Corrupt Korea Inc.

Power is prone to corruption. Many large enterprises have become powerful at least economically, and they are exposed to corruption. Many small-company CEOs feel the temptation to bribe the personnel of leading companies in their ruthless attempt to get contracts.
Corporate corruption is nothing new. As companies grow, corruption has become apparent. The problem is bribery becomes expensive, sophisticated and subtle as internal audit gets tight.
Lee Kun-hee???s timely and courageous anti-corruption campaign in Samsung is laudable as he initiated the drive at the risk of blemishing Samsung???s global image.
His crusade should get the attention of other large enterprises. Corporate corruption is no less widespread than public-sector bribery.
Lee???s cleanup movement came following an audit that Samsung Techwin executives privately used corporate cards, received entertainment and kickbacks from subcontractors. He said that the corruption was not limited to the defense equipment provider but seemed to be pervasive in the group.
Lee said Techwin's corruption has tarnished Samsung's clean corporate culture, which he said has been the pride of the group. He recalled many global companies have collapsed due to corruption and organizational inefficiency. He warned Samsung is not an exception, subjecting all subsidiaries to rigorous audit to sort out corrupt employees.
It is true that politicians and civil servants have been under constant monitoring. Corporate executives have been outside the radar of such social vigilance. Corporate irregularities have been on the rise. About 1,728 executives were charged for embezzlement and breach of trust in 2009, compared with 1,494 cases in 2007.
Many subcontractors said that employees of large enterprises subtly demand cash and entertainments. As a way of enjoying the privilege of subcontractors, they must keep oiling procurement executives by providing money and gifts on happy occasions such as a marriage or college admission.
Half-baked anti-corruption drive unexpectedly raises the cost of bribery. For example, a procurement officer got a golf club membership in return for awarding a contract. The expensive membership is registered under the name of a third party a contractor designates. It is extremely difficult to pinpoint the dirty deal until a whistleblower comes forward.
Executives sometimes promote juniors well versed in extorting cash from suppliers.
Companies other than Samsung must question themselves whether they are free from corruption. Corrupt firms cannot expect improvement of productivity as employees divert corporate resources for private gain. This is a sure road to the collapse of companies.
Bribery in the private sector has been responsible for Korea's worsening of corruption reported by Transparency International for the past two years. Korea ranked last out of 16 Asian countries in the category of the private-sector corruption index.
Korea boasts of being the world's 14th largest economy. Without uprooting corruption, Korea has limits to economic and social progress. Consumers will turn away from corrupt companies.
Now is the time for Korea Inc. to strengthen ethical management realistically. The slogan and campaign will not eradicate corruption.
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