Scandal in South Korea Over Nuclear Revelations

SEOUL, South Korea — Like Japan, resource-poor South Korea has long relied on nuclear power to provide the cheap electricity that helped build its miracle economy. For years, it met one-third of its electricity needs with nuclear power, similar to Japan's level of dependence before the 2011 disaster at its Fukushima plant.

Now, a snowballing scandal in South Korea about bribery and faked safety tests for critical plant equipment has highlighted yet another similarity: experts say both countries' nuclear programs suffer from a culture of collusion that has undermined their safety. Weeks of revelations about the close ties between South Korea's nuclear power companies, their suppliers and testing companies have led the prime minister to liken the industry to a mafia.

The scandal started after an anonymous tip in April prompted an official investigation. Prosecutors have indicted some officials at a testing company on charges of faking safety tests on parts for the plants. Some officials at the state-financed company that designs nuclear power plants were also indicted on charges of taking bribes from testing company officials in return for accepting those substandard parts.

Worse yet, investigators discovered that the questionable components are installed in 14 of South Korea's 23 nuclear power plants. The country has already shuttered three of those reactors temporarily because the questionable parts used there were important, and more closings could follow as investigators wade through more than 120,000 test certificates filed over the past decade to see if more may have been falsified.

In a further indication of the possible breadth of the problems, prosecutors recently raided the offices of 30 more suppliers suspected of also providing parts with faked quality certificates and said they would investigate other testing companies.

"What has been revealed so far may be the tip of an iceberg," said Kune Y. Suh, a professor of nuclear engineering at Seoul National University.

With each new revelation, South Koreans — who, like the Japanese, had grown to believe their leaders' soothing claims about nuclear safety — have become more jittery. Safety is the biggest concern, but the scandals have also caused economic worries. At a time of slowing growth, the government had loudly promoted its plans to become a major builder of nuclear power plants abroad.

The scandal, Professor Suh said, "makes it difficult to continue claiming to build reliable nuclear power plants cheaply."

South Koreans say they are already suffering for the industry's sins. The closing of the three reactors, in addition to another three offline for scheduled maintenance, has led the country's leaders to order a nationwide energy-saving campaign in the middle of a particularly muggy summer. At university campuses, students have deserted the libraries for cooler Internet cafes, and major corporations have turned down air-conditioning.

President Park Geun-hye has kept off her own air-conditioning even when she hosted foreign guests, including Mark Zuckerberg, the chief executive of Facebook. And some entrepreneurs have capitalized on the troubles, selling "cool scarves" made of a special fabric that, after being dipped in water, keeps wearers cool for hours. But the modeling and creativity have not stopped the grousing, or alleviated anger at the industry.

Critics of South Korea's nuclear industry say there were plenty of warning signs.

Last year, the government was forced to shut down two reactors temporarily after it learned that parts suppliers — some of whom were later convicted — had fabricated the safety-test certificates for more than 10,000 components over 10 years. But the government emphasized at the time that those parts were "nonessential" items and that the industry was otherwise sound.

The investigation that began this spring suggested that the oversight within the supply chain may also be more deeply compromised. A company that was supposed to test reactor parts skipped portions of the exams, doctored test data or even issued safety certificates for parts that failed its tests, according to government investigators. And this time the parts involved included more important items. Among the parts that failed the tests were cables used to send signals to activate emergency measures in an accident.

"This is not a simple negligence or mistake; this is a deliberate fabrication by those who were supposed to safeguard the reliability of parts," said Kim Yong-soo, a professor of nuclear engineering at Hanyang University in Seoul. "It raises serious questions about the immune system of our nuclear power industry."

Although much remains unclear with the investigations under way, experts say they know enough to pinpoint the underlying cause of the scandal: an industry that is even more highly centralized than Japan's, with poor oversight on the relations among the major players.

While Japan has a small number of utilities that provide nuclear power, South Korea has just one: the state-run Korea Electric Power Corporation, or Kepco. One of its subsidiaries, Korea Hydro & Nuclear Power, runs all the plants. Another, Kepco Engineering & Construction, designs them and is tasked with inspecting parts from suppliers and vetting the safety certificates they include from testing companies.

Over the years, senior retirees from the two subsidiaries have found jobs with parts suppliers and testing companies or invested in them, according to industry data submitted to the National Assembly.

In a culture where honoring personal ties is often considered more important than following regulations, the porous borders among the members of the supply chain resulted in what government officials and industry experts call an "entrenched chain of corruption." Important school and hometown connections among the groups further cemented the collusive links, they said. And then there is the lure of bribery, which has often lubricated relationships between South Korean parts suppliers and their buyers in various industries.

"In the past 30 years, our nuclear energy industry has become an increasingly closed community that emphasized its specialty in dealing with nuclear materials and yet allowed little oversight and intervention," the government's Ministry of Trade, Industry and Energy said in a recent report to lawmakers. "It spawned a litany of corruption, an opaque system and a business practice replete with complacency."

In the current scandal, Korea Hydro officials are accused of ordering Kepco E & C to ignore faked certificates from the testing firm Saehan Total Engineering Provider Company. The testing company's top officials and investors included current and former employees from Kepco E & C or their family members. (Although the company was called for comment several times in recent days, no one picked up the main line.)

But the problems appear to go beyond testing. At the home of one of the Korea Hydro officials, investigators found boxes of cash amounting to several hundred thousand dollars. Investigators tracing the origin of the money recently arrested officials of Hyundai Heavy Industries, a major parts supplier, on bribery charges. Prosecutors said the money was meant to ensure contracts for Hyundai Heavy and appeared not to be part of the scandal over testing certificates.

In a statement jointly issued in June, Korea Hydro, Kepco E & C and two other state-financed nuclear industry companies promised "self-purification measures." To "root out corruption arising from collusive ties," they said they would make it mandatory for senior officials to make public their personal assets, ban all employees from buying stocks in suppliers or getting jobs there after retirement, and reduce the retirement package benefits for those fired for corruption.

Amid a public uproar, the government fired the heads of both the Kepco subsidiaries. It also promised to enact new laws and tighten regulations to ban retirees from the two subsidiaries from getting jobs at suppliers and test agencies.

Political opposition parties, which control some seats on the Nuclear Safety and Security Commission — the top nuclear watchdog, which has long been criticized as being too cozy with the industry — recently added two critics of nuclear power to the regulatory group. But many worry the changes, and promised changes, will not be enough.

After last year's scandal, the government had vowed to keep parts suppliers found to have falsified documents from bidding again for 10 years. But in February, Korea Hydro imposed only a six-month penalty for such suppliers. And nuclear opponents say that more fundamental changes are needed in the regulatory system, pointing out that one of the government's main regulating arms, the Korea Institute of Nuclear Safety, gets 60 percent of its annual budget from Korea Hydro.

Some go further, saying ordinary South Koreans will have to change their own expectations before real change can occur.

The nuclear industry, they say, was built around the notion that South Korea's industries needed inexpensive power, leading Kepco to build plants quickly and operate them cheaply.

"South Koreans have guzzled cheap electricity while turning a blind eye to the safety concerns of their nuclear power plants," said Yang Lee Won-young, a leader at the Korean Federation for Environmental Movement. "They may end up paying dearly."