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Bribe scandal worries Outback

Three executives of its South Korean subsidiary resign after bribes are paid to government officials there.

By SCOTT BARANCIK
Published March 17, 2006

Outback Steakhouse's thriving South Korean unit may have violated foreign and U.S. laws by bribing South Korean officials.

In a regulatory filing Thursday evening, the Tampa company said three top executives of its Aussie Chung Ltd. subsidiary resigned after company-hired lawyers concluded they made "improper payments" to government officials.

The amount of the bribes was relatively small - less than $75,000, Outback said. But if the U.S. or South Korean governments investigate and levy sanctions, the company's "operations and prospects for growth in South Korea could be significantly impacted," it added.

That's no small concern for Outback, whose fast-growing South Korean unit includes 70 restaurants, enjoyed sales of $209-million last year and accounted for 7.8 percent of companywide profits. Outback added 20 South Korean locations in 2005 and had nearly $47-million in outstanding loans from South Korean banks as of Dec. 31 to be used for future expansion.

Outback is South Korea's second-largest restaurant chain. Its South Korean unit - 82 percent owned by Outback, 18 percent owned by the Aussie Chung CEO and chief operating officer who resigned - won no fewer than five awards in 2005, including a top ranking for brand power by the Korea Management Association, according to the company's South Korean Web site.

Outback said the improper payments may have violated the U.S. Foreign Corrupt Practices Act. The company reported the findings of its investigation to the U.S. Securities and Exchange Commission and the U.S. Department of Justice. Outback said no company officials other than the three South Koreans who resigned were implicated by its internal investigation.

Outback officials declined to answer a series of e-mailed questions Thursday "At this time (we have) nothing further to add beyond what is in the 10-K (filing)," general counsel Joe Kadow said in an e-mail. "Our actions in response were consistent with our commitment to integrity in our business practices."

Scott Barancik can be reached at barancik@sptimes.com or 727 893-8751.

[Last modified March 17, 2006, 11:23:09]