Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Coupang CEO's conduct prompts regulatory authorities to vow stronger sanctions
Coupang interim CEO Harold Rogers answers questions from lawmakers during a National Assembly hearing in Seoul, Wednesday. Yonhap
By Lee Min-hyung
Coupang executives’ conduct over the company’s massive data leak is provoking a strong backlash from the National Assembly and prompting regulatory authorities to gear up for any possible measures to sanction the e-commerce giant.
Since the data breach was disclosed in late November, the company’s top executives, including founder Kim Bom-suk, have been criticized for avoiding actions to take responsibility and apologize to the 33.7 million affected customers.
Kim issued a belated apology on Sunday, but kept refusing to attend National Assembly hearings and instead sent the newly appointed interim CEO of Coupang Korea, Harold Rogers, in his place. In the three sessions he attended, Rogers failed to curb public anger toward the company and its executives, instead fueling discontent as participating lawmakers described his attitude as “arrogant."
Besides the data breach, Coupang is mired in a series of other controversies, including poor working conditions at its logistics centers and multiple reports of workplace deaths.
With Rogers delivering unclear responses to multiple questions from lawmakers, Fair Trade Commission (FTC) Chairman Ju Biung-ghi, who also attended the hearing on Wednesday, stepped up criticism of Coupang for failing to fulfill its social responsibility.
Ju also called for stricter punitive measures against Coupang.
“Large global companies such as Coupang are exploiting Korean workers and deceiving customers,” he said during the hearing. “In the current legal environment, companies are able to continue engaging in such exploitative practices.”
To prevent a recurrence of issues such as the Coupang breach, the FTC chief underscored the need to drastically revamp Korea’s regulatory system.
“In most developed countries, they proactively set rules before any potential problem arises, which is not the case for Korea,” Ju said.
Korea needs to revise the system quickly so authorities can preemptively prevent Coupang and other large companies from conducting any unfair business activities, according to the FTC chief.
He also took issue with the weak financial penalties imposed on companies.
“Korea’s regulatory authorities cannot impose massive economic sanctions under the current ex ante regulatory framework,” he said.
Fair Trade Commission Chairman Ju Biung-ghi, left, speaks during a National Assembly hearing on Coupang in Seoul, Tuesday. Yonhap
On Tuesday, Ju also said he would consider designating Kim as the controlling owner of Coupang. If the authority does so, Coupang faces a wider range of regulations in its key decision-making.
Kim has so far been able to evade the regulatory designation, as his relatives were not known to take part in the firm’s management activities.
However, after Coupang Vice President Kim Yoo-seok, the younger brother of the founder, turned out to have collected 3 billion won ($2 million) last year in annual salary, the FTC is moving to press Bom Kim and Coupang to abide by stricter disclosure obligations under the regulation.
Ju also said the FTC will consider designating Coupang as a market-dominant business operator. If the e-commerce firm is determined to belong to that category, the company faces stricter sanctions when caught engaging in any unfair market activities or abuse.
Saying a government-private joint investigation into the data breach is ongoing, Ju added that the FTC could impose an operational suspension on the company, if necessary, after a review of what information was leaked, potential damage to customers and whether Coupang can carry out proper measures to repair the damage.
Starting from January, the watchdog is also set to investigate whether Coupang has engaged in any unfair cross-sales of its key services, such as Coupang, Coupang Eats and Coupang Play, through its paid WOW merbership.
The National Tax Service (NTS) also joined the regulatory move by launching a special tax investigation into Coupang and Bom Kim after finding suspected signs of tax evasion earlier in December.
NTS Commissioner Lim Kwang-hyun said Tueday his agency would seek cooperation with the U.S. Internal Revenue Service if necessary, as Coupang's parent company, Coupang Inc., is based in the U.S.
The Assembly is also taking steps to file a complaint against Rogers for perjury. Earlier, the Coupang executive claimed that the company had carried out an internal investigation into the latest data breach on instruction from the National Intelligence Service, but the spy agency denied it and asked the Assembly to proceed with filing against Rogers.