Prosecutors raid TMON, WeMakePrice

Aug 02, 2024, 09:43 am

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Ku Young-bae, CEO of Qoo10, opens the door to his home to cooperate with a search and seizure by prosecutors on Aug. 1, 2024. / Source: Yonhap

AsiaToday reporters Park Sae-young & Kim Hyung-joon

The prosecution searched the headquarters of Tmon and WeMakePrice and the residence of Ku Young-bae, the CEO of Singapore-based Qoo10 Group, on Thursday as part of an investigation into the e-commerce platforms’ delayed payments to their vendors amid a persisting liquidity crisis surrounding both companies. The investigation is expected to speed up further as the raid operation comes three days after setting up a dedicated investigation unit on Monday.

The Seoul Central District Prosecutors’ Office conducted raids on three residences of company executives, including Ku, and seven corporate offices, including the headquarters of Tmon and WeMakePrice. The raids came six days after the Financial Supervisory Service requested an investigation into the payment delay issues involving the e-commerce platforms. The investigation team involving 85 prosecutors and investigators seized accounting documents and digital devices, including computer hard drives and cellphones.

Tmon and WeMakePrice are suspected of maintaining contracts with sellers and selling their products despite knowing that they would not be able to settle payments in time due to liquidity issues.

The government estimates some 210 billion won in delayed payments, but observers say the figure could reach 1 trillion won as sales from June to July remain unsettled.

It is reported that in the warrant for the raids, the prosecution said that the three companies and Ku are suspected of fraud involving 1 trillion won and of embezzling 40 billion won, or some 29 million U.S. dollars. Prosecutors suspect that Tmon and WeMakePrice defrauded consumers of more than 1 trillion won by selling gift certificates at unusually high discount rates. In addition, prosecutors plan to check the flow of funds through account tracking, believing that it was Qoo10’s embezzlement that it secured 10 billion won and 30 billion won, respectively, from Tmon and WeMakePrice, and used them as funds to acquire Wish, a North American e-commerce platform.

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