Businessman Sentenced for Telecom Contract Bribery

IDG News Service — A South Korean businessman was sentenced Tuesday to five years in prison for his role in a conspiracy to bribe government officials in an effort to keep a US$206 million telecommunications contract with a U.S. military support organization, the U.S. Department of Justice said.

Gi-Hwan Jeong was also ordered to pay a $50,000 fine by Judge Ed Kinkeade of the U.S. District Court for the Northern District of Texas. Jeong pleaded guilty in June to a five-count indictment charging him with one count of conspiracy, two counts of honest services wire fraud and two counts of bribery.

Jeong's bribes, totaling about $150,000 in cash and other perks, were aimed at persuading Army and Air Force Exchange Service (AAFES) officials to approve and maintain a telecom contract with his company, Samsung Rental, the DOJ said. AAFES is a U.S. government organization that annually provides billions of dollars worth of goods and services to U.S. military members and their families around the world.

Jeong conspired between 2001 and 2006 with AAFES officials, Henry Lee Holloway and Clifton Choy, and others, to commit bribery and honest services wire fraud, the DOJ said in a news release. Jeong offered to make payments to them in the form of cash, travel, entertainment expenses and other things of value in exchange for their aid in securing and maintaining the telecom contract.

Between October 2001 and August 2005, Jeong provided about $80,000 in cash, entertainment and other things of value to Choy, an AAFES services program manager for the Pacific region, in exchange for Choy’s use of official action to benefit Samsung Rental. Before AAFES’ award of the telecommunications contract to Samsung Rental in 2001, Choy used his official position to gain access to confidential bid proposal information that competing bidders had submitted to AAFES and passed the information to Jeong.

Shortly after AAFES awarded the contract to Samsung Rental, Jeong paid $20,000 in cash to Choy, who died in 2008, the DOJ said.

From May 2003 to April 2005, Jeong also provided about $70,000 in cash, entertainment, travel expenses, stock options and other things of value to Holloway, the DOJ said.

Holloway, an AAFES general store manager for several U.S. military bases in South Korea, was in a position to terminate of AAFES’ contract with Samsung Rental following allegations of performance-related problems with the contract, the DOJ said. After Jeong began the payments, Holloway used official acts and influence to support the contract.

On April 21, Holloway, 42, of Hamilton, Georgia, pleaded guilty In U.S. District Court for the Middle District of Georgia for his role in the conspiracy and for not reporting the bribes he admitted he accepted on his income tax returns. Holloway’s sentencing is scheduled for Dec. 16.