Big firms give some 40% of donations to own foundations

Korea's major companies sharply increased their donations to society in recent years, but nearly 40 percent of the contributions went to their own foundations, a poll showed Wednesday.

The survey of the country's top 500 companies by sales found their donations to society reached 1.25 trillion won ($1.11 billion) in 2010, up from 741 billion won in 2005, according to the Federation of Korean Industries (FKI) and the Korea Corporate Governance Service (KCGS).

Of that total, 37.6 percent went to the companies' public foundations in 2010, down from about 50 percent in 2005.

The companies have usually given stock donations to their public foundations, a development critics claim could be used as a means to strengthen their management control of their affiliates.

The KCGS, a private body seeking to improve corporate governance in South Korea, said companies' stock donations to their public foundations could not be seen as "pure donations."

More than 90 percent of stocks held by 30 nonprofit foundations affiliated with conglomerates were stocks of the conglomerates' affiliates, according to a survey conducted by the Citizens' Coalition for Economic Justice in December.

The average dividend yield of stocks held by nonprofit foundations affiliated with conglomerates is 1.59 percent, a figure critics say is not enough to finance public projects.

Last month, President Lee Myung-bak called for big businesses to do more to share the benefits of their growth with less well-off members of society, saying it is a "mission of the times" for conglomerates to play a greater role in society.

Some Korean business leaders have pledged financial donations in recent years in an apparent move to avoid public criticism following legal troubles.

Hyundai Motor Co. chairman Chung Mong-koo has pledged to donate 500 billion won of his personal assets to charity, the biggest-ever charitable contribution made by an individual in Korea.

In 2008, Chung was found guilty of embezzling 90 billion won and breach of trust in an appeals court, though he later received a presidential special amnesty along with scores of convicted business tycoons. (Yonhap)