2024-01-24 11:48:23
It was confirmed that KT&G, the world’s 5th largest tobacco company and Korea’s 1st largest tobacco company, spent tens of millions of won in company money every year to send its outside directors on foreign trips. Outside directors went on business trips for reasons such as ‘overseas training’ or ‘overseas business site inspection’ and traveled to major tourist destinations such as the United States and Europe. KT&G provided business class round-trip airline tickets and luxury hotel accommodations to outside directors, and separately paid $500 (approximately 670,000 won) in cash per day for meals and transportation expenses. There was also an outside director who took his spouse on an overseas business trip.
Internal documents showing that a former KT&G outside director, a former National Tax Service executive, went on a business trip with his wife to the U.S. subsidiary of KGC Ginseng Corporation, a subsidiary, in 2014 and received business reports. / Reporter Kim Ji-seop
According to internal documents obtained by this newspaper on the 24th, most of KT&G’s outside directors have traveled abroad for about a week once a year since 2012, except for 2020-2021 when the sky was blocked due to the coronavirus outbreak. In most cases, the period of stay abroad was without work schedule, and if there was, it was only for a few hours. Currently, all six outside directors of KT&G have visited the United States, Europe, Indonesia, and Singapore once in 2022 and 2023. A KT&G official said, “Business airline tickets and luxury hotels are supported for overseas business trips of outside directors.” “KT&G overseas local employees were mobilized to drive cars or go shopping, and the outside director’s wife even attended a local corporate business report.” said. There was also testimony that local employees used corporate cards to entertain outside directors. The cost of an overseas business trip, including airfare, lodging, and local protocol costs, exceeds 10 million won per outside director.
Graphics = Park Sang-hoon
Some KT&G employees are known to have prepared documents to make it look like outside directors were on a business trip for training or work inspection purposes. A KT&G official said, “After discussing the overseas schedule with an outside director, an employee of the Board of Directors’ Operations Department falsified the business trip schedule to make it look as if it was a work schedule as much as possible.” He then added, “The structure is such that approval is received from senior management such as the head of strategic planning and the vice president. “He said.
A document showing that an outside director of KT&G was provided with a vehicle and guide when he went on an overseas business trip to Turkey in the past. At the end, you can see the phrase, ‘In order to avoid directly requesting additional amounts from the director, the above 2,535 euros will be spent after the fact, including the occurrence of additional costs.’ / Reporter Ji-seop Kim
The places KT&G’s outside directors frequently visited were Turkye and Indonesia, where local corporations and factories were located. California, where KGC Ginseng Corporation, a KT&G subsidiary, has a local U.S. subsidiary, was also one of the frequently visited destinations. A KT&G official said, “If there is a local corporation or factory, it is easy to pretend that it is a business trip when posting a report. However, in reality, it is almost entirely a local tour schedule.”
In fact, if you look at the itinerary for the business trip to Turkiye that outside director A went on for a week, the rest of the schedule is the same except that he received a work report for 3 hours and 30 minutes from 9 a.m. to 12:30 p.m. on the day after arriving in Istanbul and toured the tobacco market in downtown Istanbul. All were visits to tourist attractions such as Hagia Sophia and Buyukada Island. Among the outside directors, there was one who did not have a single work schedule and went on a cruise to Greece, Italy, Egypt, etc. for an entire week. Outside directors used travel agency package products or went sightseeing while receiving formal treatment from KT&G employees.
An internal company document showing that an outside director of KT&G brought his spouse with him on an overseas business trip. It can be confirmed that KT&G employees received the passports of the outside directors and the outside directors’ spouses and went through travel procedures. It can be seen that the outside director and his wife visited Turkey and Thessaloniki, Greece./Reporter Kim Ji-seop
◇Package trip, not a business trip… accompanied by spouse
Some outside directors also requested that they make arrangements to travel with their spouses through travel agency package products. A KT&G official said, “Once the outside director sent his or her passport and spouse’s passport, KT&G employees took care of all travel-related procedures.”
Outside directors who did not apply for a package tour received protocol from local employees. In 2014, Mr. B, an outside director who visited KGC Ginseng Corporation’s U.S. subsidiary, received a business report at the local corporation office with his wife. Local employees picked up Mr. B and his wife, acted as tour guides, and went shopping together. According to internal data obtained by this paper, the Ginseng Corporation employee who was in charge of protocol for Mr. B and his wife at the time sent an email to a colleague, saying, “Mr. OO drove all day, and I (did) take pictures next to the wife and director.” Although outside directors paid their spouses’ round-trip airfare out of their own pocket, it was pointed out that it was inappropriate for them to accompany their spouses on official business trips.
Part of the itinerary of past KT&G outside directors leaving for overseas training. Everything is filled with tourist itineraries./Reporter Kim Ji-seop
Mr. C, the current outside director, also went on a package tour to Turkey and Greece with his wife in October 2018. According to an insider, Mr. C traveled to Egypt and Spain in 2022 and last year, respectively. Mr. D, who was an outside director of KT&G from 2016 to 2022, reported that he was going on a business trip to the Russian corporation in 2019, but the flight schedule was to arrive in Moscow via Rome, Catania, and Naples, Italy. An insider said, “At that time, all Mr. D did was call the representative to the hotel conference room and receive a briefing for about two hours.”
◇“Local employees pay for meals and transportation with corporate cards”
According to an insider, a KT&G employee overseas paid for meals and transportation expenses of outside directors with a corporate card. This official said, “Because one or two expatriates or KT&G strategy office employees accompany them and make a lot of payments with corporate cards, outside directors can save up most of the $500 cash expenses paid every day and go home without spending much.”
When contacted by this newspaper requesting an explanation regarding their overseas business trip, two current outside directors said, “Please contact the company’s communications team.” Regarding the issue of outside directors’ overseas business trips, KT&G said, “The company supports outside directors in carrying out related work in accordance with regulations,” and added, “Once a year, 7 days a year when necessary for business purposes, such as visiting overseas production facilities, examining overseas markets, and identifying business status.” “I went on a business trip for about a day or so, and the cost per trip was about 6.8 million won on average per person, excluding airfare,” he said.
Illustration = Kim Seong-gyu
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