A prominent South Korean billionaire and technology entrepreneur was taken into custody on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a transaction last year. Kim Beom-su, the founder of the technology giant Kakao, has not yet faced formal charges. An arrest warrant was issued by the Seoul Southern District Court due to concerns from prosecutors that he might flee the country or destroy evidence.
Kim has publicly denied the accusations, stating in a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao expressed regret over the situation, labeling the arrest as “unfortunate.”
The charges against Kim pertain to alleged stock manipulation involving SM Entertainment, one of the country’s largest K-pop entities, during a takeover effort aimed at thwarting rival Hybe’s acquisition of the company. Both SM Entertainment and Hybe represent significant acts within the K-pop industry, home to popular groups like Aespa and BTS.
Kakao successfully obtained SM Entertainment during these dealings. Notably, Bae Jae-hyun, Kakao’s chief investment officer, was indicted for similar stock manipulation issues last year.
Kim, 58, founded Kakao in 2010, and as of 2020, the company employed over 10,000 individuals. At one point, he was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion. Following the news of his arrest, Kakao’s stock fell by 5%.
Experts are weighing in on the impact of this situation, with Woochan Kim from Korea University Business School commenting that this could represent “Kakao’s biggest crisis.” He emphasized the importance of the remaining leadership demonstrating that the company can continue to thrive without its founder.
This situation, while challenging for Kakao, highlights the resilience and potential for growth within the company. It also emphasizes the importance of strong corporate governance in navigating crises effectively. As the company moves forward, it has the opportunity to reinforce its commitment to ethical business practices and solidify trust among its stakeholders.