Six Parliamentary Committees to Participate on December 30-31
Dispute Over the Facts of the Data Breach Investigation
Questions Raised Over the Effectiveness of the Compensation Plan
Broad Criticism Expected Over Payment Terms and Overwork-Relate
Coupang, which suffered a massive customer information leak, announced a compensation package worth 1.6 trillion won on the eve of the joint parliamentary hearing scheduled for December 30-31. Kim Beomseok, Chairman of the Board of Coupang Inc. and founder of the company, issued a written apology one month after the incident involving the leak of 33.7 million customer records. Now, by announcing a large-scale compensation plan, Coupang is moving quickly to calm worsening public sentiment.
However, as Chairman Kim has once again stated that he will not attend the upcoming hearing, criticism is mounting. With lawmakers from all parties intensifying their attacks on Coupang and Chairman Kim, the hearing is expected to feature heated debates over the findings of the investigation into the cause of the data breach, as well as the adequacy of Coupang’s response and compensation plans.
According to the National Assembly and industry sources on December 29, the upcoming Coupang joint hearing will be led by the ruling party and will involve six standing committees: the Science, ICT, Broadcasting and Communications Committee; the Political Affairs Committee; the Land, Infrastructure and Transport Committee; the Climate, Energy, Environment and Labor Committee; the Planning and Finance Committee; and the Foreign Affairs and Unification Committee. Chairman Kim, Vice President Kim Yuseok, and former Coupang CEO Kang Hanseung were all summoned as witnesses, but all three reportedly submitted letters explaining their absence.
On the previous day, Chairman Kim released a statement through Coupang’s Korean subsidiary for the first time since the incident, saying, “The personal information leak at Coupang has caused great concern and inconvenience to our customers and the public. As Coupang’s founder and Chairman of the Board, I sincerely apologize on behalf of all Coupang employees.” He continued, “The Board of Directors will ensure that Coupang Korea prepares and implements a compensation plan as soon as possible for Korean customers who have been inconvenienced. We will also completely overhaul Coupang’s information security measures and investments to ensure that such a personal information leak never happens again.”
Despite this message, criticism persists that Chairman Kim’s apology is belated and intended to defuse growing public anger from the government, political circles, and consumers, especially since he refused to attend the previous Science, ICT, Broadcasting and Communications Committee hearing on December 17 and is again refusing to attend the joint hearing.
In particular, a dispute over the facts is expected at the hearing, as the government and Coupang have differing views regarding the findings of the investigation into the data breach, which Coupang announced on December 25. Coupang stated that, following government instructions, it identified the former employee responsible for the leak and secured both the testimony of the perpetrator and the storage device. The company also emphasized that only 3,000 customer records were stored on the perpetrator’s computer and that none of this information was distributed or sold externally. Chairman Kim’s apology highlighted this point, maintaining that it was the result of cooperation with the government. However, the police and the Ministry of Science and ICT, who led the investigation, countered that they had never coordinated with Coupang on this matter. The hearing is expected to scrutinize the facts behind these conflicting claims.
The compensation plan announced by Coupang on this day is also likely to become a major point of contention at the hearing. Coupang plans to provide 50,000 won in compensation to each of the 33.7 million affected customers-including Coupang Wow, regular, and former members-starting January 15 of next year. However, the compensation will be in the form of discount coupons for four categories: all Coupang products (5,000 won), Coupang Eats (5,000 won), Coupang Travel products (20,000 won), and Alux products (20,000 won), effectively encouraging additional purchases. Online communities have reacted skeptically, with comments such as, “So they’re not giving out 50,000 won in cash, just discount coupons?” and “Aside from the Coupang coupon, I probably won’t use the others.”
It has also become controversial that Vice President Kim Yuseok, who oversaw Coupang’s delivery camp operations, received a total of 14 billion won in salary and incentives over four years from 2021 to last year. If it is confirmed that Chairman Kim and his family (relatives) participated in management or engaged in transactions with the company, there is a high possibility that Chairman Kim will be designated as the controlling shareholder. Chairman Kim has so far avoided this designation by claiming that his family does not interfere in management, among other exceptions.
Other issues expected to be addressed at the hearing include Coupang Inc.’s delayed disclosure to the U.S. Securities and Exchange Commission (SEC) regarding the data breach, the company’s practice of paying for direct purchases up to 60 days later, and suspicions of downplaying the 2020 warehouse worker death incident. Meanwhile, the Democratic Party of Korea has stated that, depending on the outcome of the hearing, it may pursue a parliamentary investigation and even consider imposing an entry ban on Chairman Kim.
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