A South Korean billionaire and technology entrepreneur was taken into custody on Tuesday under allegations of stock price manipulation linked to a prominent K-pop agency during a deal last year. Kim Beom-su, the founder of Kakao, has not yet faced formal charges, according to reports. The Seoul Southern District Court approved an arrest warrant due to concerns that Kim might flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim firmly denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao has described the situation as “unfortunate.”
The accusations suggest that Kim manipulated the stock of SM Entertainment amid efforts to thwart Hybe, another significant K-pop agency, from taking over. Both SM Entertainment and Hybe are major influencers in the K-pop industry, representing popular groups like Aespa and BTS.
Kakao’s acquisition of SM Entertainment was a pivotal move for the company. Notably, last year, Kakao’s chief investment officer, Bae Jae-hyun, faced similar charges related to stock manipulation.
Kim, who established the company in 2010 and held approximately a 24% stake as of 2020, had once been recognized as South Korea’s wealthiest individual, boasting a net worth exceeding $13 billion. However, following the news of his arrest, Kakao’s stock dropped by 5%.
Business experts, like Woochan Kim from Korea University Business School, have commented that this incident might represent Kakao’s most significant challenge yet. He emphasized the need for the remaining leadership at the company to demonstrate its ability to operate effectively in the founder’s absence.
This situation serves as a reminder of the importance of corporate governance and accountability in large companies, particularly in high-stakes industries like tech and entertainment. It is essential that organizations uphold ethical standards to maintain trust and stability during trying times. While challenges await Kakao, there is hope that the company can emerge from this situation stronger and more resilient, showcasing the capabilities of its leadership and staff.