SEOUL — South Korean authorities cited the risk of Chinese economic retaliation when they charged marine technology firm SI Innotec last year with violating trade laws for its work on Taiwan's new military submarine program, according to a police document seen by Reuters and two people familiar with the matter.
In a Feb 17, 2022 affidavit to a judge seeking the arrest of SI Innotec executive director Park Mal-sik, police said authorities feared a repeat of the sweeping sanctions imposed by Beijing in 2016, after Seoul decided to install THAAD, a US anti-missile system. China agreed to lift those measures in late 2017.
In the sealed affidavit reviewed by Reuters, police cited China's furious reaction in a 2021 Reuters report about defence contractors and experts from South Korea and six other countries working on Taiwan's submarine program. A KHNT official, speaking on condition of anonymity because he was not authorised to talk to media, confirmed an ongoing criminal case. The company declined further comment. S2&K had no comment.
The affidavit said many firms with submarine expertise avoided helping Taiwan because they did not expect government approval given the risk of "bigger damage to economy than benefits", including a possible Chinese ban on South Korean exports. Seoul has no formal diplomatic ties with Taipei and has avoided arming the democratically ruled island over which China claims sovereignty, even as its companies ink weapons deals with other Asian neighbours.Taiwan President Tsai Ing-wen initiated the Indigenous Defence Submarine programme in 2016.
SI Innotec is accused of violating the Foreign Trade Act, which requires DAPA's approval to transfer abroad many "strategic goods" for military use. SI Innotec said the contract, at CSBC's request, listed the equipment's primary use as for wind power generation. It told Reuters it is "customary" for dual-use equipment contracts to be "signed for industrial use, not exposing military use" and Taiwanese clients are discreet about defence work.
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