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Congress Investigating Korean Connection with Defense Contractors

October 2, 1985

WASHINGTON (AP) _ A retired Korean air force general, alleged to have bribed Korean officials on behalf of the General Dynamics Corp., collected $6.5 million as sales agent for five U.S. defense contractors but kept about half the money outside Korea, according to a congressional investigation.

Gen. Eung-Yul Yoon, who now lives in San Francisco, was a paid consultant for General Electric, United Technologies Corp., LTV Aerospace, Martin Marietta Corp., and General Dynamics, according to a report by the House Energy and Commerce investigations subcommittee.

Yoon and his company, Buyeon Co. Ltd., were paid $6.5 million by the contractors from 1973 until this year, according to the subcommittee staff report.

However, documents in Seoul indicate much of the money paid since 1980 never reached the company in Korea. Instead, millions of dollars were put in Yoon’s accounts in the United States and Paris, the report said.

All five of the U.S. companies have severed their relationships with Yoon and his company, according to the report.

Yoon was asked to appear Wednesday at a hearing to answer questions on whatunneled through U.S. banks. Yoon has so far declined to appear before the panel, according to committee staff, and was not expected to appear Wednesday.

Representatives of the five defense companies were expected to answer questions on why they agreed to sometimes unusual payment arrangements with Yoon, sending money to his non-Korean accounts, according to committee staff members.

P. Takis Veliotis, a former senior executive of General Dynamics, told committee investigators earlier this year that Yoon was making payments to Korean officials to win contracts for the company. Veliotis said using a consultant allowed corporations to evade the Foreign Corrupt Practices Act, which prohibits U.S. companies from bribing foreign officials, according to the report.

The corporations have denied Veliotis’ allegations.

The staff report details how the corporations, at Yoon’s request, sent more than $2 million to the First City Bank of Dallas, at his request. The Dallas bank was ″the first clearing point for General Yoon’s money,″ according to the report. Until this year, the money from there flowed to the Credit du Nord or the Morgan Guaranty Trust Co. in New York, but this year Yoon withdrew the balance of the Dallas accounts and deposited the money in his family accounts in San Francisco, the report said.

Yoon, in company records, explained the need to have payments deposited in the United States was because of ″the slowness and unreliability of the postal service″ to and from Korea. However, investigators said, that explanation did not mesh with what they found.

″This justification becomes highly questionable when you consider General Yoon deposited monies in Dallas that had been received in Seoul,″ according to the subcommittee report.

The committee report said Yoon, during brief telephone discussions, said he needed the Paris account to conduct business outside of Korea.

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