Kakao Summoned for National Audit Two Years in a Row... Namgoong Hoon Confesses Chronic Illness, "Adjusted Business Trip Schedule"

[Asia Economy Reporter Seungjin Lee] Namgung Hoon, co-CEO of Kakao, will appear as a witness at the National Assembly audit. For the second consecutive year, the head of the company has been summoned to the National Assembly. Unlike last year, when there was controversy over the infringement of local businesses, this year there are no particular issues, leading to criticism that the National Assembly is targeting Kakao unfairly.

According to industry sources on the 4th, Namgung posted on his Facebook on the 1st, saying, "Some media outlets have linked the National Assembly audit with my chronic illness, but as I have said, it does not affect my daily life," and added, "I had an overseas business trip scheduled during the Political Affairs Committee (Jeongmu Committee) session, but I changed my flight and accommodation schedules. I am carrying out my duties as CEO without any hindrance and will continue to do so well."

This was a response to some media reports linking his chronic illness to the audit after Namgung revealed last month that he suffers from diabetic peripheral neuropathy.

Namgung has been selected as a witness for the Fair Trade Commission audit scheduled for the 7th. The Political Affairs Committee is expected to question him about the leftover revenue earned from refund fees on KakaoTalk Gift.

In KakaoTalk Gift, gift purchasers can receive a 100% refund within the refund period. However, the gift recipients receive only 90% of the refund in cash after a refund period ranging from 3 months to 1 year. According to data submitted by Kakao for the audit, the revenue earned from fees over the past five years amounts to 92.4 billion KRW.

Kakao accepted criticism that the refund fee rate was set excessively high and proposed two improvement plans. They explained that they would choose one after going through procedures such as legal review according to current laws, gathering opinions from stakeholders, and establishing a new point system. Namgung is also expected to appear as a witness at the audit to explain these details thoroughly.

The issue is that despite Kakao proposing improvement measures, the National Assembly is still summoning witnesses. Previously, the National Assembly’s Industry, Trade, Energy, Small and Medium Business Committee withdrew its witness request for Naver CEO Choi Soo-yeon. The plan was to request Choi to expand service linkage between Zero Pay, implemented by the government, and Naver Pay, but the witness request was withdrawn after Naver submitted improvement measures.

Hong Eun-taek, co-CEO, will also be summoned as a witness at the Political Affairs Committee audit. Hong is expected to be questioned regarding the appropriateness of online ecosystem support projects related to consent decree. The consent decree is a system where a business under investigation or review by the Fair Trade Commission proposes reasonable corrective measures such as restoration and damage relief, allowing the case to be promptly closed without confirming illegality.

Within the industry, there is criticism that summoning CEOs as witnesses over issues for which improvement plans have already been proposed, and summoning both co-CEOs for different matters, is excessive. Last year, during the audit, Kim Beom-su, the founder and then chairman of Kakao, appeared as a witness over the local business infringement controversy, repeatedly apologizing and sweating nervously. At that time, there was also criticism that the National Assembly’s 'Kakao taming' was blatant.