Prosecutors take over in power plant scandal

SOUTH KOREA - Korea Hydro & Nuclear Power (KNHP) said that it asked the prosecution to investigate a bribery case involving the state-run company, after executives from a California-based valve company pleaded guilty to conspiring to pay about $628,000 in bribes to officials in an effort to secure business contracts.

“We did our best to get to the root of the case but had difficulties because there are limitations on what we can do in the inquiry, which is why we requested the investigation,” a KNHP spokesman said.

The power firm said it will impose strict punishment on any employee who proved to have been bribed by the American company and will establish plans to promote transparency and efficiency in the organization.

The KNHP, a subsidiary of the Korea Electric Power Corp., secured a statement from Richard Morlok, a former finance director of the U.S. company who pleaded guilty to violation of the Foreign Corrupt Practices Act, saying that he sent $57,000 in kickbacks to a Korean bank account under “for whom it may concern in the KNHP,” in 2004.

U.S. authorities didn't disclose the name of the valve company, citing further investigations.

Morlok admitted that from 2003 through 2006, he caused employees and agents of the company to make corrupt payments totaling some $628,000 to foreign officials employed at state-owned enterprises in order to assist the obtainment and retention of business.

According to court documents, the illegal payments were made to foreign officials at several Asian and European state-owned entities, including the KNHP. Morlok is scheduled for sentencing in July.

The California-based company designs and manufactures service control valves for use in the nuclear energy, oil, gas, and power generation industries worldwide. The company sold its products in approximately 30 countries around the world, including South Korea.

Morlok, who faces up to five years in prison, was in charge of the company's financial operations from 2002 to 2007 and was responsible for approving commission payments and signing off on wire transfers to the recipients. He said the company earned approximately $3.5 million in profit from the contracts it obtained as a result of the payments.