A local defense firm has been caught swindling millions of dollars out of the Air Force and the state procurement agency through a maintenance scam that raised slush funds for the company's president, the state auditor said Monday.

Bluenier, an outsourced maintenance firm for Air Force fighter jets, was found to have claimed more than 17 billion won ($15.05 million) in imports of key parts for KF-16 fighter planes, which were made from its own exports of used material, according to the Board of Audit and Inspection (BAI).

The company also claimed more than 7.9 billion won in taxes from purchasing parts it did not actually buy, the BAI said, referring to an inspection it launched after the crash of a Lynx helicopter in April 2010.

In total, Bluenier pocketed nearly 25 billion won by falsifying documents to show it had replaced more than 30,000 parts that did not need replacing, the auditor said.

The cash was allegedly used to create slush funds and buy an apartment for Bluenier's president, whose name was withheld, and reward accomplices who took part in the scheme. An unnamed Air Force warrant officer in charge of technical inspections of the parts is suspected of receiving 50 million won in exchange for approving falsified inspection documents.

The BAI said it has instructed the chiefs of the state procurement agency and the Air Force Logistics Command to retrieve more than 45.1 billion won from Bluenier in undue profits and penalties.

It has also referred Bluenier's president and an alleged accomplice to prosecutors on suspicion of fraud. (Yonhap)