S. Korea reviews arrest warrant request for Kakao founder

A South Korean court is reviewing a request to arrest Brian Kim, the billionaire founder of Kakao Corp, on charges of stock manipulation during a 2023 acquisition.

This follows a previous trial involving Kakao and an executive for similar allegations. Prosecutors claim Kim manipulated the stock price of SM Entertainment to obstruct a competitor, Hybe, from acquiring the K-Pop agency.

Kim, who has not been formally charged, denies the accusations. He asserted he has never condoned or directed any illegal activities.

The tech entrepreneur holds the position of founder and largest shareholder of Kakao Corp, controlling a 24 per cent stake through himself and affiliated entities.

The court is anticipated to announce its decision by late Monday or early Tuesday. However, it will solely determine whether a warrant is justified, not the validity of the prosecution’s claims.

Analysts warn that the outcome of any potential case against Kim could jeopardise Kakao Group’s control of its online banking arm, KakaoBank Corp. South Korean regulations bar individuals convicted of financial crimes from owning more than a 10 per cent stake in a bank.

Moreover, analysts anticipate that ongoing regulatory scrutiny and public pressure will hinder Kakao, the operator of South Korea’s most popular chat app, from making bold investment decisions in areas like artificial intelligence (AI) and fundraising initiatives for subsidiaries, such as initial public offerings (IPOs).

Despite these challenges, the company maintains its plan to introduce new AI services this year.

Kim leads a “corporate alignment” council that oversees the interests of Kakao Group’s 128 affiliates and determines its business priorities.

Attribution: Reuters