A very strange spy scandal is brewing between (South) Korea and China. Acting on a tip of the (South) Korean National Intelligence Service (the Korean equivalent of  the CIA and FBI rolled into one,)  Korean state prosecutors accused China’s SAIC of stealing sensitive state secrets from Korea.

Then, they indicted seven senior Korean engineers at Korea’s Ssangyong on charges of leaking technology essential to develop hybrid cars.

According to Korea Times, the prosecutors said they had no plans to take legal action against SAIC. SAIC had taken over a 48.9-percent stake in Ssangyong in January 2005. When Ssangyong hit a bumpy road beginning this year, SAIC refused to bail them out. The company went bankrupt, and a two month bloody war erupted between laid-off workers and police.

In June 2004, Ssangyong Motor developed a “Hybrid Control Unit” (HCU) together with the German company FEV. The Korean government provided nearly half of the funds needed for the development. This provides the legal grounds the prosecution used to state that Ssangyong’s transfer of subsidized homegrown technologies was done without state permission.

It is alleged that SAIC pressured Ssangyong engineers involved in the development.
According to the prosecutors, the seven accused succumbed and gave the technology to SAIC without state permission in July 2006. The accused received no money for the information, they did what they were told.

At the beginning of the investigation, Ssangyong denied the allegation. The scandal culminated in claims that SAIC had taken over the debt-ridden Korean company to “steal” expensive technologies Ssangyong had developed, “and then threw the company away.” One would think there are cheaper ways of getting the hard and software of a microcontroller than buying the shares of a company and then taking it bankrupt. But what does one know.