LIG Defense and Aerospace (D&A) is experiencing a significant decline in its stock price due to concerns over potential additional sanctions related to bribery allegations involving one of its executives.
As of 9:43 a.m. on October 26, LIG D&A shares were trading at 436,500 won, down 39,000 won (8.20%) from the previous trading day. The stock opened down 7.68% and briefly fell to 432,500 won, marking a 9.04% drop at one point.
The sharp decline in LIG D&A's stock is attributed to news that the Defense Acquisition Program Administration (DAPA) requested the Ministry of Trade, Industry and Energy to review the cancellation of the company's designation as a defense contractor in relation to a small unmanned aerial vehicle response system project.
The defense contractor designation system allows for negotiated contracts with designated defense companies for weapon systems that cannot be reliably procured through market competition. LIG D&A was designated as a defense contractor when it participated in the development of the small unmanned aerial vehicle response system in 2022.
Previously, the Suwon District Prosecutor's Office confirmed that an executive from LIG D&A had allegedly offered bribes worth millions of won to a DAPA employee during the bidding process for several weapon development projects, including the small unmanned aerial vehicle response system. Following this, DAPA held a Defense Business Contract Review Committee meeting on October 20 and decided to impose a two-year restriction on LIG D&A's bidding eligibility. On October 25, DAPA requested the Ministry of Industry to review the cancellation of the company's defense contractor designation.
While the two-year bidding restriction limits participation in new bids, the cancellation of the defense contractor designation would prevent LIG D&A from participating in negotiated contracts for the mass production of the small unmanned aerial vehicle response system.
In response to the two-year bidding restriction, LIG D&A stated, "We plan to take legal action through a request for suspension of the enforcement of the sanctions and a cancellation lawsuit. If a decision is made to suspend the administrative action, our bidding eligibility will not be affected until the ruling on the cancellation lawsuit is made."
* This article has been translated by AI.
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