Corporations donate to CCK even as public holds back

When a scandal over the misuse of funds by Community Chest Korea hit in mid-October, donations to South Korea’s biggest charity plummeted.

But while much of the public shunned the charity, major conglomerates such as Samsung Group, POSCO and LG Group donated large sums of money just weeks after the scandal erupted.

Both Samsung and POSCO defended their donations recently, while LG declined to comment. Another major conglomerate who donated to the CCK defended its donation but refused to be named. According to the CCK, for the last five years 65 percent of donations have been corporate, with the rest coming from the general public.

A spokesman for POSCO, which along with its affiliates made an end of year donation of 10 billion won ($8.97 million) to the CCK, cited the resignation of its leadership and the impact that withholding the money would have on the poor as reasons for donating as usual. He also said there was a lack of alternative charities to give to.

Although there are other charities in Korea, the CCK is the only one which is state-endorsed and acts as an umbrella group that gives to other worthy organizations.

Other smaller charities were also hit by misappropriation scandals, affecting public trust in charities generally. Even scandal-free charities, such as the Salvation Army, also reported a drop in donations.

A Samsung spokesman who spoke on condition of anonymity said the group had waited until the resignation of the CCK leadership before giving its 20 billion won donation before Christmas and added that donations have been part of its yearly schedule since 2004.

“We thought it was the right timing. ... We waited for a while to see the end of the corruption issue,” the spokesman said.

The spokesman said the group was not in a position to comment on the fact that 55 percent of CCK’s staff had been punished for misconduct.

In the first 10 days of its yearend campaign, the CCK collected 6 billion won ― down a staggering 42.6 billion won from the same period the previous year. As of Dec. 31, individual donations had gone down about 18 percent, from 55.6 billion won to 45.8 billion won.

The CCK pointed out that over the course of the year donations rose about 7 billion won from 2009 to 338 billion won last year. The period covered by this figure, however, is mostly before the scandal hit.

An inspection by the Ministry of Health and Welfare in mid October found that officials at provincial offices of South Korea’s only government-backed charity had misappropriated up to 700 million won in donations. Donations had been misused for drinks, karaoke, skiing and other illegitimate expenses.

The CCK’s entire leadership, including chairman Yoon Byung-chul, resigned as a result of the scandal. New CCK chairman Lee Dong-gun, who is a former chairman of Rotary International, a humanitarian organization, pledged to reform the charity and regain the public trust upon taking his post last December. Lee is known for his efforts in fighting polio and illiteracy in impoverished countries.

An LG spokesperson said it was inappropriate for the company to answer questions as a donor, adding, “Please understand that those are very sensitive questions for us.” The company gave 10 billion won to the CCK in December.

Another major conglomerate said that it considered the issue largely resolved since the resignation of the CCK leadership and no concerns about future misuse of finds.

“The donations were made after the situation had been addressed, and as far as we are aware Samsung and others did the same,” a spokesman said, insisting on anonymity for the company.

“Immediately after the scandal the CCK was in disarray and they are said to have experienced difficulties in fund raising, but once the new chairman was selected, much of related issues are considered to have been solved ... we have no reservations or concerns that the funds may be inappropriately used. If we had, the donations would not have been made,” he added.

A spokesman for the CCK this week told The Korea Herald that a number of major reforms had been introduced to prevent future corruption at the charity, including a “one strike and you’re out” policy for employees who take bribes or misuse funds.

The CCK also said it is now authorized to impose fines of up to three times the amount of any money misappropriated and will establish a civil watchdog committee. Further, it has revised its Code of Ethics to guide employees on fundraising in a “transparent and honest manner.”

“Further actions that can help our reformation will be evaluated, and all necessary actions will be strongly implemented to improve the level of public trust,” said new chairman Lee.

By John Power (john.power@heraldcorp.com)