KAI struggles to vie for US jet order on unfavorable news
Korea Aerospace Industries' T-50A designed for the U.S. Air Force / Courtesy of KAI
'Dubious' ties to Michael Cohen make it harder for KAI to compete with Boeing
By Jun Ji-hye
Korea Aerospace Industries (KAI) is facing a bumpy road in exporting its supersonic trainer jets for the United States Air Force amid a series of unfavorable news reports about its previous corruption scandal and relationship with the U.S. President Donald Trump's longtime personal lawyer.
KAI President Kim Jo-won
Industry sources said Thursday the current climate of opinion may result in KAI's failure to win what would be its biggest defense contract worth $16 billion.
KAI is making a joint bid for the Advanced Pilot Training (APT) project, previously known as the T-X program, together with U.S. defense giant Lockheed Martin, to replace the U.S. Air Force's aging T-38 trainers.
With the Air Force planning to acquire 350 advanced trainers through the mega project, KAI is proposing its T-50A, the improved version of its T-50 Golden Eagle supersonic trainer.
According to recent U.S. media reports, U.S. Secretary of the Air Force Heather Wilson said the APT project is due for selection in August at the latest.
The nation's sole aircraft manufacturer has claimed that the quality of its trainer jet has already been verified as it has experience in manufacturing more than 100 T-50s.
But competitors in the project, including Boeing, have been severely holding the KAI-Lockheed Martin team in check. Boeing teamed with Saab of Sweden to develop the BTX-1, which went through its test flight in December 2016, to participate in the bid.
A source familiar with the matter said that the competition seemed to be favorable to Boeing from the beginning as there has been general opinion in the U.S. that Boeing has to be given chances of winning contracts as Lockheed Martin has won most major projects by the U.S. military so far.
He noted that such opinion seems to have led to further negative vibes facing KAI especially after its former CEO Ha Sung-yong and other executives faced prosecutors' investigation and were indicted for alleged bribery and embezzlement last year.
“KAI is on the verge of losing a chance to win the bid,” he said.
On Monday, The Washington Post reported a suspicion that the Korean aviation firm “cleared a business integrity review by the U.S. Air Force and won a contract worth up to $48?million” to maintain fighter jets in October, although the firm was the subject of a corruption investigation at the time.
Citing a public database of federal contracting information, The Washington Post said KAI did not report the indictments to the U.S. government, noting, “Knowingly making a false statement on a certification is a violation of federal law.”
A KAI official denied the report, saying it has sincerely complied with relevant procedures in accordance with standards presented by the U.S. government.
The report also focused on KAI's deal with Trump's personal lawyer Michael Cohen _ he was a consultant for the aviation firm when it won the bid. The Korean company paid $150,000 to Essential Consultants, a shell company established by Cohen, when the relationship ended in November.
Though nothing has been confirmed about Cohen's involvement in the awarding of the contract, the payment drew attention given that Cohen, as a close friend of Trump, has been cited as a lobby channel by several U.S. media.
A KAI official said, “Our preparations for the APT project are going well. We will continue to make progress in accordance with due procedures.”