A prominent South Korean billionaire and technology entrepreneur has been arrested for allegedly manipulating the stock price of a significant K-pop agency during a transaction last year. Kim Beom-su, the founder of the tech giant Kakao, has not yet been formally charged. However, an arrest warrant was issued by the Seoul Southern District Court, with prosecutors expressing concerns that he might flee the country or tamper with evidence.
In a recent company meeting, Kim denied the allegations, asserting, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao has expressed regret over the situation, deeming the arrest “unfortunate.”
The accusations against Kim stem from alleged actions to influence the stock of SM Entertainment amid a takeover attempt, aimed at preventing rival K-pop agency Hybe from acquiring the company. Both SM Entertainment and Hybe are leading players in the K-Pop industry, representing popular groups such as Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, yet the firm has faced scrutiny, as Kakao’s chief investment officer, Bae Jae-hyun, was indicted last year on similar stock manipulation charges. Kim, now 58 years old, founded Kakao in 2010 and held a 24% ownership stake in the company, which employed over 10,000 people as of 2020. Once recognized as South Korea’s richest individual, he had an estimated net worth exceeding $13 billion at his peak. Following news of Kim’s arrest, Kakao’s stock experienced a 5% decline.
Experts view this incident as a significant challenge for Kakao. Woochan Kim, a professor at Korea University Business School, remarked that this situation could present Kakao with its “biggest crisis.” He emphasized the responsibility resting on the shoulders of Kim’s successors to ensure the company can operate efficiently in his absence.
While this arrest marks a troubling time for one of South Korea’s leading tech companies, it also presents an opportunity for Kakao to refine its corporate governance and strengthen its operations. By navigating through these challenges effectively, Kakao may emerge more resilient in the long run.
In summary, Kim Beom-su’s arrest raises serious allegations about stock manipulation linked to a high-profile K-pop agency deal, but it also highlights the importance for Kakao to establish robust governance that can sustain its operations despite this turmoil.