Former SSRT executive testifies that ex-AAFES official took bribes
November 23, 2007
SUWON — Former AAFES official H. Lee Holloway received cash payments, an under-the-table stock deal and a luxury sports car as bribes from a South Korean businessman whose firm held an Internet contract with the U.S. military, according to testimony in Suwon court Wednesday.
Kim Hyun-chul, a former Samsung Rental Corp. Ltd. executive who also is known as Harry Kim, testified Wednesday in Suwon District Court that the bribes were paid by SSRT chairman Jeong Gi-hwan.
South Korean prosecutors are trying Jeong on charges he paid tens of thousands of dollars in bribes to Holloway and former Army and Air Force Exchange Service official Clifton W. Choy.
Kim said Jeong bribed the AAFES officials in exchange for their help to hold a lucrative contract to provide Internet and phone service on U.S. military installations in South Korea.
Kim was with SSRT from 1998 to 2004.
South Korean criminal authorities arrested Jeong in September 2006, accusing him of bribing Choy with $100,000 to help win the contract and later bribing Holloway with $68,000 to help shield the firm from possible adverse actions by AAFES over mounting customer complaints of price gouging and poor service.
AAFES initially awarded SSRT the $206 million, 10-year contract in 2001.
By May 2003, SSRT had become the subject of repeated customer complaints, but AAFES awarded the company a contract extension through 2019.
According to Kim, that extension was preceded by Jeong’s sustained and lavish bribery effort.
Holloway, Kim testified, did not report customer complaints to AAFES senior management in Dallas. Instead, Kim said, Holloway brought the complaints directly to Jeong, thus shielding SSRT from Dallas leadership.
Kim also said that when the contract was being considered for extension, Holloway strongly recommended to AAFES that SSRT receive the extension.
Kim outlined numerous instances in which he said Jeong bribed Holloway.
Kim testified that on Sept. 5, 2003, he was present when Holloway and Choy met at a restaurant in Seoul and saw Jeong place envelopes containing cash into Holloway’s coat pockets. Kim said he didn’t see how much money was in the envelopes, but fellow SSRT executives told him it was $2,000.
On another occasion, Kim said, Holloway told Jeong he had suffered a financial setback involving stocks.
Kim said Jeong devised a scheme in which Holloway was to be given SSRT stock.
But, Kim said, Jeong told Holloway it would be unwise to issue the stock in Holloway’s name, so he camouflaged the deal by having the stock issued in Kim’s name. Kim said he was to keep possession of the stock until Holloway asked for it; he said Holloway never requested the stocks.
Kim said Jeong also took Holloway on a leisure and golfing trip to South Korea’s popular Cheju Island, and that the trip cost SSRT between 4 and 5 million won, or about $4,300 to $5,400.
When Jeong asked Holloway what other benefits SSRT could provide him, Kim testified, Holloway expressed desire for a luxury BMW car.
Kim said that Jeong called a meeting of top SSRT executives and came up with a plan to give Holloway the money for the car in a series of payments.
At that meeting, Kim testified, some of the executives complained that Jeong was spending too much of the company’s money on the bribes. Kim said they argued the money would be better spent in investing to improve the company’s equipment and service and on the employees reeling under the weight of the continual customer complaints, but that Jeong said a businessman’s chief duty is to maximum profits.
Kim testified that Jeong paid Choy $20,000 after the SSRT contract was extended and that the payment was in return for Choy’s help.
Jeong angrily rebuffed a Stars and Stripes reporter and translator who approached him for comment Wednesday night as he was leaving the courtroom. His lawyers have said he is innocent.
Judge Kim Mi-ri set the next hearing in the case for Dec. 12.
U.S. Air Force investigators have completed investigations into the allegations against Holloway and Choy and have forwarded their findings to federal prosecutors who will decide whether further action is warranted.
Holloway was AAFES general manager at Fort Benning, Ga. His AAFES employment ended Jan. 11 after nearly 17 years.
Choy was services program manager at AAFES’ Pacific headquarters on Camp Foster, Okinawa, from February 2005 until his employment ended Feb. 17 after 36 years.
Holloway and Choy have declined to be interviewed by Stars and Stripes.