A prominent South Korean billionaire and tech entrepreneur, Kim Beom-su, founder of the technology giant Kakao, was arrested on Tuesday amid allegations of stock price manipulation concerning a major K-pop agency. The Seoul Southern District Court issued an arrest warrant for Kim, who has not yet faced formal charges. Prosecutors are concerned about the possibility of him fleeing the country or tampering with evidence.
In response to the allegations, Kim asserted during a staff meeting at Kakao that he has never engaged in or authorized any illegal activities. The company termed the arrest as “unfortunate.” Kim, 58, is suspected of manipulating SM Entertainment’s stock during a takeover bid last year to thwart rival company Hybe from acquiring it. SM Entertainment and Hybe are among the leading K-Pop agencies in South Korea, managing famous acts like Aespa and BTS.
Kakao successfully completed its acquisition of SM Entertainment, while its chief investment officer, Bae Jae-hyun, faces similar charges related to stock manipulation. Founded in 2010 and headquartered in Jeju City, Kakao is a major player in the tech industry, employing over 10,000 individuals by 2020. Kim’s net worth once soared to over $13 billion, making him one of South Korea’s wealthiest individuals. Following the news of his arrest, Kakao’s stock fell by 5%.
Experts like Woochan Kim from Korea University Business School suggest that this could represent Kakao’s most significant challenge to date. He noted that it will be crucial for the remaining leadership to demonstrate that the company can operate effectively in Kim’s absence.
This situation presents an opportunity for Kakao to showcase its resilience and adaptability. While the current circumstances are challenging, they also offer the chance for the company to reaffirm its commitment to ethical business practices and reinforce trust among its stakeholders. The outcome of this case could potentially lead to stronger governance structures within the organization, benefiting the long-term sustainability of the company.