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Hanwha Group’s defense unit under tax probe after K-9 blowup

Collected: 2017.08.25

Distributed: 2017.08.29

Source: Go Direct

Hanwha Group’s holding company Hanwha Corp. and its defense unit Hanwha Techwin Co. came under tax probe, sending jitters across the Korean defense industry about extensive investigation on collusive ties and irregularities following the arms corruption scandal involving Korea Aerospace Industries.

According to tax authorities and industry sources on Thursday, the National Tax Service (NTS) sent a team of 100 investigators from its Seoul regional office to Hanwha Group’s headquarters in downtown Seoul and seized Hanwha and Hanwha Techwin’s accounting and tax documents.

Hanwha Corp. is the holding entity of Hanwha Group whose business spans from retail to chemicals, but its mainstay business is defense. Hanwha Techwin makes defense and aircraft parts.

K-9

Industry watchers suspect the move beyond a routine tax probe as it was launched after the government vowed to address collusive ties between the defense authority and industry amid a series of corruption over arms procurements.

Moreover, a self-propelled howitzer K-9 Thunder made by the company blew up during a military drill, killing two soldiers on Aug 18.

Government authorities also may have suspected irregularities in the process of the company’s splitting and spinning off defense, energy, and industrial equipment divisions last month.

Group officials declined to comment on the probe, claiming it is a routine procedure.

At 1:40 p.m. on Friday, shares of Hanwha Techwin were down 1.42 percent at 38,050 won ($33.69).

By Chun Jung-hong and Kim Jung-hwan

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