A billionaire and tech entrepreneur from South Korea was arrested on Tuesday amid allegations of stock price manipulation linked to a major K-pop agency. Kim Beom-su, the founder of Kakao, faces accusations of interfering with the stock of SM Entertainment during a takeover bid last year, aimed at thwarting a competing acquisition by another prominent K-pop agency, Hybe.
While Kim has not yet been formally charged, the Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or tamper with evidence. In a recent meeting at Kakao, Kim denied the allegations, asserting that he has never engaged in or authorized any illegal activities. The company expressed its disappointment regarding the arrest, deeming it “unfortunate.”
Kim, 58, is accused of manipulating the stock prices during a crucial period when Kakao successfully completed its acquisition of SM Entertainment. Both SM Entertainment and Hybe are leading players in the K-pop industry, representing popular groups Aespa and BTS, respectively. This arrest comes on the heels of Kakao’s chief investment officer, Bae Jae-hyun, being indicted on similar charges of stock manipulation.
Founded in 2010 in Jeju City, Kakao has grown significantly with Kim holding around a 24% stake in the company, which employed over 10,000 workers by 2020. At one time, he was South Korea’s wealthiest individual, boasting a net worth exceeding $13 billion. Following news of his arrest, Kakao’s stock dropped by 5%.
Woochan Kim, a professor at Korea University Business School, remarked that this situation could pose a severe challenge for Kakao. He emphasized the importance for the remaining executives and employees to demonstrate that the company can continue to operate effectively in Kim’s absence.
In light of these events, there remains hope for Kakao’s future. This situation could serve as an opportunity for the company to reinforce its internal structures and leadership capabilities, ensuring stability and sustained growth despite the current challenges.
Overall, while the allegations and arrest represent significant hurdles for Kakao, the company’s foundation can potentially navigate through this turbulence and emerge stronger in the long run.