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Company caught hoarding masks, ministry says

Suspects led team of investigators to their warehouse, fled arrest

Feb 11,2020
A manufacturing company’s scheme to jack up the price of more than one million protective face masks amid the ongoing shortage has been uncovered by government officials, the Ministry of Food and Drug Safety alleged Monday.

A mask manufacturing company based in Euiseong, North Gyeongsang, was caught attempting to sell 1.05 million protective masks through an online secondhand community on Naver, the ministry said. The case follows the government’s announcement last week that it would be putting mask hoarders in its crosshairs, as fears of the Wuhan coronavirus have driven skyrocketing demand for hygiene products, including hand sanitizers.

The ministry declined to provide the name of the company it is accusing of hoarding masks.

The ministry said it was the largest quantity of masks netted in a single hoarding case. The government last week said any illegal hoarding will result in up to two years in prison or a fine of up to 50 million won ($42,000).

The company was trying to avoid government detection by meeting the potential buyer at a highway rest stop before heading to a storage warehouse. The investigation team had found piles of boxes in the storage.

Once they were caught, the company officials shut the storage warehouse, and several of them took off running, the ministry alleged.

The company allegedly posted that it was selling 1.05 million masks for 1.4 billion won and that it was only accepting cash.

That’s 1,300 won per piece. The government said the masks were only worth 700 million won, meaning that the company was trying to double the actual price.

The investigation team has also found that a separate company was selling protective masks online, and despite having an inventory of 390,000 masks, it posted that it was all sold out between Jan. 31 and Feb. 6. The government believes the company was waiting to sell its stock until it could charge a higher price.

“We will not accept any acts that disrupt the market while keeping the public’s safety as hostage,” the ministry said in a statement Monday.

The government currently runs 30 joint investigation teams made of 180 government officials from six departments, including the Food and Drug Safety Ministry, the Fair Trade Commission, the National Tax Service, the Korea Customs Service and the police.

In an effort to ease concerns over the distribution of protective masks, the government also said Monday it has decided to sell 1 million of them.

The Ministry of SMEs and Startups on Monday said the masks will be sold on Gongyoung Shop, a state-owned home shopping channel.

“There have been shortages of masks and [resultant] price hikes as the new coronavirus spreads,” said Park Young-sun, the minister of SMEs and startups. “As such, we will supply them without profit through home shopping.”

The shopping channel also plans to sell 140,000 bottles of hand sanitizer.

It will sell the first 20,000 bottles Feb. 17. On Feb. 19, the channel will sell 150,000 protective masks.

Due to the limited inventory, each customer will be only permitted to purchase a single set of 40 masks and a single set of five hand sanitizer bottles. They will be sold at the basic cost, plus delivery expenses.

In other news, the government’s effort to minimize the impact of the Wuhan coronavirus on the Korean industries continued.

Land, Infrastructure and Transport Minister Kim Hyun-mee on Monday met with 10 airline industry CEOs, including Korean Air, Asiana Airlines and Jeju Air.

“We will look into different supportive measures according to the damages inflicted on the airline industry, including suspending or exempting the airport facility charges,” Kim said during the meeting. “The airline industry since the Wuhan region in China has been locked down on Jan. 23 has seen the number of flights between Korea and China shrink roughly 70 percent. And recently other [flight] routes, including Southeast Asia, have been affected as the public’s interest in travel has decreased.”

She expressed particular concern with the impacts to the airline business.

“Compared to 2003 during SARS [severe acute respiratory syndrome], the number of international air flight passengers have grown more than four times, and the number of airlines has increased from two [Korean Air and Asiana] to 10,” Kim said. “As such the impact will be much greater [than in 2003.]”

Major Korean companies, including Hyundai Motor and Kia Motors, have halted their production plans due to a shortage of parts supply since parts suppliers in China were forced to stop.

Park also said the Korean government has sent 10,000 protective masks to smaller Korean companies in China to help restart production plants that could resupply parts. Park said the masks were sent to Shanghai on Feb. 5 and passed through customs the following day.

“The government will continue to work on policies including additional supportive measures for Korean [small- and medium-sized enterprises] in China with the help of private logistics companies and the cooperation of the Foreign Ministry,” Park said.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]


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