A prominent South Korean billionaire and tech entrepreneur, Kim Beom-su, has been arrested on allegations of manipulating the stock price of a leading K-pop agency during a deal last year. Kim, the founder of Kakao Corp., has not yet been formally charged, but a Seoul Southern District Court has issued an arrest warrant amid concerns that he may flee the country or destroy evidence.
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.” The company has expressed its disappointment regarding the situation, calling the arrest “unfortunate.”
The charges against Kim stem from claims that he manipulated the stock of SM Entertainment to thwart a takeover bid from Hybe, another significant player in the K-pop industry. SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, known for managing popular acts like Aespa and BTS, respectively. Ultimately, Kakao went on to acquire SM Entertainment. Notably, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation last year.
Kim, who founded Kakao in 2010, held roughly a 24% stake in the company, which employed over 10,000 individuals by 2020. At one point, he was considered South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion. Following the news of his arrest, Kakao’s stock price fell by 5%.
Professor Woochan Kim from Korea University Business School remarked that this incident could signify Kakao’s “biggest crisis,” emphasizing the responsibility of remaining company leadership to ensure stability and continuity in Kim’s absence.
This situation presents a challenging moment for Kakao and the K-pop industry as a whole. Despite these difficulties, there remains hope that the company will navigate this crisis effectively and continue to thrive. The resilience of leadership and the commitment to uphold company values could serve as crucial factors in overcoming this adversity.