A prominent South Korean billionaire and technology entrepreneur, Kim Beom-su, was apprehended on Tuesday on charges of allegedly manipulating the stock of a prominent K-pop agency during a takeover attempt last year. While he has not yet been formally charged, the Seoul Southern District Court has issued an arrest warrant amid concerns that he might flee the country or destroy evidence.
Kim, the founder of the tech giant Kakao, publicly denied the allegations during a company meeting last week, asserting, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao expressed regret over the situation, labeling the arrest as “unfortunate.”
The accusations center around Kim’s purportedly manipulative actions involving SM Entertainment, a key player in the K-pop industry, during a takeover battle against another major agency, Hybe, which represents global sensation BTS. Ultimately, Kakao succeeded in acquiring SM Entertainment, a move that has now raised significant legal questions. Notably, last year, Kakao’s chief investment officer, Bae Jae-hyun, also faced indictment for stock manipulation.
At 58 years old, Kim founded Kakao in 2010 and at one point was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion. His arrest led to a 5% decline in Kakao’s stock value on the same day.
Experts suggest this could be an unprecedented challenge for Kakao. Woochan Kim, a professor at Korea University Business School, 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.”
This situation not only impacts Kakao and its employees, but it also raises significant questions about leadership stability and corporate governance in the highly competitive tech and entertainment sectors in South Korea. A potential silver lining could emerge if Kakao’s remaining leadership can navigate these challenges effectively, perhaps setting a precedent for future resilience in the industry.
Given the global interest in K-pop and technology, how Kakao manages this crisis could significantly impact both sectors and redefine corporate responsibility in South Korea.