South Koreans charged with leaking submarine secrets to Taiwan

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Police in South Korea have charged two people with leaking submarine blueprints to Taiwan as Seoul seeks to avoid a backlash from Beijing over unsanctioned assistance for Taipei’s submarine programme.

Taiwan’s President Tsai Ing-wen in September unveiled her country’s first domestically built submarine at state-owned shipbuilder CSBC in the southern port city of Kaohsiung.

Taiwan has been pursuing greater underwater military capabilities and technology as part of efforts to resist growing pressure from China, which claims the country as part of its territory and has threatened to take it by force.

But South Korean officials are anxious about Korean engineers’ contributions and illegal transfer of defence technologies to Taiwan’s indigenous submarine programme. Like most countries, South Korea does not have official diplomatic relations with Taipei.

Over the past two years, at least three South Korean companies have been charged with industrial espionage relating to the Taiwanese submarine programme.

“Taiwan tried hard to get the submarine technology from the US and Germany but they couldn’t get it, so they approached Korean engineers instead,” said Cho Hyeon-gyu, head of the China centre at the Korea Defense Diplomacy Association.

“Korean authorities will be worried about the possibility of worsening relations with China”, the country’s largest trading partner, he added.

Taipei’s attempt to acquire diesel-electric submarines from the US two decades ago failed in part because European governments would not approve the transfer of related technology. This time, Taiwan’s indigenous submarine project has received foreign technology and components for electronics, weapons and propulsion, according to people familiar with the project.

The two South Korean nationals accused of industrial espionage work for marine consultancy firm SI Innotec, which was fined by a Korean court last year for exporting military-grade submarine equipment to CSBC without approval from Seoul’s Defense Acquisition Program Administration.

South Korean officials told the Financial Times that the two SI Innotec employees, who previously worked for Daewoo Shipbuilding and Marine Engineering, have been accused of obtaining dozens of pages of blueprints for Daewoo’s DSME1400 submarine and passing it to CSBC.

Park Moo-sik, SI Innotec chief executive, was also given a suspended prison sentence and the company was handed a Won1bn ($765,000) fine last year for its role in the unsanctioned export of defence technologies to CSBC. Park, who is based in Taiwan, has denied the charges and is in the process of appealing.

DSME has since been acquired by South Korean defence giant Hanwha and is now known as Hanwha Ocean. SI Innotec did not immediately respond to a request for comment about the charges, which were first reported by The Korea Economic Daily. Taiwan’s defence ministry did not respond to a request for comment.

A Dapa official said that while it was not illegal for South Korean nationals to work for foreign shipbuilders, “when they transfer defence industry-related technology or export-related products, they need our approval”.

But Chae Woo-seok, a former Dapa executive who now heads the Korea Association of Defense Industry Studies, said it was “not easy to prevent our shipbuilding researchers and employees from working for other countries when they have no work here and they are offered higher salary and other incentives by Taiwan”.

According to a South Korean police affidavit obtained by Reuters last year, the authorities’ push to prevent the transfer of defence technology to Taiwan was motivated at least in part by a fear of retaliation from Beijing.

The affidavit, dated February 2022, said SI Innotec’s support of Taiwan “directly impacts the overall security of South Korea” because it risked provoking “economic retaliation” from China.

“The Korean government appears most upset not by the country’s defence technologies being leaked, but by the prospect of an aggressive Chinese response,” said Ben Forney, a researcher at Seoul National University who specialises in industrial espionage issues.

“It is this same fear of Chinese retaliation that prevents South Korea from calling out Beijing’s own economic espionage activities against Korean companies,” he added.

Additional reporting by Kathrin Hille