South Korea bans missile maker LIG D&A from bids over bribery

South Korea’s Defense Acquisition Program Administration (DAPA) has barred LIG Defense & Aerospace, the maker of the Cheongung air defense missile formerly known as LIG Nex1, from bidding on government contracts for two years after prosecutors accused the company of paying a DAPA official hundreds of millions of won in bribes during weapons development tenders, the maximum penalty allowed under the country’s State Contracts Act.

DAPA’s defense procurement contract review committee, a 20-member panel that includes outside experts, approved the 24-month ban at a meeting at the Government Complex in Gwacheon on Oct. 20, South Korean daily Kyunghyang Shinmun reported, citing the agency. The committee said it chose the harshest sanction because the case involves the largest bribe since DAPA was founded in 2006, deliberate misconduct including cost fraud carried out over a long period, and the damage such wrongdoing does to national security and public trust in defense procurement.

The ban takes effect five business days after the company is notified, and from Oct. 29 LIG D&A will be unable to take part in new bids by DAPA or other public institutions, The Asia Business Daily reported, keeping it out of new domestic tenders until October 2028. Existing contracts and export deals are not affected, but the company relies heavily on its home market, which accounted for 72.1% of its revenue in the first half of 2026.

The case stems from an investigation by the Suwon District Prosecutors’ Office, which said on Aug. 20 that a grade-five DAPA civil servant who sat on proposal evaluation panels for six defense projects worth a combined 91.5 billion won (about $69 million) between 2021 and late 2025 had received 460 million won (about $348,000) in money and benefits. Prosecutors said the official took 320 million won in cash, the right to recommend a subcontractor for a 2.2 billion won (about $1.7 million) service contract, and 140 million won in fees for selecting subcontractors, with the money allegedly routed through sham service and consulting contracts. The official and an LIG D&A executive were both detained and indicted, along with others accused of helping launder the money.

The sanction approved on Oct. 20 covers only one of the six projects, a counter-small-drone system, together with the cost fraud tied to that contract, and DAPA said the other five projects will also be reviewed, leaving open the possibility of further penalties. The agency weighed a two-year ban for the bribery and a six-month ban for the cost fraud and, under its rules, applied the heavier of the two.

LIG D&A said it regretted that DAPA had imposed an administrative sanction based only on an indictment while legal proceedings were still under way, and announced that it would seek a stay of enforcement and file a lawsuit to have the ban overturned, filing the request for a stay with a court on Oct. 22. The company has also said it will take every step to keep its programs on schedule.

Lawmaker Chun Ha-ram of the Reform Party responded that both the DAPA official who received the bribes and the subcontractor representative who passed them on have admitted the charges. At the first hearing of the case at the Suwon District Court on Sept. 29, four defendants, including the DAPA official, acknowledged the allegations in the indictment, while LIG D&A has disputed the prosecutors’ findings.

The ban could also affect major upcoming programs. LIG D&A was ranked first for system integration in the roughly 1.9 trillion won (about $1.44 billion) program to develop a long-range air-to-air missile for the KF-21 fighter, and industry observers have raised concerns that the sanction may leave the program to a single company. DAPA has also asked the Ministry of Trade, Industry and Energy to revoke LIG D&A’s designation as a defense contractor for the counter-small-drone system, a step that would limit its access to negotiated contracts as well.