By Tatyana Shumsky and Brent Kendall 

Two South Korean companies have agreed to plead guilty and pay $127 million in criminal and civil penalties for conspiring to fix prices on fuel supplied to U.S. military bases in their country, U.S. authorities said Wednesday.

Hyundai Oilbank Co. Ltd. and S-Oil Corp. agreed to plead guilty to criminal charges of bid-rigging and fraud, and pay a total of roughly $75 million in penalties, the Justice Department said. The two companies also agreed to plead guilty to a civil antitrust charge and pay a total of $52 million, prosecutors said.

Previously, three other South Korean companies, SK Energy Co., GS Caltex Corp. and Hanjin Transportation Co. agreed to plead guilty and pay $236 million in criminal and civil penalties for their participation in this scheme.

Prosecutors on Wednesday also named seven individuals, all residents and citizens of South Korea, as co-defendants in the criminal case. Hee-Soo Kim, Tae Ho Cho, Jiwon Kang, Young-Ho Yoon, Byung Kuk Kim, Byungik Moon, and Eul-Jin Hyung participated in the bid-rigging conspiracy and in a scheme to defraud the U.S. government, prosecutors said.

They alleged that the two companies and the individuals defrauded the U.S. military for at least a decade by fixing prices and rigging bids for the contracts to supply fuel to military bases in South Korea.

The companies and their co-conspirators coordinated with other South Korean oil refiners and logistics companies to predetermine who would win each contract and as a result, they reaped vastly higher profits on the fuel and overcharged the U.S. military by well over $100 million, according to a complaint filed in the U.S. District Court for the Southern District of Ohio.

Prosecutors charged the two companies and seven individuals with conspiring to suppress and eliminate competition during the bidding process for fuel-supply contracts to numerous U.S. military bases throughout South Korea, and to defraud the U.S. by impairing obstructing and defeating the function of the procurement process. One of the individuals, Hee-Soo Kim, was additionally charged with witness tampering, according to the Justice Department.

A Justice Department spokesman declined to comment beyond court filings and a press release on the case.

Hogan Lovells, the law firm representing Hyundai Oilbank Co. Ltd., declined to comment. Lawyers representing S-Oil Corporation didn't immediately respond to requests for comment.

The two firms have agreed to cooperate with the continuing criminal and civil investigations, the Justice Department said.

Write to Tatyana Shumsky at tatyana.shumsky@wsj.com and Brent Kendall at brent.kendall@wsj.com

 

(END) Dow Jones Newswires

March 20, 2019 21:09 ET (01:09 GMT)

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