A prominent South Korean billionaire and tech entrepreneur, Kim Beom-su, was arrested on Tuesday amid allegations of stock price manipulation involving a major K-pop agency. The founder of Kakao was taken into custody following an arrest warrant issued by the Seoul Southern District Court, which expressed concerns that Kim might flee the country or destroy vital evidence.
Kim, who has not yet been formally charged, has publicly denied the accusations, asserting that he has never engaged in or condoned illegal activities. The arrest has been characterized as “unfortunate” by Kakao, the tech giant he established.
The crux of the allegations lies in his purported efforts to manipulate the stock of SM Entertainment during a takeover bid last year aimed at thwarting rival K-pop agency Hybe’s attempts to acquire it. Both SM Entertainment and Hybe are major players in the K-Pop industry, with SM representing popular groups like Aespa and Hybe being home to the globally recognized BTS.
Kakao eventually succeeded in acquiring SM Entertainment amidst the controversy. This incident follows an earlier indictment of Kakao’s chief investment officer for related stock manipulation offenses.
At 58, Kim Beom-su is a significant figure in South Korea’s tech landscape, having founded Kakao in 2010. Under his leadership, the company grew to employ over 10,000 individuals and at one point, he was the nation’s wealthiest person, with a net worth exceeding $13 billion. Following the news of his arrest, Kakao’s stock experienced a 5% decline.
Experts, including Woochan Kim from Korea University Business School, predict that this event may pose serious challenges for Kakao, referring to it as potentially the company’s “biggest crisis.” He emphasized the importance of the remaining leadership stepping up to demonstrate the company’s resilience and operational effectiveness in Kim’s absence.
While the situation is undoubtedly serious, there remains hope for Kakao’s future. Should the remaining leadership successfully navigate this turbulent period and maintain investor confidence, the company may emerge stronger and more unified, showcasing its commitment to ethical business practices and operational stability.