AAFES drops Internet subcontractor
An Internet firm with ties to a South Korean businessman convicted of bribing AAFES officials is being dropped from doing business with the U.S. military.
The firm, Concordia Co. Ltd., also known as CDI, is a subcontractor of another Korean firm, LG Dacom.
LG Dacom provides home Internet and phone service to U.S. military customers under contract with the Army and Air Force Exchange Service and Concordia handles customer service for that business, according to AAFES.
But AAFES will drop Concordia as a subcontractor because of "an apparent business relationship" with businessman Jeong Gi-hwan, AAFES officials have told Stars and Stripes.
Jeong was convicted in a South Korean court in January on charges he interfered with international trade by bribing AAFES officials. The bribes helped his Internet firm, SSRT, hold the lucrative AAFES Internet and phone service contract. SSRT is also known as Samsung Rental Corp. Ltd.
Federal agents arrested Jeong in Dallas on Nov. 19 on charges stemming from the SSRT case.
He’s being held in a low-security federal prison outside Dallas pending further action in the case. He’s charged with bribery, conspiracy to defraud the United States, conspiracy to commit wire fraud, and conspiracy to commit bribery.
In what federal prosecutors contend was a corrupt bidding process, SSRT won the $206 million, 10-year AAFES contract in 2001.
But Jeong was forced to give up the contract in early 2007 amid the South Korean bribery case against him and over servicemember complaints of price gouging and poor service.
SSRT turned over the rights to its AAFES contract on Jan. 31 to LG Dacom, which holds it until November 2019.
Soon after LG Dacom took over the contract, it brought in Concordia as a subcontractor. In September, according to AAFES officials, they learned that Jeong, despite his conviction in the South Korean bribery case, was still linked to the AAFES contract through alleged ties to Concordia.
South Korean corporate documents list Jeong as a Concordia director, AAFES said.
AAFES officials in the Pacific region have yet to be notified whether a company has been chosen yet to replace Concordia, AAFES spokesman Master Sgt. Donovan Potter said Tuesday. Nor have they been told a date by which the switchover is to be completed, said Steve Pena, AAFES general manager at Osan Air Base in South Korea.
"That’s all being done at headquarters," said Pena. AAFES headquarters is in Dallas.
Potter said customers should see no interruption in service because of the eventual changeover.
South Korean police arrested Jeong in October 2006 and accused him of bribing former AAFES officials Clifton W. Choy and H. Lee Holloway.
Choy died of heart failure in Hawaii in August at age 56. At the time, he faced possible federal prosecution in the SSRT case. According to federal authorities, Holloway has confessed to receiving bribes to help SSRT.
Holloway was AAFES general manager at Osan in South Korea from June 2000 through August 2005.
Holloway has declined to be interviewed by Stars and Stripes.
Federal authorities have been investigating the SSRT case and have said they will weigh what further action, if any, may be warranted.
To date, no indictments have been announced.
According to a recent Associated Press report, Jeong’s Dallas lawyer has said his client is innocent of wrongdoing and is the victim of "extortion," allegedly by AAFES officials.