Former Bar Owner With Checkered Past : Northrop’s $102,000-a-Year Korean Connection

When Northrop sought to hire a consultant in 1983 with influential connections in the South Korean government and a shrewd understanding of international arms trading, it went to Jimmy K. Shin.

Shin, known in Honolulu as a gregarious and high-stakes operator who drives a Rolls Royce Silver Shadow, was put on the Northrop payroll for $102,000 per year to help sell the company’s F-20 jet fighter to South Korea.

But Shin, a former bar owner with a checkered past, was not the U.S. aerospace industry’s ordinary corporate representative with an appropriately conservative background.

And Northrop’s South Korean business dealings have turned out to be anything but ordinary. The Los Angeles-based firm is under congressional investigation and Justice Department review to determine whether two agreements it made with South Korean concerns to help sell the F-20 to the South Korean air force involved illegal influence-peddling.

A South Korean government investigation has found that some of the people that Northrop dealt with in its ventures in that country had connections with organized crime gangs in Asia, according to sources familiar with the findings.

In part, Northrop wanted to hire the Korea-born Shin, who is now 51, because of his connections with the late Chong Kyu Park, once the chief bodyguard to a president of South Korea and a politically powerful dealer there with his own wide business interests.

After an introduction by Shin, Northrop made two agreements with organizations controlled by Park to obtain his political help. The firm eventually paid $7.75 million to Park’s groups and is suing in Seoul to try to recover the bulk of the money.

Shin played a pivotal role in the events that unfolded between 1983 and 1986, when Northrop’s corporate officers became involved in a frantic effort to sell the F-20. Eventually, the F-20 program failed, without one plane being sold, after having consumed $1.2 billion of company’s money.

The job Shin took consulting for Northrop seemed to mark a high point in his business career.

Before his dealings with Northrop, Shin was part owner of a Honolulu bar, known as the S Palace. The club was the site of a 1974 gambling raid in which Honolulu police arrested 30 persons, seized three blackjack tables and confiscated several guns.

Shin has operated a series of retail businesses in Honolulu with varying degrees of success, including an ice cream store at a large Hilton resort on Waikiki Beach.

On at least four occasions, Shin’s association with those ventures landed him in Hawaii Circuit Court, where he was sued for non-payment of loans. On at least one occasion, assets were ordered garnisheed by the court.

Before his arrival in Hawaii in 1971, Shin operated a bar in Saigon during the Vietnam War, catering to American servicemen and called the Saigon Recreation Center. He served in the South Korean Marine Corps from 1962 to 1967. According to those who know him, Shin grew up in his native South Korea and went to high school there.

Shin did not respond to repeated efforts to contact him by telephone and in person at his Honolulu home.

A Northrop spokesman declined to discuss in detail the arrangements between Shin and the company, including payments to him. However, he confirmed that Shin was a paid consultant for Northrop from 1983 to 1986.

As for Shin’s background in the bar business, the spokesman said: “The company was not aware of Mr. Shin’s background at the time.”

Northrop has portrayed itself as a victim of fraud in the two South Korean agreements that it signed, and it has filed a civil law suit in Korea to recover $6.25 million that it paid into one of the ventures.

3 Executives Depart

The spokesman said: “Part of our pursuit is to determine in what way Mr. Shin may have benefited and, if so, to take appropriate legal action.”

Shin was apparently recruited by James A. Dorsey, a Northrop vice president responsible for marketing the F-20 jet fighter in the Pacific region.

Dorsey, who retired earlier this year, is one of at least three key Northrop executives who have left the company at the same time that an investigation of Northrop’s Korean dealings is being pursued by an outside law firm at the behest of Northrop’s board of directors. Dorsey said he took normal retirement at age 67.

How Dorsey came to find Shin is not entirely clear, but Dorsey said in a recent interview that his introduction to Shin came from June Shin Lee, Shin’s sister.

“I know June Lee very well,” Dorsey said. “I have known her for years. She lived here in the building.”

Rules on Consultants

The building Dorsey referred to is a condominium at the Hilton Hawaiian Village on Waikiki Beach. Dorsey operated Northrop’s Pacific marketing headquarters from an office at the resort, where June Shin Lee has long held as many as six important retail leases, according to Hilton officials. June Shin Lee and her husband, U.S. Army Col. Bernard Lee, declined to comment on Jim Shin’s association with Northrop or the family businesses.

Shin also formerly owned the Village Ice Cream Parlor at the Hilton resort until 1980, when he was forced to sell the store for $60,000 to satisfy a divorce settlement with his third wife, Ok Ja Hyun Shin, according to a copy of the settlement obtained by The Times.

Northrop’s internal rules that cover the hiring of consultants are quite strict and could have been used to rule out hiring Shin. The rules are laid out in a document called Corporate Policy Directive No. 76, signed by Northrop Chairman Thomas V. Jones and issued Oct. 20, 1981. A copy of the document was obtained by The Times.

Among other requirements, the rules state that before entering into a consulting agreement, Northrop management must determine “the prospective consultant’s qualifications . . . and the names of other representative clients of the consultant.” It also warns against activities that might “embarrass” the corporation.

Dorsey said in the telephone interview that he was not aware of Shin’s background. “If I had known, I probably would not have had anything to do with him,” Dorsey said.

Legal Troubles

But after only two days of research, a Times reporter was able to collect information about Shin that might reasonably have raised questions about the wisdom of signing a consulting agreement with him.

A former Northrop official who had criticized the Korean deals at the time they were made, said: “Either the men at the top knew and condoned Shin or they accepted the word of their subordinates without question. I can’t see any other explanation.”

The Honolulu Liquor Commission found in 1975 that the S Palace, Shin’s bar was in violation of five commission regulations as a result of the gambling operation that was being run in an upstairs room the previous year, according to public documents on file.

In the gambling raid on the S Palace, police confiscated a 12-gauge shotgun, a .30-caliber rifle and two 9-millimeter pistols. Two men were eventually found guilty of misdemeanor gambling charges, two were fined for hindering prosecution and 27 others were ordered to forfeit bail. Shin was not on the premises at the time of the raid and was not charged with any offense.

Colorful Nightclub

The S Palace made more headlines in the Honolulu Advertiser in 1975 when Shin recruited 24 young women from Korea to work as hostesses at his bar for $50 per month, plus room and board.

Shin attempted to take legal action against one of the hostesses after she eloped with a customer. Shin said the women had all signed a contracts forbidding them from marrying while working at the club. He sought a $4,500 penalty against the hostess who had eloped, according to the newspaper account.

The South Korean consulate in Hawaii said at the time that the contracts were sanctioned by the government of South Korea and were legitimate under the laws of that nation. The U.S. Justice Department looked into the agreement but apparently took no action.

The nightclub attracted police attention later in 1975 when U.S. Army Specialist 5 Kyo Woon Lee, a martial arts expert stationed in Hawaii, was found shot to death in a Honolulu park. (Lee is not related to June Shin Lee.) Kyo Woon Lee, who was a well known tae kwon do expert, was employed by the club and may have become involved in gang activities, according to Honolulu homicide detectives and liquor commission investigators interviewed by The Times. The case remains unsolved.

Upon hearing of Northrop’s troubles with Shin, John A. Carroll, chief investigator for the Honolulu Liquor Commission, said: “Gee, they should have checked out his credentials. Old Jimmy Shin was a wheeler-dealer.”

‘A Known Hoodlum’

According to state records, the S Palace was operated by the Rib Joynt Inc., which was co-owned by Shin and Bo Sook Park, a resident of South Korea. Bo Sook Park is not related to Chong Kyu Park.

According to liquor commission records, Bo Sook Park was an officer in the South Korean army between 1956 and 1965 and later ran a series of companies in South Korea.

Bo Sook Park continued his affiliation with Shin in the Northrop affair, according to the South Korean government investigation. Bo Sook Park, who is described by the government investigators as “a known hoodlum,” worked with Shin in obtaining $400,000 that Northrop paid to organizations controlled by Chong Kyu Park.

The $400,000 was ostensibly Shin’s share of a $1.5-million payment made by Northrop to get out of its two agreements with the Koreans. The Korean investigation found that Shin and Bo Sook Park split the $400,000.

One of the agreements Northrop signed was with the Dong Yang Express Group, which agreed to help sell the F-20 to the South Korean government for a 2% commission, with a maximum payment of $55 million. Northrop signed a separate agreement with the Asia Culture Travel Development Co. to build a hotel on property owned by Park. Both organizations were controlled by Chong Kyu Park.

Conflict of Interest

But at the same time that Shin was earning $102,000 a year as a consultant for Northrop, he signed another agreement with Dong Yang to take a 25% cut of its sales commissions from Northrop, according to documents obtained by The Times. The size of Shin’s income from Northrop was disclosed in court papers filed in connection with his pending divorce from his fourth wife.

Shin’s dual arrangements with Dong Yang and Northorp clearly constituted a conflict of interest and would not have been permitted under Northrop’s policies, according to former company executives who said they criticized the South Korean connections within Northrop.

It is not clear how much Shin helped Northrop, but he was able to arrange several meetings between Northrop executives and Chong Kyu Park, including one between Park and Northrop Chairman Jones.

Ernest E. Tissot, Northrop’s executive director for the Far East, said in a telephone interview in Los Angeles that he knew little about Dorsey’s or Shin’s activities. But he acknowledged that he attended a party in Seoul at Shin’s invitation where he met Chong Kyu Park in 1984. Tissot said he believed that the party was held at the Safari Club, a nightclub owned by Park.

“To the best of my knowledge, he (Shin) is very well connected in Korea, including with C. K. Park,” Dorsey said.

Denies Wrongdoing

For a while in 1984 and 1985, Shin did his consulting work out of Northrop’s Century City headquarters. He owned a condominium at the nearby Le Parc development.

It was not until 1986 that Northrop came to distrust Shin and terminated his consulting contract, according to a letter Shin wrote.

In an effort to restore his connections with Northrop, Shin sent the personal letter to Jones in December, 1986, a copy of which was obtained by The Times. In it, Shin said Northrop’s agreements with Dong Yang and Asia Culture were part of a “sales promotion” plan in which funds would be “diverted” for influence peddling. He said the plan was known to key Northrop executives.

Northrop has denied any wrongdoing and said its agreement with Dong Yang was a legitimate business deal and that the arrangement with Asia Culture to build the hotel was an offset agreement of a type common in the aerospace industry.

If Northrop actually decides that Shin defrauded the firm and a lawsuit is filed against him, Northrop will become one of a long list of plaintiffs who have sued Shin.

Friendly Collectors of Honolulu sued Shin in 1974 for failing to repay part of a loan to him and his S Palace. The court eventually ordered Shin to pay nearly $15,000.

City Bank of Honolulu sued Shin in 1975 for defaulting on two loan agreements made in connection with the S Palace and won a default judgment of $15,759. Several others sued Shin as well, but those cases failed to move forward. In one case, a bank was unable to serve Shin with its suit.

In a recent interview, Mary Ann Shin, Jimmy Shin’s fourth wife, who is now seeking a divorce, said sarcastically, “Jimmy Shin is the king of Hawaii.”