A South Korean billionaire and tech entrepreneur, Kim Beom-su, has been arrested for allegedly manipulating the stock prices of SM Entertainment, a major K-pop agency, during a takeover deal last year. Kim, who is the founder of Kakao, has not yet been formally charged with any crime, but the Seoul Southern District Court has issued an arrest warrant due to concerns that he might flee the country or tamper with evidence.
During a recent staff meeting, Kim asserted his innocence, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao has expressed that the arrest is “unfortunate” for the company.
Kim, aged 58, is accused of engaging in stock manipulation to thwart Hybe, another leading K-pop agency, from acquiring SM Entertainment. Kakao ultimately won the bid for SM Entertainment last year, while Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao has grown significantly under Kim’s leadership, employing over 10,000 individuals as of 2020. At one time, Kim was considered South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion. Following the news of his arrest, Kakao’s stock fell by 5%.
Economic analyst Woochan Kim, from Korea University Business School, remarked on the severity of the situation, suggesting that this could be the biggest crisis for Kakao. He emphasized that it will now be crucial for the remaining management team to demonstrate that the company can operate effectively even in the absence of its founder.
While this incident might present challenges for both Kim and Kakao, it also poses an opportunity for the company to strengthen its governance and build resilience. By navigating through this difficult period, Kakao can potentially emerge as a more robust organization, proving its capabilities beyond its founding figurehead.
In summary, the arrest of Kim Beom-su raises serious allegations and challenges for Kakao, yet it also opens avenues for the company to show its strength and adaptability in the face of adversity.