Uber in Trouble

Travis Kalanick, founder of Uber, speaks in Paris on Dec. 10, 2013. (Photo by Heisenberg Media via Wikimedia Commons)
Travis Kalanick, founder of Uber, speaks in Paris on Dec. 10, 2013. (Photo by Heisenberg Media via Wikimedia Commons)

 

Korean prosecutors have indicted Travis Kalanick, the founder and CEO of the app-based taxi service Uber, for illegal taxi services. It is rare for the prosecution to bring a charge against the head of a foreign company. Therefore, the industry is paying attention to whether or not he will be present in court. After its establishment in San Francisco in 2009, Uber Technology started to provide its taxi service on the following year, which has expanded worldwide. It introduced its taxi service to Korea in August of 2013.

On Dec. 24, the Seoul Central District Prosecutors' Office said that it has brought charges against Kalanick, the local subsidiary of Uber Technologies, car rental service provider MK Korea, and the head of the local rental car company. The two people were charged with violating the Passenger Transport Service Act. Under the law, it is illegal for rental car companies to be engaged in a transportation business using their cars, or to help another company do the transportation business. Violators face up to two years in jail or a fine of 20 million won.

According to prosecutors, Uber forged a partnership with MK Korea in early August of last year, and decided to deduct 20 percent of taxi fares as fees. The car rental service provider supplied cars and drivers. Customers paid taxi fares with their credit cards stored on the Uber app.

Prosecutors indicted Kalanick so that the local court can decide on the illegality of Uber. The move can be interpreted as their intention to bring their decision into line with the recent launch of a crackdown on Uber by the Seoul Central District Prosecutors' Office to offer one million won to those who report Uber's illegal activities. Prosecutors' efforts are also aimed at preventing the expansion of the app-based taxi service.

Prosecutors' indictment on the CEO of a foreign company is not common, and it is also rare for a charged one to appear in the local court. Hence, Kalanick's presence or absence in court is expected to draw a lot of attention. Lone Star Funds Chairman John Grayken is the only one that appeared in court.

However, Uber C.E.O could be tried in absentia when the court believes that there will be no problems with court proceedings without his presence.

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