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​KAI's woes continue as prosecutors probe deeper

South Korean prosecutors have again raided Korea Aerospace Industries (KAI) on corruption allegations.

A company official confirms the raids took place at the company's Seoul and Sacheon offices on 25 July, but was unable to provide further details.

This follows similar raids two weeks ago, which prompted the resignation of company chief executive Ha Sung-yong.

South Korea's official news agency, Yonhap, indicates that the focus of the most recent raids was KAI's development division. The allegations reportedly revolve around profiteering related to the KUH-1 Surion utility helicopter programme, which amounts to some W24 billion ($21.4 million).

The Seoul Central District Prosecutors' Office reportedly alleges that KAI officials even conspired with suppliers, both by offering business favours and accepting bribes.

A Korea Times report adds that Ha and former Defense Acquisition Program Administration (DAPA) chief executive Chang Myoung-jin are being investigated in relation to two other major programmes: South Kroea's F-X III programme for new fighters and the development KFX fighter.

The F-X III programme saw the Lockheed Martin F-35A defeat the Boeing F-15 Silent Eagle and Eurofighter Typhoon in 2013 after a high profile battle for the order. The deal, originally for 60 aircraft, was reduced to 40 jets.

KAI is the prime contractor for the KFX, but the programme hit a roadblock in its early days when it emerged that the US was unwilling to provide export licences for four core fighter technologies: active electronically scanned array (AESA) radars, infrared search and track (IRST), electro-optical target tracking devices, and jammers.

This created a furore in South Korean media, as these technologies were supposedly to have been derived through offsets related to Seoul's F-35A acquisition.

Both Ha and Chang were appointed by South Korea's former president Park Geun-hye, who left office in March amid a broader corruption scandal that rocked South Korea.

According to KAI's investor presentation for 2016, the government holds about 35% of KAI indirectly through the Korea Development Bank, Korea Exim Bank, and the National Pension Service. Individual and institutional shareholders own 57.4%, Hanhwa Techwin 6%, and company employees 1.6%.

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