South Korea: Black Marketing of U.S. Goods and Efforts to Prevent It

GAO discussed its review of U.S. military and Department of Defense civilian personnel involvement in black marketing activities in South Korea, involving the transfer of duty-free goods acquired from commissaries and base exchanges to unauthorized individuals for profit. GAO noted that: (1) neither the U.S. nor South Korean government was satisfied with the other government's attempts to prevent black marketing; (2) the U.S. government also criticized South Korea's trade restrictions and high tariffs; (3) the exact extent of black marketing and its costs to the U.S. government are unknown; (4) numerous South Korean markets' large displays of duty-free goods and the corresponding high volume of commissary and exchange sales of those goods indicated widespread black market activity; (5) exchange and commissary management and employees did not enforce the ration control system for maintaining data on personnel expenditures and reporting suspicious expenditures; (6) black marketers could avoid detection by purchasing a few items at several stores, using commissary and exchange cashiers as accomplices, and using fraudulent ration control documents; (7) some officials believed that military personnel allowance limits for consumable goods were too high, since most military personnel lived on base and ate at military dining facilities; and (8) some ration-free items were also popular black market items.