Systemic corruption … cartel behavior … a secret military side-agreement to the UAE reactor contract … serious nuclear safety problems still evident in 2019 … plans to sell reactor technology to Saudi Arabia and thus to facilitate the Kingdom's weapons ambitions … what's not to like about South Korea's nuclear industry?
We covered South Korea's nuclear corruption scandals in Nuclear Monitor in May 20171 and this article updates and expands upon the previous one.
In May 2012, five engineers were charged with covering up a potentially dangerous power failure at South Korea's Kori-1 reactor which led to a rapid rise in the reactor core temperature.2 The accident occurred because of a failure to follow safety procedures. A manager decided to conceal the incident and to delete records, despite a legal obligation to notify the Nuclear Safety and Security Commission.
Around the same time, a much bigger and broader scandal emerged involving fake safety certifications for reactor parts, sub-standard reactor parts, cartel behavior and bribery.1-3 The corrupt practices stretched back to 2004 if not earlier.4
The Korea Institute of Nuclear Safety reported:5
- A total of 2,114 test reports were falsified: 247 test reports in relation to replaced parts for 23 reactors, an additional 944 falsifications in relation to 'items' for three recently commissioned reactors, and 923 falsifications in relation to 'items' for five reactors under construction.
- Results were 'unidentified' for an additional 3,408 test reports ‒ presumably it was impossible to assess whether or not the reports were falsified.
- Twenty-nine of the forgeries concerned 'seismic qualification', and the legitimacy of a further 43 seismic reports was 'unclear'.
- Over 7,500 reactor parts were replaced in the aftermath of the scandal.
Safety-related equipment was installed on the basis of falsified documentation. For example, equipment failed under Loss-Of-Coolant-Accident conditions during at least one concealed test, according to a whistleblower.6 Other examples include the substandard, uncertified cabling that was found to be defective when it triggered shutdowns at two nuclear plants.4
The situation in South Korea mirrors that in Japan prior to the Fukushima disaster ‒ i.e. systemic corruption ‒ except that Japan's corrupt nuclear establishment is known as the 'nuclear village' whereas South Korea's corrupt nuclear establishment is known as the 'nuclear mafia'.7
A 2014 parliamentary audit revealed that the temporary suspension of the operation of nuclear power plants after the scandal emerged caused the loss of 10 trillion won (US$8.4 billion).8 It also led to power shortages.
Nuclear power advocate Will Davis wrote this summary of the scandals in 2014:4
"Electing for brevity, suffice it to say that various schemes to advance the position of persons or companies in the South Korean nuclear industry have resulted in substandard parts being employed (particularly cable supplied by JS Cable, a company that is presently being liquidated), false quality assurance certificates being filed, and various collusion/bribery schemes among varied personnel at contractors and in the KHNP universe of subsidiaries ‒ with involvement reaching even to the highest (former) executives.
"While the true extent and nature of these corrupt activities began to be illuminated only at the end of 2011, in fact the activities stretched far prior; a recent article in the Korea Herald noted that JS Cable failed to obtain certification for nuclear parts for its product twice in 2004, and then somehow immediately made a sale of such equipment for a total of 5.5 billion won (US$5.06 million). That cabling was eventually found to be defective when it triggered shutdowns at two nuclear plants, in May 2013. Many corporate offices (including those of KHNP) were raided throughout the summer, and many arrests made ‒ arrests that included a former president of KHNP.
"Much more than cable from one company has been implicated; implicated parts (questionable parts, or questionable certifications, or both) were thought to possibly be in service at as many as 11 nuclear plants in South Korea."
The corruption also affected South Korea's reactor construction project in the UAE.9 Hyundai Heavy Industries employees offered bribes to KHNP officials in charge of the supply of parts for reactors to be exported to the UAE.
More fundamental changes needed
The New York Times reported in August 2013 that despite the government's pledge to ban parts suppliers found to have falsified documents from bidding again for 10 years, KHNP imposed only a six-month penalty for such suppliers.10 The New York Times continued:
"And nuclear opponents say that more fundamental changes are needed in the regulatory system, pointing out that one of the government's main regulating arms, the Korea Institute of Nuclear Safety, gets 60 percent of its annual budget from Korea Hydro."
Worse still, a 2014 parliamentary audit revealed that some officials fired from KEPCO E&C (Korea Electric Power Corporation Engineering and Construction) over the scandals were rehired.11
The scandal was still on the boil in 2014. Korea Times reported on 25 June 2014:7
"The government has discovered irregularities yet again that could threaten the safety of nuclear reactors. This time, the perpetrators are parts suppliers that presented fake quality certificates in the course of replacing antiquated parts used in nuclear power plants. Six state testing facilities were also found to have failed to conduct adequate tests before issuing certificates. A two-month audit of the six testing facilities by the Ministry of Trade, Industry and Energy showed that 39 quality certificates presented by 24 companies were fabricated. ...
"Most disheartening in the latest revelation of irregularities is that the state-run certifiers failed to detect fabrications by skipping the required double-testing. ... Given the magnitude of corruption in the nuclear industry arising from its intrinsic nature of being closed, the first step toward safety should be to break the deep-seated food chain created by the so-called nuclear mafia, which will help enhance transparency ultimately. With the prosecution set to investigate the suppliers, the certifiers will face business suspension. But it's imperative to toughen penalties for them, considering that light punitive measures have stood behind the lingering corruption in the nuclear industry."
Opposition to South Korea's corrupt 'nuclear mafia' feeds into broader concerns about corruption. Japan Times reported in May 2017:12
"Opinion polls taken just before the election showed that the top concern for the country's voters was "deep-rooted corruption" and a desire to promote reform; second on that list was economic revival. If Moon is to succeed in those tasks, he must tackle the chaebol, the huge industrial conglomerates that dominate the South Korean economy and have outsized influence in its politics."
Japan's corrupt 'nuclear village' survived the political fallout from the Fukushima disaster and is back in charge.13 It would be naïve to imagine that the tepid response to South Korea's scandals has done away with the 'nuclear mafia' once and for all. There were another six arrests related to nuclear corruption in 2018 ‒ an outcome that only scratched the surface of the corruption according to a whistleblower.14
An April 2019 article in MIT Technology Review provides further detail and an update on the corruption scandals:14
"On September 21, 2012, officials at KHNP had received an outside tip about illegal activity among the company's parts suppliers. By the time President Park had taken office, an internal probe had become a full-blown criminal investigation. Prosecutors discovered that thousands of counterfeit parts had made their way into nuclear reactors across the country, backed up with forged safety documents. KHNP insisted the reactors were still safe, but the question remained: was corner-cutting the real reason they were so cheap?
"Park Jong-woon, a former manager who worked on reactors at Kepco and KHNP until the early 2000s, believed so. He had seen that taking shortcuts was precisely how South Korea's headline reactor, the APR1400, had been built.
"After the Chernobyl disaster in 1986, most reactor builders had tacked on a slew of new safety features. KHNP followed suit but later realized that the astronomical cost of these features would make the APR1400 much too expensive to attract foreign clients. They eventually removed most of them," says Park, who now teaches nuclear engineering at Dongguk University. "Only about 10% to 20% of the original safety additions were kept."
"Most significant was the decision to abandon adding an extra wall in the reactor containment building ‒ a feature designed to increase protection against radiation in the event of an accident. "They packaged the APR1400 as 'new' and safer, but the so-called optimization was essentially a regression to older standards," says Park. "Because there were so few design changes compared to previous models, [KHNP] was able to build so many of them so quickly."
"Having shed most of the costly additional safety features, Kepco was able to dramatically undercut its competition in the UAE bid, a strategy that hadn't gone unnoticed. After losing Barakah to Kepco, Areva CEO Anne Lauvergeon likened the Korean unit to a car without airbags and seat belts. When I told Park this, he snorted in agreement. "Objectively speaking, if it's twice as expensive, it's going to be about twice as safe," he said. At the time, however, Lauvergeon's comments were dismissed as sour words from a struggling rival.
"By the time it was completed in 2014, the KHNP inquiry had escalated into a far-reaching investigation of graft, collusion, and warranty forgery; in total, 68 people were sentenced and the courts dispensed a cumulative 253 years of jail time. Guilty parties included KHNP president Kim Jong-shin, a Kepco lifer, and President Lee Myung-bak's close aide Park Young-joon, whom Kim had bribed in exchange for "favorable treatment" from the government.
"Several faulty parts had also found their way into the UAE plants, angering Emirati officials. "It's still creating a problem to this day," Neilson-Sewell, the Canadian advisor to Barakah, told me. "They lost complete faith in the Korean supply chain."
"The scandals, however, were not over. Earlier this year, at a small bakery in Seoul, I met Kim Min-kyu. A slight 44-year-old man with earnest, youthful eyes, Kim used to be a senior sales manager at Hyosung Heavy Industries, a manufacturer of reactor parts. In 2010, he was put in charge of selling to KHNP and quickly discovered that double-dealing was as routine as paperwork.
""Suppliers who were supposed to be competing with one another colluded to decide who would win [KHNP bids]," Kim told me. "You'd have a group of white-haired executives from competing firms sitting across from each other, playing rock-paper-scissors to decide who would take certain contracts." Dummy bids would then be supported by fake documents, doctored to ensure that the designated loser would fail. On one occasion, he says, an irate KHNP procurement manager called him to point out an amateurish forgery in a fake bidding document ‒ and demanded he do it again, properly.
"Some of these practices constituted serious lapses in safety. In May 2014, Kim oversaw the delivery of 11 load center transformers bound for the Hanul Nuclear Power Plant in North Gyeongsang province, only to discover that their safety licenses hadn't been renewed. Load center transformers manage the flow of power to key emergency functions at reactors; any malfunction, Kim told me, would be "like a hurtling car suddenly stalling."
"Yet a secret agreement between Hyosung and competitors had designated it the winner, and the transformers were installed into two reactors, their integrity unquestioned. "I personally knew of around 300 cases where those transformers caught on fire. They're incredibly unstable," says Kim, his brow furrowed. "My hometown is actually just a few kilometers from those reactors, and an accident there could endanger my relatives who live nearby."
"In 2015, fearing a Fukushima-like accident, Kim decided to report the corruption through his company's internal whistleblowing system. The only result was that he was fired.
""How naïve I was," he says, flashing a rueful grin. He eventually went to the country's competition regulator, which referred the case to prosecutors. In 2018, he took his story to the media. A few months later, on the basis of tips from Kim, prosecutors charged six employees from Hyosung and co-conspirator LS Industrial Systems with collusion ‒ an outcome that Kim believes only scratches the surface of the corruption.
"More untruths soon came to light. In 2018, after years of government denial, former defense minister Kim Taeyoung admitted that the rumors about the military side agreement with the UAE were, in fact, true: he had overseen it himself in a desperate attempt to seal the Barakah deal. "There was low risk of a dangerous situation arising, and even if it did, we believed that our response could be flexible," he told South Korean media. "In the event of an actual conflict, I figured that we would ask for parliamentary ratification then." ...
"On principle, I don't trust anything that KHNP built," says Kim Min-kyu, the corruption whistleblower. More and more South Koreans have developed a general mistrust of what they refer to as "the nuclear mafia" ‒ the close-knit pro-nuclear complex spanning KHNP, academia, government, and monied interests. Meanwhile the government watchdog, the Nuclear Safety and Security Commission, has been accused of revolving door appointments, back-scratching, and a disregard for the safety regulations it is meant to enforce."
The secret military side-agreement to the Korea/UAE reactor contract has led to debate as to whether the Lee government violated the constitution when it signed the agreement without the approval of the National Assembly.15 A confidential US briefing leaked by Wikileaks said the military side-agreement covered defense industry technology exchanges, cooperation on military training and support, and exchanges of high-ranking military officials.16
Kim Tae-young, who served as Defense Minister under the Lee administration from September 2009 to December 2010, said:15
"At the time, France had nearly clinched the UAE nuclear reactor deal. South Korea needed to show it was fully committed to the UAE. We signed an agreement for the South Korean military to intervene if the UAE runs into military trouble."
Inadequate nuclear safety standards
Clearly inadequate nuclear safety standards are still in evidence in 2019. A case in point was an incident at the Hanbit 1 reactor on 10 May 2019. The reactor's thermal output exceeded safety limits but was kept running for nearly 12 hours when it should have been shut down manually at once.17 The thermal output rose from 0% to 18% in one minute, far exceeding the 5% threshold that should have triggered a manual shutdown.
The Nuclear Safety and Security Commission (NSSC) ordered the suspension of operation of the nuclear power plant and dispatched a team of special judiciary police officers to carry out a special inspection.18 The NSSC said in a May 20 statement:18
"The NSSC confirmed that the KHNP did not immediately stop the reactor even though the thermal output of the reactor exceeded the limit during the Control Element Reactivity Measurement Test and that the control rod was operated by a person who does not have a Reactor Operator's license (RO). The NSSC said that negligence of the person having a Senior Reactor Operator's license (SRO) in supervising and directing the operation is suspected, and therefore there is a possibility of violating the Nuclear Safety Act."
The NSSC said on June 25:19
"According to the midterm results of the special investigation on the Hanbit Unit 1, which was released on June 24th, the event happened because the licensee (the Korea Hydro and Nuclear Power) did not abide by the Nuclear Safety Act, Technical Specifications and internal procedures".
The Hanbit-1 incident was one of three occasions in 2019 alone when a reactor was shut down soon after being reactivated. The Hankyoreh newspaper editorialized on 9 September 2019:20
"South Korean nuclear power plants that have reopened following government approval have faced a string of malfunctions, bringing their operations to a halt. These accidents raise worrying questions about the safety of nuclear energy. There's an urgent need for nuclear energy regulators to carry out thorough inspections and to prevent such accidents from reoccurring. ... Another question that must be asked is whether regulators have been too hasty in authorizing the reactors' reactivation."
1. Nuclear Monitor #844, 25 May 2017, 'South Korea's 'nuclear mafia'', https://www.wiseinternational.org/nuclear-monitor/844/south-koreas-nucle...
2. Nuclear Monitor #765, 1 Aug 2013, 'South Korea: Nuclear scandal widens', www.wiseinternational.org/nuclear-monitor/765/nuclear-news
3. Nuclear Monitor #771, 2 Nov 2013, 'South Korea indicts 100 people over safety scandals', www.wiseinternational.org/nuclear-monitor/771/south-korea-indicts-100-pe...
4. Will Davis, 6 Feb 2014, 'South Korea nuclear power: Are the dark times over?', http://ansnuclearcafe.org/2014/02/06/south-korea-nuclear-power-are-the-d...
5. Korea Institute of Nuclear Safety, www.kins.re.kr/en/ourwork/cfsi.jsp
6. Mycle Schneider, Antony Froggatt et al., 2016, World Nuclear Industry Status Report 2016, www.worldnuclearreport.org or direct download: www.worldnuclearreport.org/IMG/pdf/20160713MSC-WNISR2016V2-HR.pdf
7. Korea Times, 25 June 2016, 'Fake certificates again', http://koreatimes.co.kr/www/news/opinon/2014/06/137_159789.html
8. Se Young Jang, 8 Oct 2015, 'The Repercussions of South Korea's Pro-Nuclear Energy Policy', http://thediplomat.com/2015/10/the-repercussions-of-south-koreas-pro-nuc...
9. Choi Kyong-ae, 12 Jan 2014, 'Hyundai Heavy vows to root out corruption', http://koreatimes.co.kr/www/news/biz/2014/01/602_149613.html
10. Choe Sang-hun, 3 Aug 2013, 'Scandal in South Korea Over Nuclear Revelations', www.nytimes.com/2013/08/04/world/asia/scandal-in-south-korea-over-nuclea...
11. Se Young Jang, 8 Oct 2015, 'The Repercussions of South Korea's Pro-Nuclear Energy Policy', http://thediplomat.com/2015/10/the-repercussions-of-south-koreas-pro-nuc...
12. Japan Times, 10 May 2017, 'The pendulum swings in South Korea', www.japantimes.co.jp/opinion/2017/05/10/editorials/pendulum-swings-south...
13. Nuclear Monitor #800, 19 March 2015, 'Japan's 'nuclear village' reasserting control', www.wiseinternational.org/nuclear-monitor/800/japans-nuclear-village-rea...
14. Max S. Kim, 22 April 2019, 'How greed and corruption blew up South Korea's nuclear industry', https://www.technologyreview.com/s/613325/how-greed-and-corruption-blew-...
15. Lee Seung-jun, 10 Jan 2018, 'Secret military pact likely led to Blue House Chief of Staff's UAE visit', http://english.hani.co.kr/arti/english_edition/e_international/827153.html
16. 4 Jan 2010, 'ROK FM YU ON ROK'S COMPREHENSIVE DEAL WITH UAE', https://wikileaks.org/plusd/cables/10SEOUL2_a.html
17. Choi Ha-yan, 21 May 2019, 'Nuclear reactor kept running for 12 hours after it should have been shut down', http://english.hani.co.kr/arti/english_edition/e_business/894763.html
18. Nuclear Safety and Security Commission, 20 May 2019, 'The NSSC to Expand the Special Inspection on Manual Shutdown of Hanbit Unit 1', http://www.nssc.go.kr/nssc/en/c5/sub1.jsp?mode=view&article_no=45431&pag...
19. Nuclear Safety and Security Commission, 25 June 2019, 'Comments on the news article: Event at Hanbit Unit 1 was caused by a violation of the law and human error and irrelevant to the energy transition policy', http://www.nssc.go.kr/nssc/en/c5/sub1.jsp?mode=view&article_no=45520&pag...
20. Editorial ‒ Hankyoreh, 9 Sept 2019, 'Nuclear energy regulators need to be more vigilant in inspections than ever', http://english.hani.co.kr/arti/english_edition/e_editorial/909073.html