S. Korean gets 5 years in AAFES bribe scandal
November 14, 2009
PYEONGTAEK, South Korea — South Korean businessman Jeong Gi-hwan was sentenced Tuesday in a Dallas federal court to five years in prison for bribing AAFES officials so his firm could obtain a lucrative contract to sell Internet and phone service to U.S. troops in South Korea, the Justice Department said.
U.S. District Judge Ed Kinkeade also fined Jeong $50,000, denied him a supervised release and ordered him deported immediately once his jail term is served.
Jeong headed Samsung Rental Co. Ltd., also known as SSRT.
In an agreement with federal prosecutors, Jeong pleaded guilty in June to charges of bribery, conspiracy and honest services wire fraud.
The conspiracy ran from 2001 to 2006 and hinged on a $206 million Army and Air Force Exchange Service contract to sell the Internet and phone service on U.S. military installations in South Korea.
Jeong admitted paying bribes to ensure that SSRT won and held on to the contract. The bribes were in the form of money spent on prostitutes, dining, drinking, travel and other things of value.
Jeong paid about $80,000 in bribes to Clifton W. Choy, then AAFES service program manager for the Pacific region. In turn, Choy used his position to gain access to confidential bidding information that competing bidders had submitted to AAFES, then passed it to Jeong, who used it to make sure SSRT turned in the winning bid. Jeong later paid Choy additional cash and Choy continued to help SSRT.
Choy died of heart failure in August 2008 while under investigation in the case, according to court documents.
From May 2003 to April 2005, Jeong paid about $70,000 to H. Lee Holloway, at the time AAFES general manager at Osan Air Base in South Korea, to protect SSRT from adverse actions by AAFES in the face of mounting servicemember complaints of price gouging and chronically poor service.
Holloway pleaded guilty in April to his role in the conspiracy and to not reporting on his income tax returns the bribes he admitted taking. He faces sentencing Dec. 16 in U.S. District Court in Columbus, Ga.