'The Swamp of Dogmatism' Kakao... Union Calls for "Communication Channel" (Summary)

Protest at Kakao Entertainment Headquarters in Jongno-gu, Seoul on the 8th
Pointing to Unilateral Decision-Making System as Cause
'100 to 0' Principle is a Thing of the Past... "Need for Communication Channels"

The Kakao Branch of the National Chemical Fiber Food Industry Labor Union (Kakao Union) held a picketing protest near the Centropolis building in Jongno-gu, Seoul, at 12 PM on the 8th. Seo Seung-wook, the branch chairman, is answering questions from reporters. Photo by Cha Min-young

"The structure that allows unilateral decision-making must be fixed to prevent the problem from recurring."

The Kakao Labor Union began a picketing (hand sign) protest on the 8th to expose misconduct at Kakao Entertainment and demand group-level measures.

The Kakao Branch of the National Chemical, Textile, and Food Industry Labor Union (Kakao Union) held a protest near the Centropolis building in Jongno-gu, Seoul, at 12 PM that day. Kakao Entertainment leases and uses some floors of the Centropolis building in Jongno.

Seo Seung-wook, head of the Kakao Union branch, emphasized, "The company has not disclosed the reasons for management failure and remains silent," adding, "It is necessary to clearly reveal the truth through internal audits or investigations by independent external agencies so that such problems do not recur in the future." He also stated, "Similar issues are occurring in many affiliated corporations besides Kakao Entertainment, indicating a need for structural system improvements," and added, "The internal monitoring and checks are not functioning clearly."

Criticism of Kakao's '100 to 0' Principle

During a Q&A session with reporters, the lack of communication from Kakao's management was pointed out as a problem. The Kakao Union started its first protest on the 4th at Kakao Agit in Bundang-gu, Seongnam-si, Gyeonggi-do, demanding a meeting with Kim Beom-su, Kakao's founder and chairman of the management innovation committee, who was presiding over an emergency management meeting. The union has demanded investigations into management corruption and verbal abuse, as well as participation in management reform through internal statements and press releases. The company has consistently remained unresponsive.

Seo Seung-wook stated, "After the misconduct incident, Kakao only implemented voluntary retirements for employees but does not discuss the reasons for the crisis or the valuation of acquired companies," emphasizing, "They should not just claim a management crisis but clarify the reasons." The union is demanding continuous communication channels with the company and participation in the Compliance and Trust Committee.

Criticism was also directed at Kakao's '100 to 0' principle. This principle, maintained since the company's founding, means "transparent communication with internal members but strictly blocking communication with outsiders." Recently, Kim Jeong-ho, head of Kakao CA Council's management support and Compliance and Trust Committee member, publicly exposed internal company corruption on his personal Facebook, bringing the '100 to 0' principle to the surface. Afterward, Kim requested a 'self-discipline' from the company and set his Facebook account to private. Seo said, "When this system was established, it meant that all members had transparent information and could debate, but that is no longer the case," adding, "Previously, it was seen as a 'leak,' but now communication with external stakeholders is necessary."

Next Week, Kim Beom-su to Hold Employee Meeting... Replacing Emergency Management Meeting

Kakao union members are holding placards with phrases such as "Take responsibility for management failure and implement personnel reform" on the 8th.

Industry attention is focused on the employee meeting hosted by Chairman Kim Beom-su at Kakao headquarters. Chairman Kim will hold the meeting both online and offline at 2 PM on the 11th at Kakao headquarters in Seongnam-si, Gyeonggi-do. This is his first direct communication since the 10th anniversary meeting two years and ten months ago. The meeting is limited to headquarters employees, sparking controversy over affiliate exclusion. The emergency management meetings that were held every Monday morning have also been postponed to other days.

Regarding the meeting, Seo Seung-wook said, "There has been almost no disclosure about what will be discussed, so specific questions are difficult," adding, "We will mainly ask about Chairman Kim's perspective on the issues." Since it is not a one-on-one meeting between the company and the union, the union plans to refrain from taking the lead in voicing opinions. Seo also commented on the affiliate exclusion controversy, saying, "Not only headquarters employees but also those from affiliates like Mobility and Entertainment should be informed."

Kakao Entertainment is under prosecution investigation for allegations of stock price manipulation of SM Entertainment. The allegation is that they intentionally raised the stock price to hinder competitors from purchasing shares. During this process, controversy arose over the high-priced acquisition of a drama production company. In July 2020, they acquired the drama production company Baram Pictures, which had a capital of 100 million KRW, for 20 billion KRW, allegedly causing a loss of 40 billion KRW (breach of trust under the Special Act on Criminal Cases). The company, which had been operating at a loss for years, was purchased at a price higher than the market value and capital increased, causing damage to the company. It was reported that Lee Junho, head of Kakao Entertainment's investment strategy division who led the acquisition, and his wife, actress Yoon Jeong-hee, invested in Baram Pictures, raising issues of legal violations and moral hazard among management.