A prominent South Korean billionaire and technology executive was arrested on Tuesday for allegedly engaging in stock price manipulation concerning a major K-pop agency during a takeover last year. Kim Beom-su, the founder of Kakao, is currently facing scrutiny, although he has yet to be formally charged. An arrest warrant was issued by the Seoul Southern District Court, as prosecutors expressed concerns that Kim might attempt to flee the country or destroy evidence.
Kim has firmly denied the allegations, asserting in a staff meeting at Kakao that he has never authorized or supported any illegal actions. The company characterized his arrest as “unfortunate.”
The accusations stem from Kim’s dealings with SM Entertainment, one of the largest K-pop firms in South Korea, during a contentious takeover bid that aimed to thwart another major agency, Hybe, from acquiring it. Both SM Entertainment and Hybe are titans of the K-pop industry, with SM managing groups like Aespa and Hybe representing the globally successful BTS.
Kakao did successfully secure the acquisition of SM Entertainment, although this has come in the shadow of similar legal troubles for Kakao’s chief investment officer, who was indicted last year on charges related to stock market manipulation.
Since its establishment in 2010 and with a workforce surpassing 10,000 by 2020, Kakao has become a major player in the South Korean tech landscape. At one point, Kim Beom-su was recognized as the richest individual in South Korea, boasting a net worth exceeding $13 billion. However, following his arrest, Kakao’s stock fell by 5%.
Experts have indicated that this arrest might present a formidable challenge for Kakao. Professor Woochan Kim of Korea University Business School noted that the situation could be the company’s “biggest crisis” and emphasized the importance of demonstrating operational stability in Kim’s absence.
This development signals a period of uncertainty for Kakao and the K-pop industry at large. However, it might also provide an opportunity for the company to showcase its resilience and commitment to lawful and ethical business practices, potentially rebuilding trust among investors and fans alike.
In summary, while this incident casts a shadow on Kakao’s leadership, it presents a crucial moment for the company to reaffirm its operational integrity. The outcome of this situation could redefine its future trajectory in South Korea’s vibrant tech and entertainment sectors.