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Prosecutors investigating nature of e-commerce platforms' payments to parent firm
By YonhapPublished : Sept. 29, 2024 - 21:12
Prosecutors investigating two beleaguered e-commerce platforms' payment delays to vendors are now trying to determine the nature of huge sums of money changing hands between those firms and their parent company, legal sources said Sunday.
According to the sources, the Seoul Central District Prosecutors Office secured a management consulting agreement between Qoo10 and their e-commerce affiliates, TMON and WeMakePrice, in June 2023. Under the deal, those affiliates were required to pay the Singapore-based company millions each year in exchange for management consultancy offered by Qoo10 CEO Ku Young-bae, and also to cover labor costs for the finance department and the service center at Qoo10.
Prosecutors suspect TMON and WeMakePrice sent about 1 billion won (US$762,195) to Qoo10 each month for a year, according to the sources.
Qoo10 Technology, a tech subsidiary of Qoo10, had been receiving 1 percent of the affiliates' revenue each month in exchange for handling those companies' finances, technology development, legal affairs and human resources management. The contract seen by the Seoul prosecutors apparently forced TMON and WeMakePrice to pay even more money to Qoo10.
Prosecutors are also trying to determine whether Qoo10 had taken its affiliates' money intended for Qoo10 Technology for offering financial services.
The sources said prosecutors recently questioned TMON CEO Ryu Kwang-jin, WeMakePrice CEO Ryu Hwa-hyun, Qoo10 Technology CEO Kim Hyo-jong and Qoo10 CFO Lee Si-jun over the matter. They are being suspected of embezzlement, fraud and other illegal acts.
Ku is expected to be called in for questioning as early as Monday. Ku's home was raided in August as part of the investigation.
In late July, TMON and WeMakePrice filed for court receivership due to liquidity problems that led to massive delayed payments to vendors on their platforms.
The government estimates that overdue payments amount to 1.28 trillion won, affecting around 48,000 vendors.
Ryu Kwang-jin and Ryu Hwa-hyun are accused of letting Qoo10 misappropriate 50 billion won of their companies' corporate funds to finance its takeover of the U.S. e-commerce platform Wish.
