Koo Young-bae, the CEO of Qoo10 Group, attended a pre-trial detention hearing at the Seoul Central District Court in Seocho-gu, Seoul, on the morning of the 18th. It has been revealed that Qoo10 Group’s subsidiaries were required to obtain prior approval from Qoo10 headquarters for contracts exceeding 100 million won annually. This has led to criticism that CEO Koo exercised a “monarchical management” style over the subsidiaries by mandating prior reporting or approval by the CEO or a designated person.
According to the “Qoo10 Group Headquarters Regulations” document obtained by Hankyoreh on the 18th, CEO Koo required subsidiaries to receive prior approval and reporting from Qoo10 headquarters for most decision-making areas, including personnel, legal affairs, management support, and other categories. Details reveal that subsidiaries needed the group’s CEO’s prior approval for contracts over 100 million won annually (except standard business contracts), additional management personnel (staff numbers), hiring of executives or team leaders, salary contracts exceeding 100 million won annually, and setting criteria for employee bonuses and performance pay. The key decision-making authority for all subsidiaries’ management lay with CEO Koo and Qoo10 headquarters. In practice, when TMON provided a short-term loan of 2 billion won to Giosis, the predecessor of Qoo10 Technology, and 800 million won to Qoo10, the final approver was the Qoo10 CFO, with the CEO of TMON not included in the approval line.
On the same day, the Seoul Central District Court held a second pre-trial detention hearing for Koo Young-bae, Ryu Kwang-jin, CEO of TMON, and Ryu Hwa-hyun, CEO of WEMAKEPRICE, over charges related to causing the “Tmon-WeMakePrice settlement delay incident.” This comes more than a month after their initial arrest warrant was dismissed on October 10. After supplementary investigations, the prosecution refiled detention warrants against them on the 14th. The prosecution has added charges related to Interpark Commerce, increasing the breach of trust amount to approximately 2.8 billion won and embezzlement to around 12.8 billion won. They are accused of causing losses of 72 billion won to subsidiaries, including TMON, WEMAKEPRICE, and Interpark Commerce, by misappropriating settlement funds related to sales of goods valued at 1.595 trillion won and diverting work to affiliated companies. They also face charges of embezzling 7.99 billion won in affiliate funds for the acquisition payment of the U.S. e-commerce platform, Wish.
Notably, Koo instructed Lee Si-jun, then Qoo10 Group CFO, around December last year, before the settlement delay issue arose, to find a way to withdraw approximately 25 billion won from Interpark Commerce settlement funds, which belonged to TMON, and transfer it to accounts of Interpark Commerce, WEMAKEPRICE, or Qoo10, even if it violated related laws. This directive was due to the high risk that standard methods might fail to ensure settlement, potentially subjecting TMON accounts to provisional attachment by unpaid sellers and consumers. The prosecution intends to secure custody of Koo and others before considering filing arrest warrants for other suspects, including Executive Director Lee Si-jun.