LIG Defense and Aerospace is experiencing a significant drop in its stock price following news of sanctions from the Defense Acquisition Program Administration (DAPA) regarding its bidding qualifications.
As of 1:05 PM on October 21, LIG Defense and Aerospace shares were trading at 475,000 won, down 73,000 won (13.32%) from the previous trading day. The stock opened at 504,000 won and briefly fell to 460,000 won during the session. Although there was a slight rebound, the stock is still recording a double-digit decline.
The decline in stock price is attributed to weakened investor sentiment following the DAPA sanctions.
On the previous day, DAPA imposed a two-year ban on LIG Defense and Aerospace from participating in bids due to allegations of bribing a DAPA employee with hundreds of millions of won during the weapon development bidding process.
According to DAPA, the Defense Acquisition Contract Review Committee determined the severity of the sanctions based on factors including the largest bribery amount since DAPA's establishment, long-term planned misconduct involving cost fraud, and the negative impact of such misconduct on national security and overall trust in defense procurement.
The 'Act on Contracts to Which the State is a Party' defines a participant or contractor who engages in illegal activities during the bidding or contract execution process as a 'disqualified contractor,' prohibiting them from participating in bids for a specified period.
Article 27 of the same law stipulates that disqualified contractors can be barred from bidding for up to two years. This sanction represents the highest level of penalty.
Previously, a DAPA official was arrested and indicted in July for allegedly receiving approximately 460 million won in bribes from employees of defense companies, including LIG Defense and Aerospace, during the weapon development bidding process.
* This article has been translated by AI.
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