Public Firms Lose Moral CompassThe lack of morals on the part of public corporations has become the focus of public outrage. Executives of some corporations have used corporate credit cards to spend freely in massage parlors and other dubious establishments. Others have sold used equipment to employees at dirt-cheap prices.
Unscrupulous management of public companies is nothing new. However, now that dishonest management practices have been revealed in such benchmark companies as Korea Telecom and Korea Electric Power Corporation (KEPCO), on the eve of restructuring, it is time for public companies to clean up their act.
According to data submitted at a parliamentary inquiry, 12 departments of Korea Telecom charged 1.9 billion won ($1.7 million) on corporate cards for drinking parties in hostess bars from last year to the first half of this year.
Korea Telecom defended the practice, saying, "They are essential expenses for smooth corporate activities and the actual payment by the company amounted to only 1.1 billion won." Representative Kim Jin-jae of the Grand National Party, the main opposition, has examined the data and rejected this explanation.
Korea Telecom has been found to have splurged millions of won on corporate cards at massage parlors, saunas, barber shops and golf practice ranges. Anyone would be hard put to explain what business a corporation funded by taxpayers'' money conducted in these places.
In the case of KEPCO, drinks were charged on a corporate card at a bar in the red light district in northern Seoul on a holiday in July. The company denies that some employees drank at a beer hall near headquarters. The receipt was mysteriously transformed into one issued on a fraudulent card, supposedly unknown to the users. Is anyone ready to believe this excuse?
To conduct business, it might be necessary to use corporate cards for a certain amount of entertainment. Nevertheless, since the 1997 IMF bailouts, even private companies have required minimal, transparent expenses for entertainment. It is disgraceful that public corporations run with taxpayers money still act in such a shameful manner.
The public owns public corporations. The entertainment culture of these corporations should be a model for other companies. Along with improving this misguided entertainment culture, now is the time to hasten public sector reform.
by Chung Woon-chan