October 24, 2014

We hereby report to you that charges have been filed today with the Public Prosecutors Office by the Metropolitan Police Department against SHI, who is suspected of violating the Law for Controlling the Possession of Firearms and Swords (hereinafter referred to as the "Firearms and Swords Control Law").

1. Outline of facts relating to charges filed with Public Prosecutors Office
1) Violation of Firearms and Swords Control Law
SHI is a weapons manufacturer under the Ordnance Manufacturing Act and as such has been manufacturing machine guns and the like. In some instances, machine guns and the like, in our possession for the purpose of research and development, were in our custody without the proper procedures being followed, as stipulated by the Firearms and Swords Control Law.

2) Violation of Explosives Control Law
SHI is in the possession of ammunition for test firing machine guns and the like. In some instances ammunition had been used for test firing without the proper procedures being followed, as stipulated by the Explosives Control Law.

2. Action taken to prevent recurrence
Since FY2013, SHI has been carrying out exhaustive inspections at the Defense Systems Group, involving all members of the group, in order to secure product quality and to ensure full compliance with the laws and regulations. The matters described above were discovered during such processes and a report was filed voluntarily with the relevant organizations, including the Metropolitan Police. We consider the charges filed with the Public Prosecutors Office serious and we shall continue to thoroughly implement the control framework, while taking action to prevent the recurrence of such incidents, under the guidance of the relevant organizations.