Korean Firms Rigged Fuel Supply Contracts to Military, U.S. Says

(Bloomberg) -- Three South Korean companies agreed to plead guilty and pay $236 million for conspiring to rig bids for supplying fuel to U.S. military bases, U.S. prosecutors said.

Hanjin Transportation Co., SK Energy Co. and GS Caltex Corp. engaged in a decade-long conspiracy to eliminate competition for fuel-supply contracts, causing the U.S. to pay more, the Justice Department said Wednesday.

“The conduct by the corporations in this case is particularly egregious, as they targeted the U.S. military in a critically strategic region, defrauded the U.S. government, and ultimately, cheated the American taxpayers of millions of dollars,” FBI Executive Assistant Director Amy Hess said in a statement.

Makan Delrahim, who heads the Justice Department’s antitrust division, said the cases are the first to be brought in an ongoing investigation. Court papers in the case cite two unidentified companies as co-conspirators in the rigging scheme that haven’t been charged, including an oil company.

The companies agreed to pay $82 million in criminal fines plus $154 million in civil penalties. SK Energy and GS Caltex are paying the bulk of the civil penalties: $90.4 million and $57.5 million respectively. Hanjin Transportation’s civil penalty is $6.2 million. The companies agreed to cooperate in the government’s ongoing investigation targeting fuel-supply contracts in South Korea.

GS Caltex is a joint venture between GS Energy and Chevron Corp., according to court papers filed in the case.

Seoul-based Hanjin Transportation said in a statement it is "committed to complying with the antitrust and competition laws and values its decades-long relationship with the U.S. military.”

Representatives for SK Energy and GS Caltex couldn’t immediately be reached for comment

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