Prosecuting Agency:
U.S. Securities and Exchange Commission
Type of Action:
SEC Administrative Proceeding
Docket or Case Number:
3-20780
Name of Prosecuting Attorneys:
Ilana Z. Sultan, SEC Headquarters
Steven A. Susswein, SEC Headquarters
M. Shahriar Masud, SEC Headquarters
Tracy L. Price, SEC Headquarters
US Assisting Agencies:
Unknown
Foreign Enforcement Action/Investigation:
South Korean Law Enforcement Agency (Foreign Enforcement Action)
Foreign Assistance:
Unknown
Origin of the Proceeding:
Unknown
Whistleblower:
Unknown
Case Status:
Resolved
Summary
KT Corporation (“KT Corp”) was South Korea’s largest comprehensive telecommunications operator, with its principal executive offices in Seoul, South Korea. KT Corp’s American Depositary Shares were registered with the SEC and traded on the New York Stock Exchange.
According to the documents in this case, between 2009 and 2018 KT Corp engaged in multiple schemes to make improper payments to government officials in South Korea and Vietnam. In South Korea, the schemes included the maintenance of a large slush fund by KT Corp executives in order to pay for entertainment and gifts to government officials as well as a separate scheme to make payments to charitable foundations at the request of senior government officials. In Vietnam, KT Corp employees provided money to third parties connected to government officials in order to obtain contracts to construct a solar cell power system and a separate project to provide hardware, software, and training for five vocational colleges. The common thread among these various schemes is that KT Corp failed to have sufficient internal controls to prevent the misconduct, and the company mischaracterized the payments in its books and records. In all, KT Corp made payments of approximately $11.2 million and earned profits of approximately $2.3 million.
In a settled administrative proceeding issued on February 17, 2022, the SEC ordered KT Corp to cease and desist violations of the books and records and internal controls provisions of the FCPA. Under the terms of the settlement, KT Corp agreed to pay disgorgement of $2,263,821 plus prejudgment interest of $536,457 and a civil penalty of $3,500,000. The company also agreed to self-report to the SEC on the status of the company's anti-corruption compliance for a term of two years. The SEC noted KT Corp's cooperation and remediation.
In a related proceeding in November 2021, South Korean authorities indicted KT Corp and 14 executives for criminal violations related to illegal political contributions from the slush funds.
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