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 U.S. anti-missile system. China agreed to lift those measures in late 2017.
In a sign of a broader crackdown, two other South Korean companies that allegedly supplied Taiwan were also charged in November with breaking trade laws, and one of their chief executives was accused of industrial espionage, according to court records and four people familiar with the matter. Seoul's foreign ministry was "completely against" KHNT's work with Taiwan and signalled its disapproval to DAPA, according to a person familiar with the subcontractor.
A police investigator, who spoke on condition of anonymity to discuss ongoing legal matters, said that there was no pressure from Moon's liberal government, which left office in May 2022, to get tough on SI Innotec.Asked by Reuters for comment, a Chinese Foreign Ministry spokesperson accused Taiwan's ruling Democratic Progressive Party of "colluding with external forces". The spokesperson did not address a question on whether Beijing pressed Seoul about the subcontractors.
Taiwan drew on the expertise of retired South Korean naval officers - including managers at SI Innotec and KHNT - who are not required by defence ministry regulations to seek permission before working overseas. The equipment was not designed solely for military purposes and did not involve sensitive technology, SI Innotec told Reuters.
In response to Reuters questions, the subcontractor said it told DAPA it was exporting dual-use goods, which can undergo a self-certification process that the regulator does not oversee. The results of that self certification showed export approval was not needed and DAPA was informed, SI Innotec said."The accused were fully aware that the subject equipment would be used to manufacture a military submarine", the court ruled.
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