Founder Beom-su Kim Discusses Management System Reform Plan
Weekly Community Meetings Held to Specify Implementation Measures
Kakao, facing judicial risks, is establishing a compliance monitoring organization composed of external personnel. Kim Beom-su, Kakao founder and head of the Future Initiative Center, has effectively entered an emergency management system amid allegations of market manipulation during the acquisition process of SM Entertainment (SM).
On the morning of the 30th, Center Head Kim held a community management meeting with about 20 CEOs of major affiliates, including Hong Eun-taek, CEO of Kakao. This meeting was held to assess the situation as the Kakao community faces its worst crisis ever due to the SM market manipulation allegations. On the 26th, the Financial Supervisory Service’s Capital Market Special Judicial Police referred three individuals?Bae Jae-hyun, Kakao’s Chief Investment Officer; Kang Ho-jung, Head of Kakao’s Investment Strategy Office; and Lee Jun-ho, Head of Strategic Investment at Kakao Entertainment?to the prosecution on charges of violating the Capital Markets Act. The referral of Center Head Kim is also under consideration.
Kim Beom-su, former chairman of Kakao, is appearing at the Financial Supervisory Service on the 23rd to be investigated for allegations of stock price manipulation related to the acquisition of SM Entertainment. Photo by Kang Jin-hyung aymsdream@
At the meeting, Kakao’s management discussed directions for reforming the current management system. There was a consensus that the current situation should be recognized as the highest emergency management stage, requiring extraordinary measures in response.
To this end, they agreed to establish a compliance monitoring body. This is to conduct a thorough investigation into the causes of issues such as market manipulation allegations and to strengthen compliance management. Additionally, when pursuing new businesses or large-scale investments, they decided to receive external evaluations regarding social impact.
It is highly likely that the compliance monitoring activities will be conducted more objectively and transparently by forming the organization entirely with external personnel. Similar to Samsung Group’s Compliance Committee, the organization will be composed mainly of external figures from the legal sector, civil society, and academia to ensure independence. Kakao plans to specify the composition and form of the compliance monitoring organization through future meetings. They will hold community management meetings every Monday to discuss concrete implementation plans.
Currently, Kakao has the Community Compliance Management Office under the CA Council, which serves as the group’s control tower. This organization monitors internal control policies and supports compliance-related tasks. Jo Seok-young, head of Kakao’s Community Compliance Management Office, leads this effort, supported by the Compliance Department and the Fair Trade Team. Separately, Kakao intends to strengthen internal controls by creating a compliance monitoring body centered on external personnel.
Center Head Kim said, "Having gone through recent events, I reflected on my own shortcomings and thought it necessary to establish a more strengthened internal and external compliance management and control system. The entire community needs to contemplate and act on what we must do now."
Meanwhile, Kakao has embarked on restructuring its autonomous management system. It plans to strengthen risk management by expanding the role of the CA Council. The council is considering involvement in new business initiatives, mergers and acquisitions (M&A), and other decisions that were previously made by heads of each business or affiliate, aiming to reach final decisions. Kakao is also considering additional organizational restructuring to enable the CA Council, centered on these leaders, to play a substantive role.
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