A South Korean billionaire and influential tech entrepreneur was taken into custody on Tuesday, facing allegations of stock price manipulation involving a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant amid concerns that he might attempt to flee the country or destroy evidence related to the investigation.
In response to the allegations, Kim stated during a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao expressed its disappointment over his arrest, labeling the situation as unfortunate.
The charges relate to accusations that Kim manipulated the stock of SM Entertainment during a takeover bid aimed at thwarting a competing acquisition by Hybe, another major player in the K-pop industry. SM Entertainment and Hybe are recognized as two of the largest K-pop management companies in South Korea, representing popular acts such as Aespa and BTS.
Kakao effectively acquired SM Entertainment, and it should be noted that Bae Jae-hyun, the chief investment officer of Kakao, was also indicted last year for similar stock manipulation offenses.
Kim, now 58 years old, established Kakao in 2010, and he had held a 24% ownership stake in the company, which employed over 10,000 individuals in 2020. At one time, Kim was recognized as South Korea’s wealthiest individual, boasting a net worth exceeding $13 billion. Following the news of his arrest, Kakao’s stock experienced a decline of 5%.
Korea University Business School professor Woochan Kim commented that this incident could serve as Kakao’s most significant crisis. He emphasized that it falls upon the remaining leadership at Kakao to demonstrate that the company can maintain its operations effectively in the absence of its founder.
The situation highlights the complexities of the corporate landscape in South Korea, particularly in the rapidly growing K-pop industry. While these developments raise concerns about Kakao’s future, they also present an opportunity for the company’s leadership to showcase resilience and stability amid challenges. By focusing on transparent management practices and corporate governance, Kakao has the potential to navigate through this turbulent period successfully.
In summary, Kim Beom-su’s arrest brings significant scrutiny to Kakao and the K-pop industry, but it also opens a door for reflection and growth within the company.