S.Korean Prosecutors Investigate BAE Systems Over KF-16 Upgrade Deal

South Korean prosecutors will investigate BAE systems over a failed deal to upgrade KF-16 fighter jets which resulted in about 100 billion won ($90 million).

The state auditor Board of Audit and Inspection (BAI) claimed that the arms procurement agency Defense Acquisition Program Administration (DAPA) gave multiple favors to BAE Systems when the U.K.-based multinational defense firm won a 1.75 trillion won contract to upgrade KF-16s in July 2012 over Lockheed Martin, the original maker of the F-16 jets, Korea Herald reported Wednesday.

When requesting the prosecution investigation, the BAI said that DAPA changed its evaluation standard to select the British firm that was believed to be unqualified. 

DAPA later had to change the contractor to U.S. defense firm Lockheed Martin, after the DAPA was asked by the U.S. government to pay 800 billion won more ― 500 billion won to the U.S. government and 300 billion won to BAE. At the time, Washington cited that the risk cost in implementing the project had increased.

The DAPA officially announced the change of the contractor in December 2015 and signed a 2.2 trillion won contract with the U.S. firm, which consequently led to budget losses and a program delay.

Prosecutors said they have reviewed a report submitted by the state auditor and secured relevant data from DAPA in August through a search-and-seizure raid. They are also questioning those who were in charge of the deal.