Largest South Korean Telecommunications Co. Agrees to Pay the SEC to Settle FCPA Charges
Washington D.C., Feb. 17, 2022 —
The Securities and Exchange Commission announced that Seoul-based KT Corporation (KT Corp.) will pay $6.3 million to resolve charges that it violated the Foreign Corrupt Practices Act (FCPA) by providing improper payments for the benefit of government officials in Korea and Vietnam.
According to the SEC’s order, KT Corp., South Korea’s largest telecommunications operator, engaged in multiple schemes to make improper payments in Korea and Vietnam. KT Corp. lacked sufficient internal accounting controls over charitable donations, third-party payments, executive bonuses, and gift card purchases. As a result, KT Corp. employees, including high-level executives, were able to generate slush funds that were used for gifts and illegal political contributions to government officials in Korea who had influence over KT Corp.’s business. Other employees were able to make payments in connection with seeking business from government customers in Vietnam.
“For nearly a decade, KT Corp. 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,” said Charles Cain, Chief of the SEC Enforcement Division’s FCPA Unit.
In November 2021, South Korean authorities indicted KT Corp. and 14 executives for criminal violations related to illegal political contributions from the slush funds.
KT Corp. consented to the SEC’s order without admitting or denying the findings that it violated the books and records and internal accounting controls provisions of the Securities Exchange Act of 1934, and agreed to pay approximately $3.5 million in civil penalties and $2.8 million in disgorgement.
The SEC’s investigation was conducted by Ilana Z. Sultan, Steven Susswein, and M. Shahriar Masud and supervised by Tracy L. Price.