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South Korean Company Pays $1.2M to Settle Fire-Safety Equipment Suit


Stars and Stripes Pacific Edition

By Teri Weaver, Stars and Stripes Pacific Edition

SEOUL — A South Korean company has agreed to pay $1.2 million to the U.S. government to settle a lawsuit that claimed the company failed to inspect fire suppression equipment at U.S. Army and Air Force bases throughout South Korea, according to the U.S. attorney for the district of Hawaii.

The payment from the Shinwha Electronics Corporation also includes a $240,000 reward to a former employee, an American, who was the whistle-blower in the case, according to the employee’s lawyer and the U.S. Attorney’s office.

The lawsuit stemmed from a contract issued to Shinwha six years ago that required the South Korean company to “inspect, test, maintain and repair life safety systems” at U.S. military bases, according to the filed complaint. During the contract’s first year, Shinwha failed to train fire safety inspectors and falsified inspections done on the bases, the lawsuit contended.

In the settlement, reached in January, Shinwha agreed to pay the fine but admitted no wrongdoing, according to a news release from the U.S. Department of Justice. The company also withdrew a claim that the U.S. government owed $407,564 for nonpayment on the contract, the release stated.

Executives at Shinwha were unavailable for comment Thursday afternoon.

The whistle-blower’s lawyer, Thomas Grande, who practices in Hawaii, told Stripes he knew of no personal injuries or damages to property due to the company’s acts alleged in the lawsuit.

Shinwha’s contract with the military was for one year, though it could be reviewed at the 12-month mark and re-approved for a total of five years, according to the complaint. Payment during the first year was capped at $5 million, according to the complaint. The first year of the contract started in September 2000.

Shinwha hired the whistle-blower, who was not identified in the court papers or by his lawyer, on March 1, 2001, according to court papers. His job included overseeing fire safety inspections in the U.S. military’s Area I and Area II, according to court papers.

In September, the contract and the company’s work were up for U.S. review, the complaint said. As that deadline grew closer, the company’s chief executive officer ordered workers to stop performing field repairs while doing inspections, a specific requirement of the contract, the complaint said.

“He discovered they were falsifying the data,” said Grande.

Shinwha workers also were billing for work not done, failing to check battery-operated smoke detectors and omitting checks in rooms that were locked, the complaint said.

The whistle-blower resigned in September, the court papers said.

In early 2002, he filed a lawsuit in the U.S. District Court in Hawaii under the whistle-blower provision of the federal False Claims Act. The provision allows employees to point out fraud against the government and reap a reward if the case is proven true or resolved, Grande said.