State Securities Firm Caught for Reckless Spending

An internal government audit has found that Korea Securities Depository paid salary, incentives and welfare benefits to employees on temporary leave.

The Board of Inspection and Audit also said yesterday that the securities company distributed fashion gift cards worth 400,000 to 500,000 won each to participants at its ceremonies and workshops.

Specifically, the company paid 532 million won (532,000 U.S. dollars) in allowances, incentives and welfare benefits to 11 employees on temporary leave, including eight who went overseas for language study between 2005 and last year.

The audit also showed five staff members treated officials from the now-defunct Finance and Economy Ministry to expensive bars and spent 34.75 million won on 17 occasions between 2005 and last year.

In addition, the securities company awarded department store gift certificates worth 200,000 won to each employee at a self-organized “Vision 2015” event in 2006. Top executives and high-level managers also got fashion gift cards worth 400,000 to 500,000 won each after a management strategy workshop.

Employees’ children also got benefits. The sum of 1.08 billion won was unconditionally paid for their college tuition and private education fees for elementary and middle school.

The government watchdog had recommended to the company loans instead of outright support for college tuition for the third time this year after two failed attempts in 1998 and 2000.

Another area of abuse was clothing expenses. Though it stopped making such payments in 1998 when caught, the securities company resumed the practice in 2006 as soon as the now-defunct Planning and Budget Ministry excluded the firm from the list of state-run organizations.

The audit also found that the average salary of a company employee was 116 million won a year. The budget manual for state-funded organizations had recommended annual raises of two percent, but the securities company gave wage hikes of 5.5 percent in 2006 and 7.9 percent last year.

jameshuh@donga.com