Last Friday, the Securities and Exchange Commission (SEC) announced that KT Corporation agreed to resolve allegations that it violated the Foreign Corrupt Practices Act (FCPA) in a cease and desist order. The order says that KT paid nearly $400,000 to almost 100 lawmakers and candidates and created a “slush fund” of about $900,000 from which it paid improper bonuses in violation of the FCPA.
The law bars companies that issue stock in the U.S. from bribing foreign officials for government contracts and other business and also imposes accounting and internal oversight mandates.
Seoul-based KT, South Korea’s largest telecommunications provider, engaged in multiple schemes over the last nine years to make improper payments in Korea and Vietnam, the SEC’s order explains. For example, the SEC points to a solar power project KT vied for in 2014 by offering a bribe to a high-level Vietnamese official. The filing points to direct evidence of the bribe, including an email and subsequent invoices referring to the $95,000 as “expenses for engaging in sales activities with the ordering organization.”
The American securities oversight body faults KT for insufficient internal accounting controls over charitable donations, third-party payments, executive bonuses, and gift card purchases and simultaneously, a lack of anti-corruption policies or procedures. The order says that KT’s conduct violates the FCPA’s recordkeeping and internal audit provisions.
Relatedly, the telecommunications company and 14 of its executives were criminally indicted by South Korean authorities last November over the bribery and political contribution conduct, the SEC notes. In last week’s order the company agreed to pay the fine, approximately $3.5 million in civil penalties and $2.8 million in disgorgement, without admitting or denying fault.