S. Korea Picks Boeing as the Accusations Fly

SEOUL —  The South Korean Defense Ministry announced Friday that it will award a $4.4-billion contract for fighter jets to Boeing Co., capping a tumultuous bidding war that has triggered almost daily anti-American protests here and allegations of skulduggery.

The contract for 40 Boeing F-15s was immediately challenged by rival Dassault Aviation of France, which is seeking a court injunction to block the deal and make public the details of the bidding process.

Dassault alleges that the South Korean government took into account purely political considerations in picking the American-made jet, while other critics charge that Seoul came under unfair pressure from the United States, its main ally.

The unusually public competition has been tantamount to a Franco-American war, with charges and countercharges splayed daily across the front pages of newspapers here. Two South Korean military procurement officials have been indicted for allegedly taking bribes from the French company--one claims he is being persecuted because he is a whistle-blower--and university students have been crashing the Web site of the Defense Ministry with protests against the F-15.

Even as the choice was being announced at the Defense Ministry, demonstrators protested outside with banners reading, “We cannot buy peace with arms!”

“People are very emotional,” Deputy Defense Minister Cha Young Koo said. “We made our decision with cool heads, with the national interest as the top priority.”

The U.S., which stations 37,000 troops in South Korea as a bulwark against communist North Korea, has had a virtual monopoly in the sale of fighter jets here since the 1950-53 Korean War. Two years ago, when they started shopping for a new fleet of fighters, the Koreans decided to put the contract out to bid with a new and more open procurement process.

Seven companies submitted bids, and the contest was whittled down through various rounds of evaluations to Dassault, which makes the Rafale fighter, and Boeing, which is to manufacture an updated version, known as the F-15K, of its classic jet. That’s when the bidding war began to get interesting.

During President Bush’s visit to Asia in February, a popular conspiracy theory took root here that the ulterior motive of the trip was to sell weapons and that the White House would support South Korean President Kim Dae Jung’s policies of greater openness toward North Korea only if Boeing won the bid.

The idea of a conspiracy seemed to gain credence in March when a South Korean air force colonel involved in the bidding appeared on television--his voice and image altered to disguise his identity--to allege that superiors had told him the U.S. threatened to pull its troops out of the Korean peninsula if Boeing did not win the contract.

Then came yet another twist. The colonel, since identified as Cho Joo Hyung, was arrested a week later on charges that he took $8,400 in bribes from Dassault’s South Korean agent. Another air force colonel was arrested as well, while the Seoul offices of Dassault’s public relations firm and its partner were raided by police.

Shortly afterward, the Defense Ministry announced that the F-15 was emerging as the likely winner going into final evaluations.

Speaking by telephone from Paris on Friday, Dassault’s vice president for international relations, Yves Robins, denied there had been any bribery involved and suggested that the arrests were a reaction to the colonel’s appearance as a whistle-blower on television.

The main criticism of the F-15 is that it is an older-model plane than the Rafale and, although being upgraded by Boeing, is expected to go out of production sooner, making it more difficult for South Korea to purchase parts.

“It is like buying a Ford Model-T. You can put a CD player in it. You can put in a navigation system and air bags, but it is still a Model-T,” Robins said. “This is an aircraft with a very honorable history, but it is 30 years old. It is a product of the Cold War.”

Arthur Park, a Seoul-based spokesman for Boeing, countered that the F-15 has been continually upgraded and perfected through the years.

“There are more than 1,500 flying around the world. . . . The Rafale is an unproven technology,” Park said. He added that the “interoperability” of the F-15 with other U.S.-made weaponry in the South Korean military is a legitimate reason to favor an American bidder.

A senior U.S. official said it was natural for the U.S. government to support the efforts of American companies to sell products abroad and that all countries do the same.

“What seems natural to other countries can look like bullying when it is the United States,” said the official, who requested anonymity. “That’s part of the problem being the biggest kid on the block.”

U.S. and South Korean officials say Bush did not bring up the F-15 bid during his visit. But Rep. Roy Blunt (R-Mo.) in January accompanied House Speaker J. Dennis Hastert (R-Ill.) on a trip to Seoul, where they discussed the F-15 with Kim.

The new fighters are to be manufactured during the next six years at Boeing’s St. Louis-based Military Aircraft and Missile Systems division. Boeing has been hit hard by the slump in commercial aviation since the Sept. 11 terrorist attacks and by the loss last year of a $200-billion Pentagon contract to Lockheed Martin Corp. to develop a new fighter.