Korea Telecom exhausts funds wining and dining

Hundreds of millions won of research funds have been wasted in dining and entertaining by Korea Telecom, an audit by the Board of Audit and Inspection revealed recently.

Poorly conceived investments led to reducing equipment worth 4.7 billion won to useless scrap iron selling off for 50,000 won.

These examples of critical laxity and mismanagement came to light as Rep. Kim Jin-Jae of the Grand National Party made public the results of the BAI audit of the state-invested telecommunication firm conducted in September-October last year.

The inspection concluded that Korea Telecom had wasted a total of 1.4 trillion won since 1994 through failed investments, excessive salaries and benefits for personnel, and misappropriation of funds.

Between 1994 and October 1999 Korea Telecom poured 1.065 trillion won into new projects. Of them, five projects accounted for 56 percent of the total investment, including 198.5 billion won in a one-way "city phone" service and 313 billion won in cable television service, either have been suspended or are being prepared for termination on account of snowballing deficits and plummeting viability.

In the course of such bungles, 4.7 billion won worth of equipment acquired for use in a multimedia service projected for Yoido was sold for 50,000 won as scrap.

The huge company has been plagued by serious moral hazards, according to the report. Three departments, including the Research and Development Headquarters, misused funds amounting to 1.72 billion won on food, entertainment or the purchase of consumables for personal use. Wining, dining and singing sprees at restaurants for employees cost 348 million won, the report said.