Prosecutors question WeMakePrice, TMON chiefs over payment failures

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Prosecutors question WeMakePrice, TMON chiefs over payment failures

Published: 19 Sep. 2024, 13:50 Updated: 19 Sep. 2024, 19:30

KIM JU-YEON
kim.juyeon2@joongang.co.kr

TMON CEO Ryu Gwang-jin answers questions from the press in front of the Seoul Central District Prosecutors' Office in Seocho District, southern Seoul, ahead of questioning on Thursday. [NEWS1]

WeMakePrice CEO Ryu Hwa-hyeon and TMON CEO Ryu Gwang-jin were summoned by prosecutors for their first questioning on Thursday over their involvement in the e-commerce platforms’ failure to pay their listed sellers.

The two heads appeared at the Seoul Central District Prosecutor’s Office at 10 a.m., according to local reports. This comes around two months after the Financial Supervisory Service launched its investigation into the shopping platforms in late July, and over a month after prosecutors raided the offices of Qoo10-related executives.

The heads are reportedly being questioned on when they became aware of the companies’ financial woes and the extent of their role in sending payments that should have gone to sellers to Qoo10 for Wish’s takeover.

They are accused of transferring around 50 billion won ($37.5 million) in merchants’ earnings to parent company Qoo10 to acquire North American platform Wish and continuing the marketplaces’ operations despite knowing of their companies’ liquidity crisis, resulting in around 1.4 trillion won in fraudulent sales.

The platforms allegedly earned quick cash through aggressive sales of their prepaid cards and gift cards — now mostly unusable and non-refundable — before the companies’ crisis became public.

TMON CEO Ryu told reporters before the questioning that TMON’s liquidity crisis and payment delays were caused when sellers and payment gateways abruptly pulled their services in a “bank run” and parent company Qoo10’s lack of support.

He said that, unlike WeMakePrice, "TMON did not show any signs of delayed payments.”

“The current situation occurred because there was no support from headquarters, and we failed to prevent a bank run. TMON had no time to think about the difficulties in making payments. We make payments by earning revenue, but the bank run suddenly occurred, so I will now explain to the prosecution why it occurred and our efforts to fix it,” he said.

He denied being involved in the decision-making process for acquiring Wish.

On allegations that Qoo10 had launched non-marginable promotional events to list Qoo10’s logistics subsidiary Qxpress on Nasdaq, Ryu said Qoo10 CEO Ku Young-bae had repeatedly emphasized the listing’s importance for the benefit of all Qoo10 affiliates and had urged an increase in shipment for Qxpress.

WeMakePrice CEO Ryu did not answer questions from the press, saying he would comment after the prosecution's questioning.

The Fair Trade Commission and Korea Consumer Agency said on the same day that they earmarked an additional 450 million won in the government's budget for next year to resolve consumer damages resulting from the two marketplaces’ crisis. So far, 22,005 customers who purchased travel-related services or gift cards on the platforms have applied for collective dispute mediation.

Update, Sept. 19: Info on government budget outlays to resolve consumer damages added.

BY KIM JU-YEON [kim.juyeon2@joongang.co.kr]