Abuse of corporate credit cards
CHOI HYUN-JUThe author is a life and economy team reporter of the JoongAng Ilbo.
Credit cards originated in the United States in the 1920s. It began with charge accounts at gas stations and department stores to make a one-time payment for the entire month’s transactions. The credit card we use today was first offered by “Diners Club” in the 1950s. Founder Frank McNamara came up with the idea after realizing he didn’t have his wallet after dining at a restaurant.
In Korea, credit cards began to be used in the late 1970s. Today, 977.1 trillion won ($834 billion) is charged on credit cards annually as of last year. Of this, 17.7 percent is charged on corporate cards.
Corporate cards are credit cards issued to businesses. In Korea, corporate card usage drastically increased from 2001, when the tax law acknowledged the amount charged on corporate cards as expenses and excludes it from taxation.
Using corporate cards for personal use is subject to punishment. The company will be imposed a corporate tax and the employee who uses the card personally will be subject to embezzlement and breach of trust. According to the law, business embezzlement and breach of trust are punishable by imprisonment for up to 10 years or a fine up to 30 million won.
But personal use of corporate cards continues. A head of a public corporation used the corporate card more than 300 times over three years, in a neighborhood in which a woman presumed to be his mistress resided. A former high-level Health Ministry official is serving a prison sentence for using eight corporate cards from a large hospital for entertainment and golf for four years.
There are preventative measures, such as the “clean card” system introduced in 2005. There are restrictions on the type of business, hours and amount that corporate cards can be used. But there are loopholes in the restrictions. Entertainment establishments have separate card terminals under the name of other businesses. When the amount exceeds the limit, receipts are divided into installments. The card can be charged before the restricted hour, or a personal card may be charged first, and then switched to the corporate card during the daytime.
After all, the rightful usage of a corporate card depends on personal ethics. That’s why the fury over the use of a government card by the spouse of a presidential candidate does not subside easily. Use of government cards should be stricter for not just the potential first lady who is held to high ethical standards but also public officials. They are not simply using corporate money, but taxpayers’ money. The government card filled with tax money is not “allowance” to buy meat.
with the Korea JoongAng Daily
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