KT Chief Executive Officer Ku Hyeon-mo (left) strikes a gavel at a shareholder meeting in March 2021. (KT)
KT, South Korea’s largest telecommunications firm by sales, will pay a total of $6.3 million to the US Securities and Exchange Commission to resolve charges for violating the Foreign Corrupt Practices Act, an SEC announcement showed Friday.
The SEC ordered the Seoul-based firm to pay $3.5 million in civil payments and $2.8 million in disgorgement and prejudgment interest within a month, more than two years after the US authorities started their investigation.
KT was accused of insufficient internal accounting controls provisions and making improper payments for the benefit of lawmakers and government officials in Korea and public officials in Vietnam.
In addition, KT was found to have no relevant anti-corruption policies or procedures with respect to donations, employment candidates, vendors, subcontractors, or third-party agents, which meant that there were no measures to curb the misconduct internally, the SEC said.
According to SEC, KT lacked internal accounting controls over expenses, including executive bonuses and purchases of gift cards, allowing managers and executives to generate slush funds. The misconduct took place in Korea from at least 2009 through 2017.
The Korean prosecution’s indictment showed that KT’s slush fund, worth 437.9 million won ($393,600), went to 99 Korean lawmakers, while the incumbent Chief Executive Officer Ku Hyeon-mo was also involved. Ku and nine other KT executives were given a combined 46 million won fine as they faced a summary indictment, while court proceedings for four KT executives are underway.
In Vietnam, KT had sought to provide money to third parties connected to government officials in Vietnam to obtain government contracts between 2014 and 2018, the SEC filing also showed.
“For nearly a decade, KT failed to implement sufficient internal accounting controls with respect to key aspects of its business operations, while at the same time lacking relevant anti-corruption policies or procedures. Issuers must be sure to devote appropriate attention to meeting their obligations under the FCPA,” Charles Cain, chief of the SEC Enforcement Division’s FCPA Unit, said in a statement.
KT is subject to supervision by the US SEC, as the company’s American Depositary Receipt -- a form of a share -- trades on the New York Stock Exchange. KT’s common shares are listed on the Korea Exchange.
By Son Ji-hyoung (firstname.lastname@example.org