Criminal

Defense Industry Law Lawyer

Defense Industry Law Lawyer | Advisory Before the Investigation Starts

Summary

Defense industry legal matters sit at the intersection of criminal law, national security regulation, and government contracting rules. A company can be exposed to criminal liability under the Defense Acquisition Program Act (방위사업법), the Defense Technology Security Act (방위산업기술 보호법), or general trade secret provisions in the Unfair Competition Prevention Act (부정경쟁방지 및 영업비밀보호에 관한 법률) even where no one intended wrongdoing. Because these statutes carry criminal penalties in addition to administrative sanctions such as suspension from bidding, early advisory review of contracts, technology transfer plans, and internal compliance systems is usually more effective than reacting after an investigation opens.

Criminal · Defense Industry Related law: 방위사업법 Related law: 방위산업기술 보호법 Advisory

Defense Industry Law | Risk Under the Defense Acquisition Program Act

Much of the criminal exposure in this field comes from the Defense Acquisition Program Act (방위사업법), which regulates how defense contractors bid for, perform, and report on government contracts.

Bid rigging and false performance reporting

Collusion among bidders or submission of false cost or performance data in a defense procurement bid can lead to recovery of unjust profits with a surcharge of up to twice that amount and suspension from future bidding, and may also be prosecuted as fraud or bid obstruction (방위사업법 제58조, 제59조). Because defense contracts often involve subcontractor chains, a violation by a supplier can also implicate the prime contractor if oversight duties were neglected.

Diversion or misuse of government-furnished technology

Where a company receives technical data or equipment from the government for a specific project, using it outside the approved scope can be treated as a violation of the Act's technology management provisions. Internal review of how such materials are tracked and who has access is one of the first things counsel typically checks.

Administrative sanctions run in parallel with criminal exposure

A finding of wrongdoing frequently leads to both a criminal referral and an administrative disposition such as debarment from bidding for a fixed period. Because these two tracks proceed somewhat independently, a response strategy usually needs to address both at once rather than treating the criminal case in isolation.

Defense Industry Law | Military Secret and Defense Technology Leak Allegations

Allegations of leaking defense technology or military secrets are among the most severe risks in this sector, because they can implicate both national security statutes and trade secret law simultaneously.

Military Secrets Protection Act exposure

Disclosing or acquiring a designated military secret without authorization can be prosecuted under the Military Secrets Protection Act (군사기밀보호법), which applies not only to current employees but also to former employees and third parties who receive the information. Whether the information at issue was properly designated as a military secret at the relevant time is often the first factual question in these cases.

Designated defense technology under the Defense Technology Security Act

Separately, the Defense Technology Security Act (방위산업기술 보호법) protects a list of technologies designated by the government as core defense technologies, and unauthorized export or transfer of such technology overseas can carry criminal penalties (방위산업기술 보호법 제21조). This applies even to technology developed by a private company if it has been formally designated.

Employee movement between defense companies

When an engineer or researcher moves to a competitor or a foreign company, the departing company may allege that trade secrets or designated defense technology left with them. These disputes often turn on whether the information was properly protected as confidential under internal policy, which affects both criminal exposure and any related civil claim (부정경쟁방지 및 영업비밀보호에 관한 법률 제2조).

⚠ Short reporting windows for certain disclosures

Some notification obligations tied to designated technology exports or security incidents have short statutory or regulatory deadlines. Missing a required report can itself become a separate compliance issue, so this is usually checked early in an advisory review.

Defense Industry Law | Export Control and Arms Trafficking Risk

Cross-border transactions involving defense articles are subject to a licensing regime, and unlicensed export or brokering can lead to criminal charges even where the underlying business relationship appeared legitimate.

Foreign Trade Act licensing requirements

Export of items on the strategic items control list, including many dual-use and defense-related goods, requires a permit under the Foreign Trade Act (대외무역법), and exporting without the required permit can result in criminal liability regardless of the exporter's belief about the end use (대외무역법 제53조).

End-use and end-user verification

Because export control violations often arise from inadequate end-use checks rather than intentional evasion, reviewing a company's due diligence process for verifying the buyer and final destination is a core part of advisory work in this area.

Brokering and intermediary liability

Individuals or firms that arrange or facilitate a defense-related transaction between two other parties can also be exposed even if they never take physical possession of the goods, since brokering itself can fall within the regulated conduct.

Defense Industry Law | From Initial Review to Ongoing Compliance

Initial fact and document review
Counsel reviews the relevant contract, technology designation status, internal compliance records, and any communications with regulators or investigators to map out where the actual exposure lies.

Risk assessment across parallel tracks
Because defense industry matters often involve criminal, administrative, and contractual risk at the same time, the review identifies which agency or authority may act and on what timeline.

Response strategy and, where relevant, investigator contact
If an investigation has already begun, counsel prepares the company or individual for interviews and coordinates the response to document requests, while flagging any immediate reporting obligations.

Internal compliance and preventive measures
Where the matter is still at the advisory stage, counsel helps design or revise internal controls around technology access, subcontractor management, and export screening to reduce recurrence.

Follow-up and monitoring
For ongoing government contractors, periodic review of new contracts or technology designations helps catch emerging issues before they become disputes.

Defense Industry Law | How Fees Are Set for Defense Industry Advisory Work

Advisory retainer
Ongoing advisory relationships are typically billed on a retainer basis calibrated to the frequency of contract reviews and compliance questions, rather than a flat one-time fee.

Investigation defense fee
If a matter has escalated to a criminal investigation or administrative sanction proceeding, fees are usually set based on the complexity of the allegations and the number of proceedings running in parallel (criminal, administrative, civil).

Document and technical review costs
Cases involving technology designation disputes or export classification questions may require review of technical documentation, which can affect the scope of work and associated cost.

Success-linked fees
Where applicable and permitted, a portion of fees tied to specific favorable outcomes (such as avoiding debarment or a reduced sanction) may be discussed, but this depends on the nature of the matter.

※ Costs vary depending on case complexity and specific circumstances; exact fees will be provided during consultation. No specific outcome is guaranteed.

Defense Industry Law | Self-Check Before You Call

1️⃣ For Companies Facing a DAPA Investigation

Has your company received a formal request for materials from the Defense Acquisition Program Administration or a related agency?
Do you know whether the allegation concerns bid rigging, false reporting, or misuse of government-furnished technology?
Have you preserved relevant contract and communication records rather than deleting or altering them?
Is there a risk of administrative debarment running alongside any criminal referral?

2️⃣ For Individuals Under Military Secret or Tech Leak Suspicion

Was the information you are accused of disclosing formally designated as a military secret or core defense technology at the time?
Did you receive or transmit the information in the course of your normal job duties?
Are you a current employee, former employee, or third-party recipient — because liability standards can differ?
Have you been contacted by investigators, and if so, have you sought advice before your first interview?

3️⃣ For Exporters and Brokers

Does the item you are exporting or brokering appear on the strategic items control list?
Have you verified the end user and end use of the goods, and do you have documentation of that verification?
Are you aware of any sanctions or restrictions applicable to the destination country?
If you are acting as an intermediary, have you confirmed whether your role itself requires a license?

4️⃣ For Companies Building Preventive Compliance

Does your company have a written policy restricting access to designated defense technology?
Are subcontractors and partners subject to contractual confidentiality and compliance obligations?
Is there a clear internal process for reporting a suspected leak or export control issue promptly?
Has your compliance program been reviewed since the last update to relevant designation lists or regulations?

Frequently Asked Questions

Q. What makes defense industry cases different from ordinary corporate criminal cases?

A. Defense industry matters often involve overlapping criminal, administrative, and national security regimes at the same time, such as the Defense Acquisition Program Act (방위사업법) and the Military Secrets Protection Act (군사기밀보호법). A single set of facts can trigger a criminal investigation, a debarment proceeding, and a separate security review, so the response usually needs to be coordinated across all three.

Q. Can a company be held liable for a subcontractor's misconduct?

A. It depends on whether the prime contractor had oversight obligations that were neglected and whether it knew or should have known about the issue. This is a fact-specific question that is often reviewed early in an advisory engagement.

Q. What should we do if investigators show up at our office?

A. Employees should cooperate with lawful requests but are not obligated to answer every question without first understanding the scope of the investigation and their own role. Getting advice before the first substantive interview, where practically possible, tends to reduce the risk of statements being used out of context later.

Q. Is it a crime to simply possess a document containing a military secret?

A. Liability under the Military Secrets Protection Act (군사기밀보호법) generally turns on how the secret was obtained and what was done with it, not mere passive possession alone. The specific facts of acquisition and handling matter significantly.

Q. How is a 'designated defense technology' determined?

A. The government maintains and periodically updates a list of technologies designated as core defense technologies under the Defense Technology Security Act (방위산업기술 보호법). Whether a specific piece of technology falls within a current designation is a factual and often technical question that may require review of the designation notice itself.

Q. Do export control rules apply even to civilian-use components?

A. Yes, in some cases. Dual-use items with both civilian and military applications can appear on the strategic items control list under the Foreign Trade Act (대외무역법), so the intended end use does not automatically exempt an item from licensing requirements.

Q. What happens if our company is suspended from bidding on defense contracts?

A. A bidding suspension (debarment) is an administrative sanction that runs separately from any criminal case, though the two are often related. The length and scope of a suspension depend on the nature of the violation and applicable regulations, and in some circumstances a company can seek administrative or judicial review of the sanction.

Q. Should we set up a compliance program before any problem arises?

A. Yes — most of the exposure in this field comes from gaps in internal controls around technology access, subcontractor management, and export screening rather than intentional wrongdoing. A periodic compliance review can catch these gaps before they become an investigation.

Q. Can a former employee who moved to a competitor be prosecuted for something they remember rather than took documents for?

A. It is possible in principle if the information qualifies as a protected trade secret or designated defense technology and was used or disclosed, but proving that purely memorized information was actually used can be factually difficult. These cases often turn heavily on the specific evidence available.

Q. Does a foreign parent company's involvement change the legal exposure?

A. It can. Transfers of technology or information to a foreign parent or affiliate may themselves be treated as an export or technology transfer requiring authorization, so corporate structure and reporting lines are often reviewed specifically in cross-border defense industry matters.