South Korean police have launched a probe into Uber's local employees and business partners, accusing the company of violating the country's transport and communications laws.
The police raided an office in Gangnam where Uber drivers were registered and trained, and seized their smartphones and related materials for evidence of the company's alleged illegal activities. Up to 17 people are under investigation, including the head of Uber's local branch and drivers of the U.S. company and its rental car partner, the Seoul Metropolitan Police said in a statement Tuesday.
Just last week, the Land, Infrastructure and Transportation Legislative sub-committee approved a bill to ban Uber from operating in Korea. The San Francisco-based startup subsequently suspended its ride-sharing service in Seoul, giving in to local authorities after more than a year of struggle over its ride-hailing services.
The police have accused Uber of violating Korean transportation laws by allowing unlicensed drivers to offer rides to city residents using private or rental vehicles. Penalties for this violation are up to two years in prison or up to 20 million won (US$17,622) in fines. Uber is also charged with breaching local communications rules, which require a company offering a location service to register with the Communications Commission and comply with certain requirements, one of which is to protect user location data. Violators can be sentenced up to three years or fined up to 30 million won.
To comply with the transportation laws, starting last week, Uber suspended its ride-sharing platform in the city and limited its premium ride service, UberBlack, only catering to a certain set of passengers such as those aged over 65, the disabled, foreigners and government and municipal officials. It continues to run the UberTaxi service, which works with existing taxi drivers.
"Uber does not believe the employees in Korea have engaged in any misconduct or illegal behavior," the company said in a statement. "Uber has fully cooperated with the police during the course of their investigation and we will continue to do so as the matter is referred to the prosecution for review."
South Korea has consistently maintained a hard stance against the global tech company. In December, the government filed a criminal charge against Uber CEO Travis Kalanick for allegedly flouting local laws. He was never detained by the authorities but if found guilty, the police can put him on the criminal wanted list, said Oh Kyo-jung, police investigation director.
Uber claimed that it filed the location-based service application to the Commission on March 8. The reason for the delay, the company said, was a regulation that prevented the foreign company from doing it, which was relaxed just this year. But the Korea Communications Commission holds that no such restrictions ever existed, according to an official who spoke on condition of anonymity.
The taxi business in Seoul is saturated as cabs are readily available and several apps for calling cabs have existed for a while. Local tech companies such as Daum Kakao are also catching up by offering mobile-based taxi-hailing services like those of Uber. More than 30 million South Koreans are registered on Kakao Talk mobile messenger app, which could help "Kakao Taxi" when it is launched at the end of this month. To avoid legal issues, the service will only work with the existing taxi operators.
The authorities have claimed that Uber threatened the safety and security of Seoul passengers as its drivers did not have to go through official background checks as other taxi drivers, and the riders were not insured in the case of road accidents.