The Vertical Corporate Culture in Korea and Whistle-blowing
by Lee, Hae-Gwan (Chair, Social Solidarity Committee, New Labor Union)
Good evening, ladies and gentlemen,
My name is Lee Hae-Gwan, currently the chair of Social Solidarity Committee of the New Labor Union at KT (Korea Telecommunication Company). KT is one of the biggest telecommunication companies in Korea. This evening, I would like to share with you about my whistle-blowing story and experiences.
In 2011, Korea was captured by the crazy fever of selecting Jeju Island as one of the New7Wonders of Nature, which is to be decided by cast votes through the internet or telephone call. KT was conducting this event in Korea. Later on, it was revealed that the New7Wonders Foundation who managed this event was just a voluntary association and it does not even have an office, and the voting was only one of the events held to collect money. What is worst is that KT manipulated domestic calls to make them look like international calls, thus receiving international rates for the calls made.
The employees of the KT gave these information to the KT Labor Union and as the chair at that time I released these facts to the media. Having done that, the management took a “disciplinary action”. They changed my job status, got transferred to a remote office which can take 5 hours and 30 minutes to commute, and then was sued for 3 hundred million won to compensate for the alleged damages incurred. Finally, I was fired on December 31, 2012. I filed my case as an unfair dismissal to the Anti-Corruption and Civil Rights Commission, a governmental anti-corruption agency. The ACRC received my case as whistle-blowing then took legal actions against the company while putting me under the whistle-blower (protection) program. However, the company remained unyielding and so a lawsuit is now ongoing.
My question now goes like this: Why is this big company, KT, behaving this way? And why nobody raised questions before I revealed this case to the media? I think the reason behind that behavior is the vertical corporate culture. Even though there are wrongdoings at the top management level, employees have no choice but to keep silent (to keep their jobs). Due to this corporate culture, huge scale wrongdoings keep occurring. Despite such happening, I think they never feel sorry or regretted anything.
KT was formerly a state-owned company. It once specialized a large scale communications facility and was an equipment investment and maintenance company. For being such a company, it was prone to and suffering from large scale corruption at the top level. For instance, a case of corruption occurred when fiber-optic cables were installed (buried underground) from Seoul to Busan. Although the lay-out says to bury the cables 1 meter below the ground, a fraudulent company will pocket huge sum of money if the cables are buried a bit shallower than recommended. Or, providing sub-standard construction materials and equipment and poor delivery of services are some of the examples. Therefore, in order to prevent such situations from occurring at public companies, complex regulations, monitoring and supervisory systems were put in place. However, if such complicated (and very demanding) ethical system will be properly kept the construction will not be completed within its allocated time-frame. And if you cannot complete the project on time, you will undergo a disciplinary action. Although the management knows that expediency (which means, a convenient and practical way to complete the project on time by not abiding the required complex ethical system) is going on, they turn a blind eye that proliferate such corporate culture. In that sort of culture, the relationship between the top officials and employees is not about management but that of an accomplice. That is precisely the collusive and obedient relationship that promote a vertical corporate culture.
In 2002, KT was privatized and started to compete with other companies. The atmosphere surrounding the company has changed but the fixated corporate culture remains “business as usual”. The complex regulations were abandoned while the competition to get results (or get the job done) is considered the best. All practical methods in the process are tolerated just to get the job done on time. Some examples include: fabricating a document that says an employee has worked during a holiday; faking a marketing record such as selling phones that never took place is a common practice, and contacting a KT user to close her/his existing phone service and lure to buy a new one by offering huge amount of money coming from the company’s support fund. The high result of sales will be reflected in her/his performance record. In reality, the results of such activities are just but a waste of the company’s resources. Despite the fact that all KT employees know these activities, and although they think these behaviours are wrong, the vertical corporate culture does not allow them to make complaints or report such issues.
KT’s fraudulent “international call” case is another example that occurred because of vertical corporate culture. If only there is an environment where people can freely discuss about internal problems such cases will not happen. Although, as a result, KT will be fined with a considerable sum of money, this will not help change its vertical corporate culture. The problem I have been experiencing at KT is never KT’s problem alone. I think this is the same problem that most companies are facing with. The rapidly growing power of collusive and vertical corporate culture will someday prevent us from achieving our dreams. Therefore, in order that a Korean company can establish a realistic ethical management system it should not simply protect whistle-blowers, but it must be a system that would help encourage a participative corporate culture.
Thank you very much for your attention.*
*The above is a translation from Mr Lee’s speech given during the “One Year After Sewol: Corruption in South Korea and the role of business on the road to transparency” that was held at Millenium Hilton on 21 April 20014 in Seoul.