Man convicted in SSRT bribery case arrested in Dallas
November 24, 2008
PYEONGTAEK, South Korea — The businessman convicted earlier this year in a South Korean court of bribing AAFES officials so his company could hold a lucrative Internet contract on military bases has been arrested in the United States on federal bribery conspiracy charges, Stars and Stripes has learned.
Jeong Gi-hwan, 44, was arrested in Dallas by federal agents Wednesday and is being held without bond for his alleged role in a bribery conspiracy, federal authorities told Stars and Stripes on Saturday.
The alleged conspiracy involves his telecommunications company, Samsung Rental Corp. Ltd., also known as SSRT, and former Army and Air Force Exchange Service officials.
Among the former AAFES officials Jeong is accused of bribing is H. Lee Holloway, a Justice Department official told Stars and Stripes.
Holloway was AAFES general manager at Osan Air Base in South Korea from June 2000 through August 2005.
A former SSRT executive who spoke on condition of anonymity said Jeong, a South Korean citizen and resident of Seoul, had traveled to Dallas for a meeting with AAFES officials.
Agents arrested Jeong on a criminal complaint that charges him with bribery; conspiracy to defraud the United States; conspiracy to commit wire fraud; and conspiracy to commit bribery.
Federal authorities accuse Jeong of paying bribes to AAFES employees, who are considered U.S. government employees, to assist SSRT in a $206 million contract to provide home Internet and phone service to U.S. military installations in South Korea.
Authorities also contend that Holloway moved to terminate SSRT’s contract on grounds of poor performance, but then supported the contract after allegedly receiving payments from Jeong.
Holloway has declined to be interviewed by Stars and Stripes.
U.S. Magistrate Judge Paul D. Stickney of the Northern District of Texas ordered Jeong detained after finding grounds to support the charges and deeming Jeong a flight risk, according to a Justice Department news release.
Prosecutors now will have to go before a grand jury and seek an indictment of Jeong.
Jeong was convicted in Suwon District Court in January of paying hundreds of thousands of dollars in bribes to Holloway and former AAFES official Clifton W. Choy.
Choy died of heart failure Aug. 29 in Hawaii at age 56, at a time when he faced possible federal indictment on charges growing out of the SSRT scandal. He had been services program manager at AAFES Pacific headquarters on Camp Foster, Okinawa, from February 2005 until his employment ended in February 2007 after 36 years.
Holloway’s AAFES career of nearly 17 years ended in January 2007 when he was general manager at Fort Benning, Ga.
According to testimony in the South Korean case, Jeong allegedly paid Choy $100,000 to help win the contract and later paid Holloway $68,000 to shield SSRT from trouble over rising customer complaints of alleged price gouging and poor service.
Jeong was sentenced to pay 10 million won (about $10,597), and SSRT was fined 20 million won (about $21,194). He appealed the sentence, but a three-judge panel upheld it in September.
Jeong’s arrest comes after an investigation by agents of the FBI, Internal Revenue Service, and the U.S. Air Force Office of Special Investigations.
Federal prosecutors have been weighing possible further action against Holloway and others, but no indictments have been announced to date.
AAFES initially awarded SSRT a 10-year contract in 2001.
In May 2003, by which time SSRT had become the object of repeated customer complaints, AAFES extended the contract through 2019.
But by early 2007, amid publicity surrounding the bribery allegations, SSRT was forced to give up the contract.
It transferred the rights to the contract to LG Dacom, through a legal process known as novation.