South Korean prosecutors have launched an investigation into the “unsettled payment scandal” involving TMON and WeMakePrice by conducting raids on their headquarters and other locations. The Seoul Central District Prosecutors’ Office dispatched investigators on Aug. 1 to 10 locations, including the residence of Qoo10 CEO Ku Young-bae. This action came just six days after the Financial Supervisory Service requested an investigation into the scandal on July 26. Prosecutors have charged Ku with fraud and embezzlement under the Act on the Aggravated Punishment of Specific Economic Crimes.
Apart from the prosecutors’ investigation, Qoo10′s affiliates are taking independent measures to ensure their survival. Affiliates such as WeMakePrice and Interpark Commerce are pursuing separate sales independent of the parent group. However, the South Korean e-commerce industry remains skeptical, noting that even 11Street has struggled to find a buyer for a long time, casting doubt on Qoo10′s prospects.
“WeMakePrice plans to propose a sale to Chinese e-commerce companies like AliExpress and Temu separately from TMON and Qoo10,” said a senior Qoo10 official. “Through the Seoul Bankruptcy Court, we could proceed with reducing Qoo10′s shares entirely before working with creditors on the sale. If AliExpress or Temu don’t accept the proposal, we will reach out to South Korean companies. We need a quick solution; otherwise, we’re all headed for disaster.”
Interpark Commerce, another Qoo10 affiliate affected by the scandal, also announced its intention to pursue independent management. Interpark Commerce includes Interpark Shopping, Interpark Books, and AK Mall. “If we continue like this, Interpark Commerce will face the same fate as TMON and WeMakePrice. Independent management is our last hope for survival,” said Interpark Commerce CEO Kim Dong-sik. Ku has reportedly agreed to the sale of Interpark Commerce.
The affiliates’ decision to seek their own survival strategies stems from the conclusion that waiting for a group-level solution is not viable. “We told Ku to secure even 10 billion won from investors, but he said that no investors are willing to help,” a senior Qoo10 official revealed.
Currently, Ku is considering merging TMON and WeMakePrice for a sale. “We are planning to merge the two companies so that sellers who haven’t received their payments can become the major shareholders of the merged entity,” Ku mentioned in a media interview. However, there is criticism that Ku has lost his leadership within Qoo10 due to this crisis.
There are projections that Ku might lose control of Qxpress, a key Qoo10 subsidiary. Several private equity funds, which invested in Qxpress with hopes of a Nasdaq listing, might convert their preferred shares to common shares and exercise convertible bonds (CB) and exchangeable bonds (EB) to oust Ku. On July 26, shortly after the TMON and WeMakePrice scandal broke, Qxpress announced that Ku resigned as CEO and a successor was appointed. “The Qxpress board likely removed Ku in response to investor demands,” suggested an insider familiar with Qxpress.
