South Korea’s largest telecom company, KT Corporation, paid the SEC $6.3 million Thursday to resolve charges that it violated the Foreign Corrupt Practices Act by providing improper payments to government officials in South Korea and Vietnam.
In an internal administrative order, the SEC charged the Seoul-based company with violating the FCPA’s books and records and internal accounting controls provisions.
KT Corporation agreed to disgorge $2.3 million and pay a civil penalty of $3.5 million.
High-level executives in South Korea maintained “slush funds comprised of both off-the-books accounts and physical stashes of cash” from at least 2009 to 2017. Executives and other employees used the slush funds to bribe government officials, the SEC said.
The bribes included gifts, entertainment, and “illegal political contributions” to members of the Korean National Assembly serving on committees relevant to KT’s business.
According to the SEC, the slush fund in South Korea totaled around $1.3 million.
Between 2015 and 2016, KT Corporation also made payments of over $1.6 million to three organizations at the request of high-level government officials. Two of the payments were made at the instruction of the Blue House, Korea’s presidential residence and office, the SEC said.
In Vietnam, between 2014 and 2018, KT Corporation “lacked sufficient internal accounting controls regarding third parties and no relevant compliance policies regarding due diligence,” the SEC said.
The company arranged with a construction company in Vietnam to pay a bribe of about $95,000 to a high-level official in 2014. KT Corporation later falsely booked a $200,000 payment to the construction company as “Support/consulting for performance of the business (completed).”
KT Corporation first disclosed the investigation into its operations in South Korea in April 2017, according to data from FCPA Tracker.
The company has over 16.4 million total subscribers and 23,000 employees.
In November 2021, South Korean authorities indicted KT Corporation and 14 executives for criminal violations related to illegal political contributions from the slush funds.
The SEC said KT Corporation did not self-report the FCPA violations but “did cooperate with the [SEC’s] investigation by providing translations or summaries of some relevant documents, providing certain facts developed in its own internal investigation, and making certain current and former employees available . . . including those who needed to travel to the United States.”
As part of Thursday’s settlement, the company agreed to report to the SEC every six months for two years about “the status of its remediation and implementation of compliance measures.”