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Companies buy luxury cars for a variety of business purposes. Keeping fleets of expensive cars might demonstrate business strength and add to corporate creditability. Nothing wrong if company owners, their spouses and children holding executive positions drive these corporate cars for commuting or on local tours with domestic or foreign clients.
It is a totally different matter, however, if the son of a conglomerate chairman drives a company-owned Lamborghini through a suburban highway close to midnight and is caught by a surveillance camera for speeding 40 kilometers per hour in excess of the limit. The fuel cost for the night’s operation and the fine for speeding are paid from the corporate account. In fact the entire costs of owning and running this car, including premium gasoline, annual auto taxes, full insurance and maintenance fees, are borne by the company, although no other employee ever touches the vehicle.
The problem is that this is not an exception but a rather common practice in Korea’s corporate culture, known for the obscurity of the boundary between official business and private activities in expense accounts. According to a report submitted by the Ministry of Land, Transport and Maritime Affairs to Rep. Ahn Hong-joon of the Grand National Party, Korean corporations owned 10,466 cars with the purchase price of over 100 million won ($95,000) each, excluding cars on lease. These include 184 luxury sports cars of foreign make, which are mostly used for pleasure by large shareholders and their children.
How these cars drive about the streets and highways of Korea is well explained by police statistics. Between January 2008 and last May, 72 foreign-made sports cars were checked for a total of 400 traffic violations ― 5.6 times each, primarily for speeding ― twice as frequently as other luxury cars.
To blame is of course the moral laxity of corporate owners. But there is also the weakness of our corporate accounting and taxation systems which allow such clear diversion of corporate funds to go unchecked. The poor consumers are paying for the traffic tickets issued to an unknown sports car fanatic, for his gas and for the settlement costs of an accident that he was involved in.
It is a totally different matter, however, if the son of a conglomerate chairman drives a company-owned Lamborghini through a suburban highway close to midnight and is caught by a surveillance camera for speeding 40 kilometers per hour in excess of the limit. The fuel cost for the night’s operation and the fine for speeding are paid from the corporate account. In fact the entire costs of owning and running this car, including premium gasoline, annual auto taxes, full insurance and maintenance fees, are borne by the company, although no other employee ever touches the vehicle.
The problem is that this is not an exception but a rather common practice in Korea’s corporate culture, known for the obscurity of the boundary between official business and private activities in expense accounts. According to a report submitted by the Ministry of Land, Transport and Maritime Affairs to Rep. Ahn Hong-joon of the Grand National Party, Korean corporations owned 10,466 cars with the purchase price of over 100 million won ($95,000) each, excluding cars on lease. These include 184 luxury sports cars of foreign make, which are mostly used for pleasure by large shareholders and their children.
How these cars drive about the streets and highways of Korea is well explained by police statistics. Between January 2008 and last May, 72 foreign-made sports cars were checked for a total of 400 traffic violations ― 5.6 times each, primarily for speeding ― twice as frequently as other luxury cars.
To blame is of course the moral laxity of corporate owners. But there is also the weakness of our corporate accounting and taxation systems which allow such clear diversion of corporate funds to go unchecked. The poor consumers are paying for the traffic tickets issued to an unknown sports car fanatic, for his gas and for the settlement costs of an accident that he was involved in.
