The arrest of Kim Beom-su, the founder of South Korean internet giant Kakao, has sent shockwaves through the country’s business community. The billionaire was arrested over allegations of stock price manipulation during the company’s bidding war for SM Entertainment, one of the largest K-pop agencies in South Korea. Prosecutors accused Kakao of rigging the stock price of SM Entertainment last year to prevent Hybe, the management company behind BTS, from acquiring the agency. Despite Kim’s denial of the allegations, the Seoul Southern District Court approved his arrest warrant, citing concerns that he could destroy evidence.
The arrest of Kim has had immediate repercussions on Kakao’s stock price, which saw a 5.4% decline on Tuesday, the steepest daily decline in almost two years. This development comes after Kakao’s chief investment officer, Bae Jae-hyun, was arrested last year for his alleged involvement in the same bidding battle for SM Entertainment. Bae, who has also denied any wrongdoing, is currently standing trial for his role in the case. The arrest of both top executives has raised concerns about corporate governance and ethical practices in South Korea’s business sector.
Kim Beom-su’s rise from poverty to becoming one of South Korea’s most successful entrepreneurs has been a remarkable journey. Starting with the launch of the popular messaging app Kakao in 2010, Kim has transformed the company into an internet powerhouse with diverse businesses in payments, banking, gaming, and ride-hailing services. Despite stepping down as chairman in 2022, Kim remains Kakao’s largest shareholder and is known for his philanthropic efforts, having signed the Giving Pledge in 2021. His current fortune, as per Forbes’ real-time billionaires ranking, stands at $3.3 billion.
The allegations against Kim and Kakao have raised questions about the competitive landscape in South Korea’s entertainment industry, particularly in the lucrative K-pop sector. With Kakao emerging as the largest shareholder in SM Entertainment after the bidding war, concerns have been raised about the fairness of the process and the impact on the broader K-pop ecosystem. The ongoing investigations and legal proceedings are likely to have far-reaching implications for the future of corporate governance and competition in the country’s tech and entertainment sectors.
The arrest of Kim Beom-su has reignited discussions about ethics, transparency, and accountability in South Korea’s corporate world. As one of the country’s most prominent business figures, Kim’s legal troubles have reverberated across the industry and beyond. The case highlights the challenges and complexities faced by fast-growing companies like Kakao in navigating competitive markets and regulatory scrutiny. It remains to be seen how Kakao and its leadership will address the allegations and rebuild trust among investors, stakeholders, and the public in the wake of this scandal.
