Home shopping firms cut back on corruption

Korea’s home shopping industry is moving to clean up its act under the threat of a government crackdown.
Lotte Home Shopping announced on Monday that the company will start providing additional monthly entertainment allowances of up to 400,000 won ($362) a month to employees who interact with product suppliers.
“From now on, Lotte Home Shopping employees won’t get treated to even a cup of coffee from our suppliers,” the company said in statement released Monday.
The move follows a warning by three government bodies — the Fair Trade Commission, the Ministry of Science, ICT and Future Planning, and the Small and Medium Business Administration — that they will crack down on the industry’s corrupt ways by including fair trade issues into license reviews.
Home shopping channels usually make their suppliers pay for all sort of things to get their products on air. They have justified their ways by saying it was a longtime custom.
“This is part of our campaign to guide our employees, who are always exposed to the temptation of taking bribes and being entertained [by suppliers],” said Kang Hyun-gu, CEO of Lotte Home Shopping. “We hope to see our employees actively participate in our initiative to stop these long-standing corrupt business customs.”
The new allowances differ depending on rank. About 150,000 won will be allocated to regular staff members and department directors will get 400,000 won. Employees are allowed to use this money to paying for things like dinner while meeting suppliers.
The new allowances will be given to product merchandisers who decide which products are featured on air, show producers, show hosts and product quality managers. All the spending has to be reported to management with receipts. Employees will have to return any amount that is misused.
Last year, Lotte Home Shopping was at the center of a corruption controversy and was investigated by prosecutors. Former CEO Shin Heon was prosecuted last year for allegedly receiving a 100 million won bribe from a supplier and embezzling about 300 million won of the company’s funds. Shin was convicted at the end of last year, receiving a jail term of two years and a fine of almost 90 million won.
According to a Lotte spokesperson, Monday’s decision was an attempt by Lotte Home Shopping to clean up the company’s image of being corrupt.
Lotte is not alone in such an initiative. Two more home shopping channels are waiting for assessments to get re-licensed.
Hyundai Home Shopping and NS Home Shopping have expanded investments in social corporate responsibility.
BY KIM JI-YOON [jiyoon.kim@joongang.co.kr]