SEOUL: The billionaire founder of South Korea’s Coupang failed to appear before a parliamentary hearing in Seoul on Wednesday (Dec 17) over the e-commerce group’s recent data breach, prompting a decision to file a legal complaint over his absence.
Coupang CEO and chairman Bom Kim declined to attend, citing his overseas residence and commitments as head of a global company operating in more than 170 countries.
“Chairman Bom Kim’s claim that he cannot attend because he is travelling abroad and is a global CEO is, in my view, an act that truly mocks the public and delivers despair to global investors,” said lawmaker Choi Hyung-du.
“Even Meta’s Mark Zuckerberg and Amazon’s Jeff Bezos – heads of companies larger than Coupang – did not refuse to appear before Congress hearings,” he said.
South Korea’s National Assembly later decided to file a legal complaint against the Coupang founder and former chief executive officers under a law that compels witnesses to attend hearings and make themselves available for investigations. Under the law, people can be fined or imprisoned for refusing testimony.
YELLING IN PARLIAMENT
Emotions ran high at the hearing, with lawmakers often shouting at Harold Rogers, the interim CEO of Coupang Corp, the company’s South Korean unit, who was standing in for Kim. Rogers repeatedly asked to be allowed to finish his answers.
“I’m in communication with our board of directors, including with our chairman,” Rogers said, but then added: “I am the decision maker in Korea.”
The personal data of more than 33 million Coupang customers was leaked in a breach believed to have started on Jun 24 through overseas servers, though the company did not learn of the problem until Nov 18.
Shares in New York-listed Coupang, which is roughly 17 per cent owned by Japanese tech investment group SoftBank, have slumped by 17 per cent since it revealed the breach at its South Korean unit late last month. The South Korean unit accounts for the vast majority of its revenue.
Rogers said that under US SEC rules, the breach did not count as a material breach because the information leaked is not considered highly sensitive. It would not violate US privacy law, he added.
The data included customers’ names, home and email addresses, phone numbers and purchase history.
A DOMINANT COMPANY
Coupang dominates South Korea’s e-commerce market, keeping rivals in check with its competitive prices and various benefits such as same-day delivery, video streaming and food delivery services. It has 24.7 million active users – nearly half of the country’s population.
That dominant position is expected to help Coupang weather the negative publicity brought by the breach.
Coupang is “structurally advantaged in the Korean e-commerce market, effectively operating in a market with limited direct competition due to its scale, logistics integration and consumer lock-in”, Nomura analysts said in a note to clients this week.
The company is, however, likely to be hit with a hefty fine.
Under South Korean law, companies that fail to implement adequate data protection measures can be fined up to 3 per cent of revenue, which would translate to a penalty of more than 1 trillion won (US$680 million) for Coupang.
In the wake of the breach, South Korean President Lee Jae Myung has called for increased penalties, and on Wednesday, lawmakers introduced a Bill to raise fines to up to 10 per cent of revenue for massive data breaches.