The military and related public agencies have provided a range of favors to defense companies and failed to properly manage them, leading to pervasive corruption and a huge waste of budget, the state auditor said Tuesday.

Announcing the results of a three-month probe from May, the Board of Audit and Inspection (BAI) said the authorities designated defense goods without proper demand analysis and gave preferences to large defense companies for their production, which led to a waste of more than 600 billion won (US$544.9 million) in taxpayer money over the past several years.

The inspection covered the country's military headquarters and major defense institutions, including the Defense Acquisition Program Administration (DAPA), in the wake of a series of corruption cases involving military officers and private defense firms.

"The DAPA is supposed to cancel the designation of defense articles that can be produced under the competition system in accordance with technology development, but rarely took action," the BAI said.

As a result, some 237 out of 1,317 defense items turned out to be unfairly protected, which has caused at least 381.8 billion won of wasted budget since 2009, it said.

The government guarantees a certain level of profits and the right to monopolize production for the companies in charge of making defense items.

The DAPA was also found to have ignored legal steps necessary for the transparent procurement. Between 2006 and April last year, the arms procurement agency designated more than 90 percent of 449 defense articles without demand analysis and due deliberation by letting its officials in charge of promoting the industry give permission arbitrarily.

The authorities also failed to develop indigenous technologies to produce key parts, causing concerns over its possible negative impact on maintaining the country's combat power.

"The DAPA and the commerce ministry failed to play its role of supervising and managing defense companies, while unjustifiably providing subsidies mostly to large companies," the auditor said.

Apart from the audit, the government launched a massive probe into alleged corruption in the defense industry in November, after President Park Geun-hye denounced corrupt dealings in defense acquisition programs as "actions serving the interests of the enemy" and vowed to impose "exemplary punishment" to root them out. (Yonhap)