Rep. Park Sangwoong Proposes 'Preemptive Safety Device Act' in Response to Tmap Situation

On the 22nd, Park Sangwoong, a member of the People Power Party (representing Miryang, Uiryeong, Haman, and Changnyeong in Gyeongnam), proposed a partial amendment to the "Act on Contracts to Which the State is a Party," which mandates public institutions to verify the financial status, including capital erosion, when entering into contracts with private companies such as e-commerce firms, in order to prevent incidents like the Timapeu case.

Until now, there has been no legal basis or safety mechanism for public institutions to verify whether a private company is experiencing capital erosion when assessing eligibility for bidding or participating directly in bids.

Photo of Assemblyman Sangwoong Park's legislative activities. [Image provided by Assemblyman Sangwoong Park's Secretariat]

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In fact, during the so-called "Timapeu unpaid settlement incident" involving Tmon and Wemakeprice in August, Home Shopping for Public Interest was unable to collect approximately 2.1 billion KRW after onboarding with these companies without verifying their capital erosion status.

Accordingly, the proposed amendment stipulates that when pre-screening companies for eligibility to participate in state contracts, their capital erosion status must be checked, and if capital erosion is confirmed, their participation in bidding may be restricted.

Under the current law, capital erosion is not a factor that excludes a company from bidding eligibility, which has allowed companies experiencing capital erosion to enter into contracts with public institutions through state contracts.

Park Sangwoong stated, "The estimated damage from the Timapeu unpaid settlement incident is about 1.3 trillion KRW, but this is only an estimate and the actual scale of damage could expand further," adding, "Given the nature of the e-commerce industry, it is necessary to establish preemptive safety measures even when entering into contracts with companies experiencing capital erosion."

Park also added, "As a standing member of the National Assembly’s Trade, Industry, Energy, SMEs, and Startups Committee, I will do my utmost to develop policy and institutional measures to prevent the recurrence of incidents like the Timapeu unpaid settlement."

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