A prominent South Korean billionaire and tech entrepreneur, Kim Beom-su, was apprehended on Tuesday on allegations of manipulating the stock price of SM Entertainment, a leading K-pop agency, during a takeover deal last year. Kim, known for founding the technology giant Kakao, has not yet faced formal charges. The Seoul Southern District Court issued an arrest warrant amid concerns that he may attempt to flee the country or destroy evidence related to the case.
In a recent gathering at Kakao, Kim staunchly denied the accusations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the situation as “unfortunate.”
The investigation centers on claims that Kim engaged in stock manipulation to hinder Hybe, another significant player in the K-pop industry, from acquiring SM Entertainment. Both companies represent some of the biggest names in K-pop, including Aespa and BTS. Ultimately, Kakao secured the acquisition of SM Entertainment, following which the company’s chief investment officer, Bae Jae-hyun, was also indicted on related stock manipulation charges.
Kim, 58, has had a substantial impact on South Korea’s tech landscape since founding Kakao in 2010. With roughly a 24% ownership stake, he was once deemed the richest individual in the country, with a net worth surpassing $13 billion, and his company employed over 10,000 people by 2020. Kakao’s stock experienced a 5% drop on the day of his arrest, prompting concerns about the company’s stability.
Woochan Kim, a professor at Korea University Business School, commented that this incident could represent Kakao’s “biggest crisis.” He emphasized the importance of the remaining leadership at Kakao to demonstrate that the company can thrive even in the founder’s absence.
While the developments surrounding Kim Beom-su’s arrest raise concerns, this situation also presents an opportunity for Kakao to reinforce its corporate governance and transparency, potentially leading to a stronger, more resilient company in the future.
In summary, Kim Beom-su’s arrest has cast a shadow over Kakao, but it may also serve as a catalyst for the company to strengthen its internal processes and re-establish investor confidence in the long run.