Bae Jae-hyun, general representative of Kakao Investment, was arrested on the 19th of last month, and Kim Bum-soo, head of the center, attended the Financial Supervisory Service on the 21st and received a high-intensity investigation for nearly 16 hours. While sending the case to the prosecution, the Financial Supervisory Service’s special envoy also reportedly indicated his opinion of prosecution against Kakao and Kakao Entertainment corporations.
Kakao Bank (Online Bank), where Kakao is the largest shareholder, is on the verge of shaking its status as a major shareholder. Stock market analysts say that if the arrested CEO Bae is convicted or the violation is confirmed by the head of the center Kim, it could lead to the worst situation in which most of Kakao Bank’s shares have to be offered. Under the current Internet Bank Special Act, industrial capital (non-financial players) must not have been fined for violating the Tax Offender Penalty Act, the Specific Economic Crimes Weighted Punishment Act, and the Fair Trade Act in the past five years to hold more than 10% of shares in Internet banks.Kakao Mobility, which has been in conflict with the taxi industry for years, is in a corner due to allegations of taxi call-making and fraudulent accounting. Earlier in February, the Fair Trade Commission imposed a corrective order and a $23 million fine to improve the acceptance rate standard among taxi dispatch factors, saying it drove a taxi call to a member of Kakao T operated by Kakao Mobility.
The Seoul High Court ruled in favor of Kakao Mobility’s appeal, but faced a new phase when the FTC appealed to the Supreme Court in August. Currently, five of the non-blind drivers who were affected by Kakao Mobility’s call-making are pursuing class actions with the People’s Solidarity for Participatory Democracy. Meanwhile, Kakao Mobility has recently been supervised by the Financial Supervisory Service due to allegations of accounting manipulation in the range of about 2.5 billion dollars before being listed.Earlier in July, Kakao received a correction order from the Korea Communications Commission in violation of the regulations on ownership of advertising agents. Kakao held 10% of SBS M&C shares, and became a special official of SM C&C, an advertising agency, when it acquired SM Entertainment earlier this year. Kakao, which said it was an “unintended violation” at the time, must correct the violation by January next year.In September, the civic group Economic Democracy 21 accused Kim Bum-soo, the center’s director, and major former and current executives such as Kakao and the Clayton Foundation on charges of breach of trust and embezzlement through virtual assets “Clay.” The organization claimed that management embezzled during the private sale (private pre-sale) before the listing of Clay. At that time, $1.2-2,5 billion was raised, but there was no sign that it was used for related projects, and Kakao arbitrarily used it.In addition to the allegation of SM market price manipulation, Kakao Entertainment is conducting an appeal after receiving a $520,000 fine and a correction order from the FTC in September on charges of abusing the right to create the second work. In addition, controversy over political bias over news algorithms following portal Daum continues. However, the conflict is expected to continue as Kakao affiliates are not expected to drop the lawsuit unless guidelines at the Kakao community level come down.
EJ SONG
US ASIA JOURNAL
