A prominent South Korean billionaire and technology entrepreneur, Kim Beom-su, was taken into custody on Tuesday due to allegations of stock price manipulation regarding a prominent K-pop agency. Kim, the founder of Kakao, a leading technology company in South Korea, has not yet faced formal charges. The Seoul Southern District Court has issued an arrest warrant based on concerns that he could flee the country or destroy evidence related to the case.
In a recent meeting at Kakao, Kim vehemently denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company expressed regret over his arrest, referring to the situation as “unfortunate.”
The allegations against Kim stem from a deal involving SM Entertainment, one of the largest K-pop companies known for groups like Aespa, during a takeover bid last year. He is accused of manipulation in an effort to block Hybe, another top K-pop agency recognized for managing BTS, from acquiring SM Entertainment. Ultimately, Kakao successfully completed its acquisition of SM. Last year, Bae Jae-hyun, Kakao’s chief investment officer, faced similar stock manipulation charges.
Kim founded Kakao in 2010, and it has grown to employ over 10,000 people, holding a significant stake in the company. Once regarded as South Korea’s wealthiest individual, Kim’s net worth exceeded $13 billion. However, following the news of his arrest, Kakao’s stock plummeted by 5%.
The situation marks a critical juncture for Kakao, according to Woochan Kim, a business professor at Korea University. He emphasized that it is now up to the management team to demonstrate that the company can thrive even in the absence of its founder.
This event serves as a reminder of the challenges faced by leaders in the tech industry, and it allows for the possibility of fresh leadership and governance approaches at Kakao that could enhance company resilience and accountability in the long run. With the current landscape, it may also present an opportunity for Kakao to strengthen its operational foundations and regain investor confidence.
In summary, Kim Beom-su’s arrest for alleged stock manipulation has sent shockwaves through Kakao and the broader K-pop industry, raising concerns about potential impacts on corporate governance and investor trust. However, this could also pave the way for new practices and robust management strategies.