Korea Aerospace CEO Resigns as Prosecutors Probe Chopper Project

(Bloomberg) -- Korea Aerospace Industries Ltd., the country’s only aircraft maker, said Chief Executive Officer Ha Sung-yong will resign, taking responsibility for the “recent incidents” that led prosecutors to search its offices last week.

Ha will submit his resignation letter at a board meeting Thursday afternoon, and Korea Aerospace plans to ask its shareholders soon to select a replacement, the company said in an emailed statement. Ha was appointed as CEO of the state-owned firm in May 2013. Export-Import Bank of Korea is the biggest shareholder of Korea Aerospace.

Prosecutors, investigating a helicopter project of Korea Aerospace, searched the Sacheon and Seoul offices of the company on July 14. The Board Audit and Inspection of Korea said Wednesday that it had uncovered some design flaws in the engine blades of the military chopper the company developed and also found some irregularities with tests related to obtaining certificates for the aircraft. The audit board said it had asked for an investigation into these findings last year.

“I will do my best to answer all allegations and suspicions to the prosecutors,” Ha said in the Thursday statement. “I will try not to undermine the reputation Korea Aerospace has worked to build over the years.”

Shares of Korea Aerospace, which also builds trainer jets for the military, rose as much as 2.8 percent to 51,600 won on Thursday in Seoul. The stock has dropped 24 percent this year, compared with a 20 percent advance in the benchmark Kospi index. 

To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net.

To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net, Sam Nagarajan