Uber CEO indicted in South Korea over 'illegal' service

Seoul official says company operated rental cars as taxis

Prosecutors in South Korea on Wednesday charged Uber Technologies Inc Chief Executive Officer Travis Kalanick and the head of its domestic business partner MK Korea Co with violating a transportation law.

San Francisco-based Uber is facing growing legal challenges as it expands in Asia amid mounting protest from taxi operators.

Seoul Metropolitan Government said this year it may ban Uber's service and similar applications on grounds they're unsafe and compete with licensed taxi services, and from next week will offer rewards of as much as 1 million won ($905) to people who provide information on Uber's services.

Uber's South Korea unit and MK Korea illegally operated rental cars as taxis, an official with the Seoul Central District Prosecutors' Office said by phone on Wednesday, asking not to be identified, citing internal policy. The official declined to comment on whether prosecutors expect Kalanick to appear for questioning. Uber said it will fully cooperate with the investigation and is "confident" that the court will uphold a fair and sensible judgment'' in the case.

"We firmly believe that our service, which connects drivers and riders via an application, is not only legal in Korea, but that it is being welcomed and supported by consumers," the firm said in an email distributed by its South Korean public relations representative.

Uber, which raised $1.2 billion earlier this month at a valuation of $40 billion, said in August it had sought a legal opinion and that its Seoul service obeys the law. Opposition to its operations is down to outdated regulations that precede smartphone and wireless technology, Allen Penn, the company's head of Asia, told reporters at the time.

Paid transportation with unregistered vehicles is "clearly illegal activity," South Korea's Ministry of Land, Infrastructure and Transport said later that month.

The maximum penalty for Uber's alleged legal violation is a two-year prison sentence or a fine of as much as 20 million won, Yonhap News reported on Wednesday.

Uber, which according to its website operates in 53 countries, started its service in Seoul in 2013. It competes with local taxi-hailing apps such as NaviCall, run by a unit of the nation's largest mobile phone carrier SK Telecom Co, which connects users with registered taxis. "Uber does not believe it is appropriate for authorities to seek to punish drivers who are trying to make a living through this service," Uber said in the email.

Seoul's government has said it will launch its own smartphone-based cab-hailing service using taxi operators.

In Sydney, Uber said it was "truly sorry" for hiking prices as frightened people fled an armed cafe siege in Sydney last week, AFP reported. The company initially implemented "surge pricing", which increases rates during peak demand, for those exiting Sydney's financial hub as police surrounded a cafe where a gunman was holding hostages. It reportedly charged customers four times the regular fares to leave the area.

"We didn't stop surge pricing immediately. This was the wrong decision," it said in a statement.

Last week, Uber's services were declared illegal in Taiwan. In addition to worries over the safety of consumers following reports of rape in New Delhi and Boston, Taiwan officials are concerned about how Uber collects and manages personal data including name, credit card, location and route, the Minister of Transportation and Communications Yeh Kuang-shih said in an interview.