South Korea's Nuclear Energy Corruption Scandal Widens in Scope

News this past week out of South Korea concerning counterfeit parts used in nuclear plants, and/or faked QA (quality assurance) certificates for parts shows that the suspected reach of such practices, and likely associated corporate corruption including bribery, has broadened out considerably.

Here are the most recent developments with links to external sources; readers are strongly advised to click the links and examine the content in order to obtain the full impact of the story now unfolding.

June 20:  Widespread raids were conducted by warrant of the Busan Prosecutors' Office in the nuclear parts counterfeit / corruption investigation, broadening the focus of the investigation beyond just a small number of companies and people.  See full details here.

July 2:  Indictments involving KEPCO E&C and other companies; see full details here.**

July 8:  The former president of Korea Hydro & Nuclear Power was arrested as part of the ongoing investigation into nuclear industry corruption inside South Korea.  See details here.  (This link is a detailed story, several days after the arrest.  For a short piece nearer the time of his arrest, which includes some details on affected parts and plants prior to that time, see this link.)  For a different source, see this link.**

July 10:  Search and seizure occurred at Hyundai Heavy Industries following the Busan Prosecutor's office having obtained warrants in the nuclear parts scandal.  See details here.  See also here.**

July 11:  Details emerged on the involved parties in the Hyundai headquarters raid, including persons and exchanged funds.  Contract bribery is included in the charges.  See details here.  See also here.**

The South Korean President, Park Geun-hye, has been very public about her anger over the entire nuclear parts scandal, which up until this point had only been acknowledged to concern cable supplied by JS Cable.  The struggle to determine just how to make certain that the nuclear regulatory organization in South Korea can control such things and itself remain free of corruption is making itself evident, as the President has instructed the Cabinet to develop further measures which are not necessarily meeting with full agreement.  (See details of this developing side story here.  Also, see here some further statements from July 9th.)

At the recent ANS 2013 Annual Meeting, it was learned by this author that there was no implication by this scandal with JS Cable that might have involved anything supplied to the UAE nuclear plants under construction.  With Hyundai having been implicated in the most recent raids, one might wonder whether any UAE connection will have to be evaluated; certainly, this author will be watching the news for any such implications.  In terms of affected South Korean plants, at least one plant shut down after it was discovered that it incorporated the suspect cables has restarted; see here.  However, in an earlier June 23 article, the prosecutors revealed that the number of plants suspected to have non-compliant parts (or at least paperwork) has widened considerably to include 11 of South Korea's 23 reactor plants.  It is not inconceivable that further shutdowns could be ordered, outside of (and ahead of) scheduled refueling outages.

So, backing up from the details a bit, we can see that since at least mid-late June, the prosecutors have been finding evidence that greatly widens the scope of the scandal.  Prior to this time, only control cabling from JS Cable was implicated, with no export implications and no serious implication of bribery.  Now, a major industrial manufacturer which supplies pumps, transformers and EDG's has been implicated with raids and arrests made, which include bribery.  The former president of KHNP has also been arrested in the same scandal. 

This is a completely unnecessary and frankly depressing and alarming set of developments.  I've detailed on this site the very great rise of the South Korean nuclear industry, in a very detailed historical post.  Apparently the opportunity to shortcut requirements and maximize personal gain was just too much for some persons in a situation where time was of the essence, and having parts in hand on time or early was much more important - apparently - than having GOOD parts in hand under legal contract with proper inspection and material history and paperwork.

•Do we know for certain that any or all of the parts suspected in this scandal cannot actually perform the duties for which they are intended?  No, we do not know that for certain yet.

•Does a part or machine supplied under a contract that included bribes necessarily not meet safety requirements?  No, absolutely not; parts under these conditions may meet all safety and inspection requirements, with the only concern being bribery in obtaining the contract to produce such parts or machines. 

•Can anyone with any knowledge of nuclear energy simply approve of the idea of just signing off on the chance that all of the actually suspected parts are really all right?  No, not a chance.  The suspect parts will all have to be checked and replaced by certified parts if needed.  There is no avoiding this eventuality.  Worse, roughly 50% of the South Korean reactor plants are now implicated in the situation.  Shutdown of just two a while back caused alarm over electric distribution grid stress, and fear of rolling blackout; what now, with eleven implicated?

The most important thing for the South Korean government to do is to discover the full extent of the corruption and burn it out, wherever it is, as one might burn out a hill of fire ants.  The next most important thing to do is for all of the nuclear plants to undertake every measure to inspect and, if required, replace all implicated parts and shift suppliers as necessary.  Further beyond this, the South Korean government will absolutely have to institute some sort of further check on this (as it's already beginning to evaluate) in terms of regulatory oversight to ensure it's quite impossible in the future.  None of these steps is avoidable; they should be pursued with rigor and unbending determination.

Atomic Power Review will continue to monitor the English-language Korean news sources for updates and provide them as required.

For more reading:  See development of the South Korean nuclear industry on Atomic Power Review.

11:50 AM   7/14/2013
ATOMIC POWER REVIEW


Update -- 9:00 AM   7/15    Links denoted by ** have been added to provide more varied sourcing and different details.  One new event has been added.