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(EDITORIAL from Korea Times on Jan. 12)

Editorials from Korean dailies 07:02 January 12, 2022

Shame on Kakao executives
Mass selling of shares betrays public trust

Executives of Kakao Pay, the payment arm of IT giant Kakao Corp., have invited criticism for selling off their company stocks to make a quick profit. On Monday the fintech firm's chief, Ryu Young-joon, decided to turn down his nomination as co-CEO of Kakao Corp., caving in to public outcry for the abrupt disposal of his shares.

Ryu and seven other Kakao Pay executives have come under fire for dumping a combined 440,933 shares worth 90 billion won ($75 million), Dec. 10, through after-hours block trading by exercising their stock options. The sell-off came about one month after the online payment platform made its market debut in November through an initial public offering (IPO).

There appears to be nothing legally wrong with their sell-offs. But their sudden profit taking is blamed for disregarding shareholder value and causing huge losses to minority shareholders. Kakao Pay's share price hit a record high of 248,500 won Nov. 30, after the company's listing on the Korea Exchange, Nov. 3. But the executives' mass selling prompted a slide in the stock price which lost more than 25 percent of its worth in a month.

The executives' moral hazard reached its apogee. Their blind pursuit of monetary gain cannot and should not be condoned. It constituted a betrayal of the public's trust in the innovative corporation. It also led to the firm's failure to make good on its commitment to shareholder value and social responsibility.

Particularly Ryu has taken flak for making a windfall of 45 billion won by selling 230,000 shares he obtained under the stock option program. He and his company cannot assuage the public's anger by only withdrawing his nomination as the next co-CEO of Kakao Corp. It is disappointing to see that Ryu will continue to serve as Kakao Pay's CEO until March when his term ends. He should resign immediately as it is shameful for him to lead the firm.

When applying for its IPO, Kakao Pay promised to turn the company into a leading global investment bank by pushing for financial innovation. It managed to raise 1.5 trillion won in capital from its IPO, with 1.82 million people rushing to buy new shares of the firm. But the executives' dumping of their shares demonstrated that they have forgotten that promise.

More seriously, their selfish and shameful act of profit taking has something to do with Kakao Corp.'s unfair practices, including its alleged exploitation of subcontractors and small businesses. Kakao Corp., the operator of the country's top mobile messenger KakaoTalk, is under attack for reckless business expansion that has driven small neighborhood stores out of business. It has also raised the ire of taxi drivers due to the exploitative practice of its taxi-hailing platform Kakao Mobility.

Kakao Corp. has emerged as the country's 18th-largest conglomerate with more than 100 subsidiaries, including KakoBank and Kakao Games, by taking advantage of innovation. Yet innovation could be meaningless if the IT behemoth is intent on pursuing profit at the sacrifice of shareholders, business partners and consumers. We urge the group to restore its reputation and public trust by making efforts to play fair, improve transparency, fulfill social responsibility and protect consumers better.

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