A prominent billionaire and tech leader from South Korea, Kim Beom-su, founder of Kakao Corp, was arrested on Tuesday over allegations of stock manipulation related to his company’s acquisition of SM Entertainment, a major K-pop agency. This arrest comes amid concerns from prosecutors that he might attempt to flee the country or destroy evidence.
Although Kim has not yet been formally charged, he has publicly denied the allegations during a company meeting, asserting, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the situation as “unfortunate,” showing apprehension about how this incident may affect their operations.
Kim, 58, is under suspicion for allegedly coordinating efforts to inflate the stock prices of SM Entertainment during a takeover process that aimed at thwarting Hybe, another leading K-pop agency known for representing popular groups like BTS. SM Entertainment and Hybe are two of South Korea’s most influential players in the music industry, with extensive fanbases across the globe.
Kakao had secured the acquisition of SM Entertainment, but the scrutiny has raised concerns about the integrity of this transaction. This is not the first time the company has faced legal issues; last year, Kakao’s chief investment officer was indicted on similar stock manipulation charges.
As the founder of Kakao, established in 2010, Kim controls roughly 24% of the company’s shares and was once considered South Korea’s wealthiest individual, boasting a net worth exceeding $13 billion. Following news of his arrest, shares of Kakao fell by 5%, prompting concerns regarding the potential repercussions for the company’s future.
Experts have voiced that this incident marks a challenging period for Kakao. Woochan Kim, a professor at Korea University Business School, noted that maintaining company stability in Kim’s absence would be vital for its ongoing success.
In spite of these serious allegations, there remains hope that Kakao can navigate through this turmoil and emerge stronger. The leadership team at Kakao has the opportunity to demonstrate resilience and foster trust within the media and tech sectors, especially in an era increasingly shaped by innovation and public scrutiny.