SOUTH KOREA’S CORRUPT AND DANGEROUS NUCLEAR INDUSTRY

During the eighteen months from the beginning of 2012 to mid- 2013, major corruption incidents occurred in the nuclear power industry in every country currently seeking to export nuclear reactors: the United States, Canada, Japan, South Korea, Russia, France, and China….. “In the Korean case, systemic nuclear industry corruption was found

Supplementary Submission to the Victorian Parliament’s Standing Committee on Environment and Planning
Inquiry into Nuclear Prohibition Friends of the Earth Australia www.nuclear.foe.org.au
 June 2020  – Extract 

 SOUTH KOREA’S CORRUPT AND DANGEROUS NUCLEAR INDUSTRY

South Korea’s reactor project in the UAE is years behind schedule: the start-up of the first reactor has not yet occurred despite initially being scheduled for 2017. The project has been promoted as a US$20 billion (A$29 billion) contract but costs have undoubtedly increased. The World Nuclear Industry Status Report gives a figure of €24.4 billion (A$40 billion).[1]

[1] https://www.worldnuclearreport.org/The-World-Nuclear-Industry-Status-Report-2017-HTML.html

[2] KBS, 8 May 2020, ‘S. Korea Unveils Energy Plan to Reduce Coal-powered, Nuclear Power Plants’, http://world.kbs.co.kr/service/news_view.htm

The following articles discuss:

  1. The endemic corruption in South Korea’s nuclear industry.
  2. The business model which sacrifices safety in order to improve economics (the CEO of French nuclear utility Areva likened Korea’s AP1400 reactor design to ‘a car without airbags and safety belts.'[1])
  3. The level of state-sponsored skullduggery associated with South Korea’s nuclear industry is almost beyond belief, even extending to a secret military side-agreement to the UAE reactor contract which was agreed without the knowledge or agreement of South Korea’s parliament

Nuclear corruption and the partial reform of South Korea’s nuclear mafia

Jim Green, Nuclear Monitor #887, 17 June 2020, https://wiseinternational.org/nuclear-monitor/887/nuclear-monitor-887-17-june-2020

The corrupt behavior of Japan’s ‘nuclear village’ ‒ and the very existence of the nuclear village ‒ were root causes of the March 2011 Fukushima disaster and a string of earlier accidents.1 In the aftermath of the Fukushima disaster, academic Richard Tanter identified a worldwide pattern of nuclear corruption:2

“During the eighteen months from the beginning of 2012 to mid- 2013, major corruption incidents occurred in the nuclear power industry in every country currently seeking to export nuclear reactors: the United States, Canada, Japan, South Korea, Russia, France, and China. A number of other countries that operate or plan to have nuclear power plants also had major corruption cases, including Lithuania, Bulgaria, and Pakistan; moreover, serious allegations of corruption were raised in Egypt, India, Jordan, Nigeria, Slovakia, South Africa, and Taiwan.

 “In the Korean case, systemic nuclear industry corruption was found; in Canada, deep corporate corruption within the largest nuclear engineering corporation was one matter, and bribery of nuclear technology consuming countries’ senior ministers was another. In Russia, the issue was persistent, deep seated, and widespread corruption in state-owned and private nuclear industry companies, with profound implications for the safety of Russian nuclear industry exports.

South Korea is slowly phasing out its nuclear power industry. In the late 2000s, it was anticipated that South Korea’s nuclear capacity would rise from 18 gigawatts (GW) to 43 GW by 2030. The current plan is to reduce the number of reactors from a peak of 26 in 2024 to 17 reactors (approx. 17 GW) in 2034.[2] Thus the ambitions have been more than halved. In recent years the South Korean government has shut down the Kori-1 and Wolsong-1 reactors, and suspended or cancelled plans for six further reactors.

“Two cases in nuclear technology importing countries, Lithuania and Bulgaria, revealed large-scale bribery involving government, the nuclear industry, and foreign (US and Russian) companies.

 “Post-Soviet bloc geostrategic energy interests are central to both stories. The profound influence of organized crime in national energy policy, and on a transnational basis, is revealed in the Bulgarian and Russian cases. Suspicions are widespread and allegations common in the cases of India, Taiwan, and Bangladesh, but confirmed evidence remains weak.”

Since Tanter’s 2013 article, more information has surfaced regarding corruption in Russia’s nuclear industry3-4 and Russia’s nuclear dealings with India.5-7 The corruption associated with the abandoned Westinghouse nuclear power project in South Carolina is gradually coming to light.8 Corruption has been uncovered in the nuclear programs of South Africa9-15, Brazil16, Ukraine17 and, no doubt, elsewhere.

The International Atomic Energy Agency (IAEA) noted in its 2015 Nuclear Technology Review that counterfeit, fraudulent and suspect items (CFSIs) “are becoming an increasing concern for operating organizations and regulators”18 And again in 2019, an IAEA report noted that CFSIs “are of increasing concern in the nuclear industry and generally throughout the industrial and commercial supply chains.”19 The 2019 report noted that CFSIs “can pose immediate and potential threats to worker safety, facility performance, the public and the environment, and they can negatively impact facility costs.”

 “Post-Soviet bloc geostrategic energy interests are central to both stories. The profound influence of organized crime in national energy policy, and on a transnational basis, is revealed in the Bulgarian and Russian cases. Suspicions are widespread and allegations common in the cases of India, Taiwan, and Bangladesh, but confirmed evidence remains weak.”

“The sequence of events that led to the station blackout began on 4 February 2012 when the management carried out a planned shutdown of the reactor for refuelling. On 9 February, the plant suffered a loss of power due to human error during a test of the main generator. After this, one of the two emergency diesel generators failed to start. The other generator was undergoing maintenance. In addition, the connection to one of the offsite auxiliary transformers failed to work as it had not been properly set up after maintenance; and the other offsite transformer was just entering maintenance. This caused a station blackout lasting 11 minutes 43 seconds. Cooling was lost for 11 minutes. The plant manager only reported the event to the Nuclear Safety and Security Commission on 12 March, more than one month later. … The plant manager justified the decision not to report the blackout on the risk of loss of public confidence and of credibility of the plant with the management of the operating company.”

Not long after, a much broader pattern of corruption began to come to light:

“Investigations of 101 companies revealed a wide range of illegal activities including bribery, overpaying, preferential treatment and favouritism, limiting competition in bidding, accepting parts with fraudulent or even no certificate, and collusion by parties in the falsification of testing reports.”

An investigation by the Korea Institute for Nuclear Safety showed that 2,114 test reports had been falsified by material suppliers and equipment manufacturers; that a further 62 equipment qualification documents (environmental and seismic qualification) were falsified between 1996 and 2012; and that a further 3,408 test reports and 53 qualification reports could not be verified or were unclear.22,23 Over 7,000 reactor parts were replaced in the aftermath of the scandal.23

Andrews-Speed details the corruption that probably had the greatest consequences for reactor safety:22

[1] Nucleonics Week (2010) : No core catcher, double containment for UAE reactors, South Koreans say, April 22, 2010.

“A very special case of systematic counterfeiting came to light in May 2013 when it was revealed that safety-grade control cable installed in four reactors had been falsely certified. The supplier of the cable was a Korean company, JS Cable. In 2004, KHNP decided for the first time to purchase cable from a domestic rather than foreign supplier. JS Cable submitted a bid to KEPCO E&C, despite not having the capability to make cable to the required specifications. KHNP awarded the contract to JS Cable with the first delivery due in 2017, on the condition that the cable met the required standards.

An investigation by the Korea Institute for Nuclear Safety showed that 2,114 test reports had been falsified by material suppliers and equipment manufacturers; that a further 62 equipment qualification documents (environmental and seismic qualification) were falsified between 1996 and 2012; and that a further 3,408 test reports and 53 qualification reports could not be verified or were unclear.22,23 Over 7,000 reactor parts were replaced in the aftermath of the scandal.23

“JS Cable chose Saehan TEP to test the cable, but this firm lacked the capacity to undertake the required loss of coolant testing. So Saehan TEP outsourced the process to the Canadian testing firm, RCM Technologies (RCMT). RCMT tested six samples, but only one passed. JS Cable sent six further samples. Only two passed, but these two samples were illegitimate as they had not been exposed to radiation before testing. In response, KHNP instructed KEPCO E&C to make the test results acceptable. So KEPCO E&C, Saehan TEP and JS cable agreed together to modify the test reports from RCMT to show that all the samples met the required standards.”

The corruption also affected South Korea’s reactor construction project in the UAE. Hyundai Heavy Industries employees offered bribes to KHNP officials in charge of the supply of parts for reactors to be exported to the UAE.24 And ‒ incredibly ‒ the reactor contract was underpinned by a secret military side-agreement, signed without the knowledge or approval of South Korea’s National Assembly, and containing a clause that does not require approval from the National Assembly to engage in conflict, should there be a request for military assistance from the UAE.25-28 The pact includes a clause that would obligate South Korea to intervene militarily to protect the UAE in the event of a crisis, in addition to the deployment of South Korean special forces and the ongoing supply of military equipment.25

Structural problems

Andrews-Speed describes the interlinking elements of South Korea’s ‘nuclear mafia’ involving nuclear power companies, research centers, regulators, government, and educational institutions. He notes that the country’s nuclear industry possesses some special features that make it particularly prone to corruption, relating to the structure and governance of the industry, and its close links with the government.

Both KHNP and KEPCO E&C are monopolists in their fields, and both suffer from poor corporate governance and weak internal management:22

“The poor corporate governance has its roots in the way in which the Ministry of Trade, Industry and Energy is directly involved in the management of KEPCO and its subsidiaries and in the political nature of appointments of many board members and senior managers. The weak internal management was particularly pertinent to safety because, before it was amended in 2014, the Act on Nuclear Safety and Security did not address the safety standards of parts and equipment. Thus, the selling of sub-standard components was not illegal and the task of supply chain oversight was left to KHNP to manage.”

Improvements and lingering problems

Andrews-Speed notes that the Kori-1 blackout and the systemic supply-chain corruption led to efforts to curb corruption. These included revisions to the Nuclear Safety Act giving greater powers to the newly created Nuclear Safety and Security Commission; placing new reporting obligations on all actors in the nuclear supply chain; and broader legislation and regulations governing public procurement, the conduct of public officials and corruption.

But it is doubtful whether these reforms are sufficient:22

“The principal obstacles to progress relate to power and structure. The Nuclear Safety and Security Commission lacks the authority of nuclear regulators in some other countries for a number of reasons

First, after 2013 the status of the Commission Chair was reduced from Ministerial to Vice-Ministerial level and their reporting line was changed from the President to the Prime Minister. The reason for this change of status related more to the career mobility of civil servants than to the governance of nuclear safety. Nevertheless, the consequences for the authority of the Commission have been significant. It cannot now issue any regulations without the approval of the Ministry of Justice and other Ministries. This results in delay and occasional suppression of new regulations. In addition, it has been alleged that the Nuclear Safety and Security Commission redacts and sanitizes the safety reports of the Korea Institute Nuclear Safety. The consequences of this practice on safety are exacerbated by the ability of ministries, politicians and KEPCO subsidiaries to block the tough enforcement of safety standards.

“Second, the National Assembly provides little oversight of the Commission. Instead, authority lies solely with the government. Finally, the term of the Commission Chair is just three years which is shorter than that of the nation’s president which is five years. This contrasts with the situation in the USA, for example, where the Chair of the Nuclear Regulatory Commission is appointed for a five-year term, one year longer than that of the US President. As a result, Korean Presidents have significant influence over the nuclear regulator given their remit to appoint all nine members of the Commission. Taken together, these three factors enhance the power of the executive over the Nuclear Safety and Security Commission.

“The structural weaknesses within Korea’s nuclear industry are multiple. The Ministries of Finance and Strategy and of Trade, Industry and Energy exert excessive influence over state-owned enterprises, including KHNP and KEPCO E&C. These two corporations not only have strong monopolistic positions but KHNP combines the roles of constructor, owner and operator of nuclear power plants. In addition, KHNP exerts undue influence over KEPCO E&C. This strong triangular relationship between government and two monopolists persists today and forms the core of Korea’s ‘nuclear mafia’. Only radical structural and governance reform can address this fundamental weakness.

 “Further compounding factors include: the corporate culture of KEPCO and its subsidiaries that emphasizes the need for conformity; the weak culture of accountability that arises in part from the absence of a strong law providing for punitive damages; and the general standard of personal and corporate ethics in Korea.”

One indication of ongoing problems ‒ and efforts to resolve them ‒ was the awarding of ‘prize money’ to 14 whistleblowers in 2019 for reporting violations of nuclear or radiation safety laws to the Nuclear Safety and Security Committee.29

There were another six arrests related to nuclear corruption in 2018 ‒ an outcome that only scratched the surface of the problems according to a whistleblower.30

A recent example of violations of safety regulations occurred at the Hanbit-1 reactor on 10 May 2019. The reactor’s thermal output exceeded safety limits but was kept running for nearly 12 hours when it should have been shut down manually at once.31 In addition, the control rods were operated by a person who does not hold a Reactor Operator’s license.32

References:

  1. Japan’s nuclear scandals and the Fukushima disaster, 2012,https://nuclear.foe.org.au/wp-content/uploads/FUKUSHIMA_BRIEFING_MARCH_2012.pdf
  2. Richard Tanter, 2013, ‘After Fukushima: A Survey of Corruption in the Global Nuclear Power Industry’, Asian Perspectives 37:4,https://muse.jhu.edu/article/713962/pdf
  3. Vladimir Slivyak, December 2014, ‘Russian Nuclear Industry Overview’

http://earthlife.org.za/2014/12/pay-more-with-nuclear-report-4/

http://earthlife.org.za/www/wp-content/uploads/2014/12/russian-nuc-ind-overview.pdf

  1. Reissa Su, 2 May 2015, ‘Russia’s Corruption In Nuclear Industry A US Concern And ‘Threat’ To National Security; FBI Still Investigates’http://www.ibtimes.com.au/russias-corruption-nuclear-industry-us-concern-threat-national-security-fbi-still-investigates
  2. Dr V Prakash, 3 Nov 2014, ‘Koodankulam: Corruption to Impending Disaster – The missing Link?’,https://www.dianuke.org/koodankulam-corruption-to-impending-disaster-the-missing-link/
  3. DiaNuke, 14 April 2013, ‘The Zio-Podolsk Scandal and Koodankulam: Urgent and Must-Read Articles’,https://www.dianuke.org/the-zio-podolsk-scandal-and-koodankulam-urgent-and-must-read-articles/
  4. P.K. Sundaram, 26 April 2013, ‘Scandal Engulfs India’s Koodankulam Nuclear Project’,https://wiseinternational.org/nuclear-monitor/761/scandal-engulfs-india%E2%80%99s-koodankulam-nuclear-project-pk-sundaram
  5. John Monk, 8 June 2020, ‘Top SCANA ex-official to plead guilty to fraud conspiracy in nuclear plant failure’,https://www.thestate.com/news/local/crime/article243356621.html
  6. Abram Mashego, 2019, ”Nuclear deal’ claims first scalp: Necsa’s CEO Phumzile Tshelane’,https://city-press.news24.com/News/nuclear-deal-claims-first-scalp-necsas-ceo-phumzile-tshelane-20190511
  7. World Nuclear Association, 10 Dec 2018, ‘South African government replaces Necsa board’,http://www.world-nuclear-news.org/Articles/South-African-government-replaces-Necsa-board
  8. Hartmut Winkler, 10 Nov 2017, ‘South African president’s last ditch effort to ram through a nuclear power deal’,https://theconversation.com/south-african-presidents-last-ditch-effort-to-ram-through-a-nuclear-power-deal-87018
  9. Nuclear Monitor #835, 6 Dec 2016, ‘Twists and turns in South Africa’s nuclear power program’,https://www.wiseinternational.org/nuclear-monitor/835/twists-and-turns-south-africas-nuclear-power-program
  10. Matthew le Cordeur, 13 Oct 2016, ‘State capture claims: For real? Unpacking #Zupta nuclear conspiracy theory’,http://www.biznews.com/leadership/2016/10/13/state-capture-claims-for-real-unpacking-zupta-nuclear-conspiracy-theory/
  11. Jan-Jan Joubert, 10 Aug 2017, ‘Energy minister investigates R80m in irregularities in nuclear contract’,https://www.timeslive.co.za/politics/2017-08-10-exclusive-energy-minister-investigates-r80-million-in-irregularities-in-nuclear-contract/
  12. Neil Overy, 23 May 2017, ‘How SA’s nuclear plant build could fuel corruption’,https://www.businesslive.co.za/bd/opinion/2017-05-23-how-sas-nuclear-plant-build-could-fuel-corruption/
  13. Nuclear Monitor #835, 6 Dec 2016, ‘Brazil’s nuclear power program undone by corruption’,https://www.wiseinternational.org/nuclear-monitor/835/brazils-nuclear-power-program-undone-corruption
  14. L. Todd Wood, 30 March 2017, ‘Ukrainian corruption casts nuclear pall over Europe’,http://www.washingtontimes.com/news/2017/mar/30/ukrainian-corruption-casts-nuclear-pall-over-all-e/
  15. IAEA, July 2015, Nuclear Technology Review 2015,www.iaea.org/About/Policy/GC/GC59/GC59InfDocuments/English/gc59inf-2_en.pdf
  16. IAEA, 2019, ‘Managing Counterfeit and Fraudulent Items in the Nuclear Industry’,http://www-pub.iaea.org/MTCD/Publications/PDF/P1817_web.pdf
  17. KBS, 8 May 2020, ‘S. Korea Unveils Energy Plan to Reduce Coal-powered, Nuclear Power Plants’,http://world.kbs.co.kr/service/news_view.htm
  18. Nuclear Monitor #878, 23 Sept 2019, ‘South Korea’s corrupt and dangerous nuclear industry’,https://wiseinternational.org/nuclear-monitor/878/south-koreas-corrupt-and-dangerous-nuclear-industry
  19. Philip Andrews-Speed, May 2020, ‘South Korea’s nuclear power industry: recovering from scandal’, Journal of World Energy Law & Business,https://academic.oup.com/jwelb/article/13/1/47/5837954
  20. Korea Institute of Nuclear Safety,www.kins.re.kr/en/ourwork/cfsi.jsp
  21. Choi Kyong-ae, 12 Jan 2014, ‘Hyundai Heavy vows to root out corruption’,http://koreatimes.co.kr/www/news/biz/2014/01/602_149613.html
  22. June Park and Ali Ahmad, 1 March 2018, ‘Risky Business: South Korea’s Secret Military Deal With UAE’, ‘The hidden military pact was meant to seal the UAE-ROK nuclear power plant deal’,https://thediplomat.com/2018/03/risky-business-south-koreas-secret-military-deal-with-uae/
  23. Lee Seung-jun, 10 Jan 2018, ‘Secret military pact likely led to Blue House Chief of Staff’s UAE visit’,http://english.hani.co.kr/arti/english_edition/e_international/827153.html
  24. 4 Jan 2010, ‘ROK FM YU ON ROK’S COMPREHENSIVE DEAL WITH UAE’,https://wikileaks.org/plusd/cables/10SEOUL2_a.html
  25. Jeong Woo-sang and Kim Seung-bum, 10 Jan 2018, ‘Korea and UAE Kiss and Make up’,http://english.chosun.com/site/data/html_dir/2018/01/10/2018011001376.html
  26. Nuclear Safety and Security Committee, 4 Dec 2019, ‘The NSSC Decided to Award Whistleblowers With 48.15 Million Won’,https://www.nssc.go.kr/en/cms/FR_BBS_CON/BoardView.do?SITE_NO=3&BOARD_SEQ=1&BBS_SEQ=45886&MENU_ID=90&CONTENTS_NO=1
  27. Max S. Kim, 22 April 2019, ‘How greed and corruption blew up South Korea’s nuclear industry’,https://www.technologyreview.com/s/613325/how-greed-and-corruption-blew-up-south-koreas-nuclear-industry/
  28. Choi Ha-yan, 21 May 2019, ‘Nuclear reactor kept running for 12 hours after it should have been shut down’,http://english.hani.co.kr/arti/english_edition/e_business/894763.html
  29. https://www.worldnuclearreport.org/The-World-

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