A prominent South Korean billionaire and tech entrepreneur was apprehended on Tuesday, amid allegations of stock price manipulation linked to a significant K-pop agency. Kim Beom-su, the founder of the technology giant Kakao, has not yet faced formal charges, but prosecutors secured an arrest warrant to prevent him from potentially fleeing or destroying evidence.
During a staff meeting at Kakao, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts,” as reported by the New York Times. The company expressed regret over the situation, labeling the arrest as “unfortunate.”
The 58-year-old entrepreneur is under investigation for allegedly manipulating the stock of SM Entertainment in an effort to thwart Hybe’s attempt to take over the company last year. SM Entertainment and Hybe are major players in South Korea’s K-pop industry, representing popular groups such as Aespa and BTS, respectively. Ultimately, Kakao completed the acquisition of SM Entertainment, and last year, Kakao’s chief investment officer faced similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao has grown significantly, with over 10,000 employees reported in 2020. At one time, Kim was regarded as the richest individual in South Korea, with a net worth exceeding $13 billion. Following news of his arrest, Kakao’s stock experienced a decline of 5%.
Korea University Business School professor Woochan Kim remarked that this could represent Kakao’s “biggest crisis,” emphasizing that it will be crucial for the remaining leadership to demonstrate the company’s stability without its founder.
In summary, Kim Beom-su’s arrest highlights significant concerns regarding corporate governance in prominent South Korean tech and entertainment sectors. While the situation appears challenging, it presents an opportunity for Kakao to affirm its resilience and commitment to ethical business practices moving forward. This crisis could be a turning point, prompting greater scrutiny and resulting in stronger governance mechanisms within the industry.