A Korea Aerospace Research Institute (KARI) employee established a startup that effectively outsourced his own job duties while still employed at the institute, signing contracts worth more than 40 billion won with KARI, an audit by the Korea AeroSpace Administration (KASA) has revealed. The findings raise concerns that the startup support program at government-funded research institutes — designed to help commercialize R&D outcomes — has been exploited as a channel for personal gain by a specific employee.
KASA released the "KARI Comprehensive Audit Report" containing these findings on the 15th. According to the report, former KARI employee A signed a total of 66 contracts worth 40.16 billion won with KARI starting in 2018, through a startup he founded and another company he acquired.
In 2018, while still employed, A established a company whose business areas covered satellite frequency acquisition, analysis and registration — the very duties he was handling at KARI — and applied for startup leave in 2019. During the leave period in 2020, he acquired a service contractor that had been performing satellite operations work with his original department, operated it as a subsidiary of his startup, and took the position of CEO.
Through these companies, A signed a total of 66 contracts with KARI, of which 57 — all but nine — were no-bid contracts. In particular, 20 service contracts related to low-Earth orbit satellite frequencies signed with the startup attracted no other bidders, effectively making them exclusive deals. Most of the contracts were signed during A's startup leave period while he was still affiliated with KARI, and eight additional contracts were signed even after his retirement.
KASA concluded that A's startup undermined the purpose of the institute's startup support program. KARI was at that time under the National Research Council of Science & Technology (NST), and both the NST guidelines and KARI's startup support regulations prohibit startups that outsource the founder's existing job duties. However, the audit confirmed that KARI had approved A's startup despite knowing he was launching it in the same business area he had been handling.
Signs of preferential treatment also emerged during the contracting process. In some bidding rounds, evaluation criteria were structured so that A's company — a newly established firm — could receive favorable scores, and when another company raised objections about unfairness, KARI did not accept them. As a result, that company judged the bidding to be effectively disadvantageous and withdrew.
There were also indications that A had received non-public information about contracts in advance and provided meals to KARI employees. According to the audit report, before one service project was launched, A received contract-related information by email from a KARI employee, including a draft request for proposal and negotiation price standards. A's company subsequently submitted the sole bid and signed a no-bid contract. The audit also found that during the contracting process, he provided meals worth a total of 220,000 won to eight or nine KARI employees.
A argued that there were no domestic specialized firms in the field, so the startup was in line with the purpose of the support program, and that he had informed the institute about the acquired company when applying to extend his leave, meaning it was not an intentional violation of regulations. However, KASA did not accept this argument.
KASA notified KARI to file a criminal complaint against A on charges including violation of the Improper Solicitation and Graft Act. It also demanded heavy disciplinary action, disciplinary measures and warnings against employees who provided non-public information during the contracting process or failed to fulfill their obligations to declare or recuse themselves from conflicts of interest. KARI said, "We are reviewing follow-up measures against the company in question based on the audit results, and we are also conducting a legal review of contract-related matters," adding, "We will pursue institutional improvements to prevent recurrence."
