Conglomerates coy about entertainment expenses

By Kang Seung-woo

The country’s top 10 business groups are reluctant to unveil how much they spent last year to wine and dine their key contacts. Questions about their charity work, however, generate quick responses.

Figures at the Financial Supervisory Service (FSS) and Chaebul.com (www.chaebul.com), a business website, show that 297 affiliates owned by the top 10 conglomerates spent 191.2 billion won (about $176 million) in entertainment expenses last year, up about 17 percent from the 163.3 billion won they spent in 2009.

However, the remaining 284 companies owned by the 10 largest business groups refused to disclose their spending as they aren’t legally obligated to.

Among the notable companies refusing to reveal their spending on meals, gifts and other expenses are Samsung Electronics, Asia’s largest electronics company and the undisputed kingpin of Korea Inc., SK Telecom, the country’s biggest mobile phone service operator and LG Group’s trio of technology giants — LG Electronics, LG Display and LG Chem.

Refiners SK Innovation, GS Caltex and Hyundai Oil Bank and a number of key Samsung Group affiliates — Samsung Life Insurance, Samsung Heavy Industries and Samsung C&T — also didn’t reveal their entertainment expenses.

In comparison, 374 of the 581 companies owned by the top 10 business groups have made their spending on charity and other corporate social responsibility (CSR) activities available.

Although only 41 out of Samsung Group’s 78 affiliates disclosed their entertainment expenses, their combined spending of 33 billion won last year accounted for more than that of any other business group. The 44 affiliates of the SK Group, which controls 86 companies overall, came in second at 31.3 billion won.

Companies from the Hanwha Group, the Lotte Group and the Hyundai Automotive Group rounded out the top five after spending 23.7 billion won, 23.6 billion won and 19.3 billion won in that order.

Korea’s corporate entertainment expenses have been on the upswing after the government’s easing of related regulations. In 2009, the government abolished a regulation requiring companies to disclose entertainment expenses that surpass 500,000 won in a bid to boost general consumption.