A South Korean billionaire and technology entrepreneur was arrested on Tuesday, facing allegations of stock price manipulation concerning a prominent K-pop agency during a deal executed last year. Kim Beom-su, the founder of Kakao, has yet to be officially charged, with the Seoul Southern District Court issuing an arrest warrant due to concerns that he might flee the country or destroy evidence related to the case.
Kim has publicly denied the allegations, asserting during a company meeting that he has never directed or approved any unlawful actions. Kakao labeled the incident as “unfortunate.”
The accusations stem from claims that Kim manipulated the stock of SM Entertainment to thwart Hybe, another leading K-pop enterprise, from acquiring the company. Both SM Entertainment and Hybe represent major acts in the K-pop scene, with SM managing groups like Aespa and Hybe representing the world-famous BTS.
Kakao ultimately secured SM Entertainment following this contention, and last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Founded in 2010 and headquartered in Jeju City, Kakao has grown into a significant technology entity with Kim owning about a 24% stake. In 2020, the company reported employing over 10,000 individuals and at one stage, Kim was recognized as South Korea’s wealthiest person, with an estimated net worth exceeding $13 billion. Following the arrest, Kakao’s stock experienced a decline of 5%.
Experts have expressed concern about the potential impact on Kakao, with Woochan Kim, a professor at Korea University Business School, suggesting this may represent a “biggest crisis” for the company. He emphasized the importance for remaining management to prove that Kakao can continue to thrive even in the absence of its founder.
This situation places Kakao at a critical juncture, but it also presents an opportunity for the company’s leadership to showcase their resilience and adaptability. As challenges arise, companies often find innovative ways to navigate through adversity and emerge even stronger.
Summary: Kim Beom-su, the founder of Kakao, was arrested for allegedly manipulating the stock price of SM Entertainment. Though he denies the claims, the arrest may pose challenges for Kakao. However, it presents a chance for the company’s remaining leadership to demonstrate their capacity to lead effectively during tough times.