Prosecutors grill Qoo10 CEO over involvement in TMON, WeMakePrice payout crisis

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Prosecutors grill Qoo10 CEO over involvement in TMON, WeMakePrice payout crisis

Published: 30 Sep. 2024, 16:02

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

Qoo10 CEO and founder Ku Young-bae attends a parliamentary hearing at the National Assembly in western Seoul on July 30. [NEWS1]

Prosecutors summoned Qoo10 CEO and founder Ku Young-bae on Monday to question him over his involvement in the e-commerce platform’s subsidiaries' management, which has led to a seller-payout crisis.

Ku’s summoning comes around two months after the prosecution launched its investigation into the Singapore-based marketplace and its subsidiaries, TMON and WeMakePrice, after the platforms’ failure to pay their merchants was widely publicized in late July. The two platforms had yet to pay 1.3 trillion won ($991 million) owed to around 48,000 sellers as of late August, according to the Financial Supervisory Service.

The CEO said he would “diligently comply with the investigation” when he entered the Seoul Central District Prosecutors' Office in Seocho District, southern Seoul, at 8:55 a.m., according to local reports.

Prosecutors will reportedly question Ku on whether he ordered TMON and WeMakePrice to continue operating as normal and push for sales despite knowing of their poor finances. The CEO will also be asked whether Qoo10 has been using funds from its subsidiaries through Qoo10 Technology — a subsidiary wholly owned by Qoo10 that managed the group’s Korean e-commerce platforms’ finances — and his involvement in those decisions.

Qoo10 Technology was found by the prosecution to have signed a contract to receive 0.9 percent of the Korean Qoo10 affiliates’ monthly sales for their financial services — around 63 billion won each year of the 7 trillion won recorded by TMON, WeMakePrice and Interpark Commerce — according to local newspaper Hankyoreh.

Ku is further accused of using around 50 billion won of sellers’ earnings made on TMON and WeMakePrice to acquire North American e-commerce platform Wish, which was ultimately a bid to boost the company's asset size ahead of Qoo10's logistics subsidiary Qxpress's planned listing on Nasdaq.

TMON and WeMakePrice CEOs Ryu Gwang-jin and Ryu Hwa-hyeon were questioned earlier by the prosecution on the companies’ top management on Sept. 19.

The anticorruption investigation department of the prosecution has so far found the Qoo10 group to have embezzled 50 billion won and earned 1.4 trillion won through fraudulent sales.

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