[Column] The True Face of Kakao

Son Sun-hee, Social Affairs Reporter

There were two recent striking scenes related to Kakao, whose founder and senior executives have been consecutively indicted. The first was the trial held on the 23rd at the Seoul Southern District Court. Employee A from the subsidiary Kakao Entertainment's Future Strategy Office appeared as a witness. During the prosecution's questioning, messenger and phone call recordings from around February last year, suspected of involving 'SM stock price manipulation,' between A and Kang Hojung, head of Kakao's Investment Strategy Office, were revealed. Setting aside the content, the first thing that caught attention was their 'casual' conversation. Not only did they speak informally to each other, but they also referred to Bae Jaehyun, the Chief Investment Officer and a senior executive, as 'Jaehyun hyung.' When Helios, funded by Won Asia Partners?who are accused of conspiring to manipulate stock prices?bought SM shares, the two speculated, "Their representative is a member very close to Stephan (Kim Seongsu, former CEO of Kakao Entertainment)." Despite their friendly, neighborhood-like tone, the content was far from trivial. Kang is one of the defendants indicted in this case.

It is unknown how close A and Kang are personally. However, it was hard to believe that such informal communication occurred among the top investment strategy leadership of the 'Kakao conglomerate,' which once boasted a market capitalization exceeding 75 trillion won and ranked third in KOSPI market cap. Kakao is known for fostering a horizontal organizational culture by using English nicknames instead of real names or titles internally. Yet, this communication style, which blurs the line between personal and professional, might have been a root cause of the current crisis.

The second scene was on the day the prosecution announced the indictment of Kim Seongsu, former CEO of Kakao Entertainment, and Lee Junho, former head of the Investment Strategy Division. Kakao Entertainment's external PR representative diligently conveyed their stance of 'faithfully explaining the facts in future trials.' It seemed they were contacting journalists who wrote related articles one by one.

Kakao Entertainment as a corporation is the victim in this case. Kim and Lee were indicted on charges of causing massive damages to the company (breach of trust under the Specific Economic Crimes Act). In particular, Lee induced the company to pour 73.7 billion won into a drama production company he established with 100 million won of his own money. He concealed his actual ownership and pocketed 31.9 billion won in private gains. Kim reportedly enjoyed luxury, such as buying a diamond necklace, in exchange for approving these transactions.

Since the incident, no proper personnel measures have been taken; Kim has been treated as a 'non-executive advisor,' and Lee still retains his affiliation. Consequently, an ironic situation has unfolded where the company's PR representative, the victim, ends up representing the perpetrators' positions.

The charges against Chairman Kim Beom-su and other Kakao executives will be judged in court. More importantly, attention should be paid to what Kakao as a company has lost 'outside the courtroom' due to this incident. Was the ousting of former Kakao CA Council Chief of Management Support Kim Jeong-ho, who was brought in to lead reform but was expelled after severe internal strife, a precursor? The poor organizational management, leadership communication relying on camaraderie, and closed leadership style revealed by this incident sharply contrast with Kakao's image as the 'national messenger company' and a 'model successful IT startup.' Chairman Kim's first trial is scheduled for the 11th of next month. The 'bare face' of Kakao that will emerge in future trials is already a cause for concern.

This content was produced with the assistance of AI translation services.