A prominent South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a significant K-pop agency during a previous acquisition attempt. Kim Beom-su, the founder of technology company Kakao, has yet to be formally charged, but the Seoul Southern District Court issued an arrest warrant due to concerns that he might flee the country or destroy evidence.
In a statement made at a staff meeting, Kim denied the allegations, asserting, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of orchestrating a scheme to manipulate the stock of SM Entertainment last year during its takeover, primarily to thwart the efforts of rival K-pop agency Hybe, which manages popular groups such as BTS. After these events, Kakao successfully acquired SM Entertainment. Notably, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges of stock manipulation last year.
Kim founded Kakao in 2010 and has retained a substantial stake of about 24% in the company, which, as of 2020, employed over 10,000 individuals. Once considered South Korea’s wealthiest individual with a net worth exceeding $13 billion, news of his arrest resulted in a 5% drop in Kakao’s stock price.
Woochan Kim, a professor at Korea University Business School, commented that this incident could represent Kakao’s “biggest crisis” and emphasized the importance of the company’s remaining leadership in demonstrating effective management in Kim’s absence.
This situation raises questions about the impact on Kakao and its future direction, with potential implications for the broader tech and entertainment sectors in South Korea. However, it also provides an opportunity for the company to showcase its resilience and commitment to ethical business practices. The outcome could redefine corporate governance in the rapidly evolving tech landscape.
In summary, while the arrest of Kim Beom-su poses challenges for Kakao, it also offers a chance for the company to strengthen its operational integrity and ensure stability.