A prominent South Korean billionaire and technology leader, Kim Beom-su, was arrested on Tuesday over allegations of manipulating the stock price of a leading K-pop agency during a takeover attempt last year. Kim is the founder of Kakao, a major tech company in South Korea, but he has yet to be formally charged with any crimes. A Seoul Southern District Court authorized his arrest amid concerns that he might flee the country or tamper with evidence.
In a recent staff meeting, Kim, 58, denied the accusations, asserting, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao referred to the situation as “unfortunate.”
Kim is accused of attempting to manipulate the stock of SM Entertainment as part of a strategy to prevent rival firm Hybe from acquiring the company. SM Entertainment and Hybe are two of South Korea’s largest K-Pop agencies, associated with popular groups Aespa and BTS, respectively. Ultimately, Kakao succeeded in taking over SM Entertainment. Notably, last year, Kakao’s chief investment officer, Bae Jae-hyun, faced similar stock manipulation charges.
Since its founding in 2010, Kakao staff has grown to over 10,000 employees, and Kim held about a 24% stake in the company as of 2020. At one point, he was the wealthiest individual in South Korea, with an estimated fortune exceeding $13 billion. Following the news of his arrest, Kakao’s stock value dropped by 5%.
Experts like Woochan Kim, a professor at Korea University Business School, suggest that this incident could be Kakao’s most significant crisis, noting the need for those remaining in leadership to demonstrate the company’s resilience in Kim’s absence.
This situation underscores the pressures faced by high-profile executives in the tech and entertainment sectors, especially in the fast-paced world of K-pop, where corporate maneuvers can have far-reaching implications. Despite the challenges posed by Kim’s arrest, Kakao has an opportunity to reinforce its corporate governance and public trust, showcasing its commitment to ethical practices and long-term growth.
As the unfolding events play out, it remains essential for Kakao to navigate this crisis strategically in order to sustain its position as a leader in the tech industry.