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Foreign ICT Giants Fail to Fulfill Their Share of Social Responsibilities in S. Korea
Taking Advantage of Legal Loopholes
Foreign ICT Giants Fail to Fulfill Their Share of Social Responsibilities in S. Korea
  • By Jung Suk-yee
  • October 18, 2018, 09:25
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Global ICT companies such as Google, Facebook and Apple still have a long way to go when it comes to contribution to society in South Korea.

CEOs of global ICT companies’ Korea operations attended a parliamentary audit of the Ministry of Science and ICT as witnesses on Oct. 10. They included Google Korea CEO John Lee, Facebook Korea CEO Damian Yeo Guan, and Apple Korea general manager Brandon Yoon. Yet they gave no answer at all to lawmakers’ repeated questions about their companies’ sales and tax payments.

Non-Korean ICT companies such as Google, Facebook and Apple still have a long way to go when it comes to contribution to society in South Korea. They have taken advantage of legal loopholes to hide sales and tax data and have been lukewarm about donation and job creation. They are limited liability companies in South Korea and they have concentrated on profit maximization by using that status, which means no mandatory auditing and no duty of disclosure.

At present, 480, 320 and 70 or so South Koreans are assumed to be working for Apple Korea, Google Korea and Facebook Korea, respectively. This size of employment is about 10% of employment by local ICT companies with a similar level of sales to them. Naver posted 4.7 trillion won in sales last year and had 3,400 employees as of June this year. Google Korea’s sales in Korea are estimated at 4.9 trillion won but it has about 320 employees. The comparable figures for Apple Korea are three trillion won to four trillion won in sales and 480 or so employees. Kakao, which lags behind Apple Korea in terms of sales, currently has more than 2,600 employees.

Those companies are actively fulfilling their social responsibilities in the United States and Europe. For instance, Google UK currently has more than 3,000 employees and Google France recently established an AI research institute in Paris by hiring hundreds of people. The Google HQ announced last year that it would donate US$1 billion so that more Americans can get vocational training via non-profit organizations.

Well aware of the problem, the South Korean government changed its policy so that non-small limited liability companies are subject to external audits starting from 2020. Nonetheless, those companies are still exempt from the duty of corporate information disclosure. “The financial authorities tried to apply the duty of disclosure but failed to overcome those companies’ opposition,” said a local accountant, adding, “This means their accounting data and practical information about social contribution and the like will remain hidden.”