A prominent South Korean billionaire and tech entrepreneur, Kim Beom-su, was detained on Tuesday under allegations of manipulating stock prices related to a significant K-pop agency. This incident is linked to a takeover that occurred last year involving SM Entertainment, a major player in the K-pop industry.
Kim, the founder of Kakao, one of South Korea’s leading tech firms, has not yet been formally charged with any crime. The Seoul Southern District Court authorized an arrest warrant out of concern that he might flee the country or tamper with potential evidence. In a recent company meeting, Kim firmly denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described his arrest as “unfortunate.”
The accusations against Kim claim he attempted to manipulate the stock of SM Entertainment to thwart Hybe, another leading K-pop agency, from acquiring it. Kakao eventually completed the acquisition of SM Entertainment, while last year, the company’s chief investment officer, Bae Jae-hyun, faced similar stock manipulation charges.
Kim, 58, established Kakao in 2010, and as of 2020, the company had over 10,000 employees. He once held the title of South Korea’s richest individual, with a net worth exceeding $13 billion. Following his arrest, Kakao’s stock experienced a 5% drop, signaling potential investor concern.
Comments from Woochan Kim, a professor at Korea University Business School, imply that this situation might pose a substantial challenge for Kakao. He noted, “It would be the job of those who remain at the company to show that it can run well even with the founder not around.”
Despite the current turmoil, this situation could present an opportunity for Kakao to strengthen its internal leadership and showcase its resilience in the face of adversity. If the company can continue to thrive and uphold its innovative spirit, it may emerge even stronger from this crisis.