Kakao Union Demands Withdrawal and Audit of Unethical Executive Advisory Contracts

The Kakao Labor Union has demanded the termination of advisory contracts with former Kakao Entertainment co-CEO Kim Seong-su and former Head of Investment Strategy Lee Jun-ho, who were indicted in connection with allegations of Kakao's high-priced acquisition of a drama production company.

The Kakao union stated on the 23rd that former CEO Kim has continued his advisory contract after resigning, and former Head Lee is still employed by the company, calling for the immediate termination of their advisory contracts and dismissal.

Earlier, the prosecution indicted former CEO Kim and former Head Lee without detention on charges including violation of the Act on the Aggravated Punishment of Specific Economic Crimes (breach of trust), mediation of breach of trust, acceptance of breach of trust, and violation of the Act on the Regulation and Punishment of Criminal Proceeds Concealment. They are accused of conspiring to have Kakao Entertainment acquire the insolvent drama production company Baram Pictures, which was actually owned by former Head Lee, at a high price in 2020, causing the company a loss of 31.9 billion KRW.

The union said, "The allegations of unfair transactions are being proven true, and former CEO Kim and former Head Lee have been indicted," adding, "Despite the management innovation committee operating for nearly a year within Kakao, there are reports that internal control over management has not significantly improved."

They further explained, "It has been revealed that former Kakao Pay CEO Ryu Young-jun, who caused a 'muk-ttwi' (hit-and-run) incident shortly after the company's listing, and former Kakao Enterprise CEO Baek Sang-yeop, who drove half of the entire workforce into restructuring due to reckless management, have been receiving high advisory fees through advisory contracts. Despite the union's immediate demands to stop this, no improvements have been made."

The union also emphasized, "We demand the immediate termination of advisory contracts and dismissal of unethical executives involved in legal and social issues," and "We insist on conducting a thorough internal audit, which has not functioned properly for management so far, and making the results public."

Seo Seung-wook, head of the union branch, criticized, "The labor union has continuously sent warning messages and demanded management reform through collective agreements, but the company has not engaged in concrete discussions on reform, citing management rights."

Meanwhile, apart from internal audits, the union plans to report cases of mergers and acquisitions and investment executions suspected of unfair transactions through the 'Compliance and Trust Committee,' an external body for monitoring compliance and ethical management.