[Reporter’s Notebook] Prosecution Rushed Kakao Investigation, But Trial Proceeds at Leisurely Pace

The investigation process into Kakao last year was truly spectacular. The fact that two companies familiar to the entire nation (Kakao and HYBE) engaged in a battle over shares of SM itself generated significant public interest, and amid this, allegations of stock price manipulation arose, causing a major stir. The Financial Supervisory Service (FSS) drew media attention by putting former Kakao Board Chairman Kim Beom-su in the 'photo line' for the first time in history. The FSS quickly transferred the case to the Seoul Southern District Prosecutors' Office via a 'fast track' (emergency measure). The prosecution promptly arrested and indicted former Kakao Head of Investment Strategy Bae Jae-hyun within about two weeks.

However, once the trial actually began, the prosecution's attitude changed drastically. Usually, when a trial starts, defendants deliberately delay proceedings, causing issues, but the Kakao case was the opposite. The key to proving Bae’s stock price manipulation charges, who was indicted in November last year, was whether there was a 'conspiracy' with the private equity fund One Asia Partners. Yet, the prosecution’s investigation only proceeded this year. The trial was effectively stalled for months as the prosecution repeatedly delayed submitting related evidence records, citing ongoing investigations. Defense attorneys urged, asking, 'When can we actually review the evidence?' Meanwhile, Bae was released on bail in March just before his detention period expired. The indictment of the One Asia Partners representative came a full month after Bae’s release.

It seems both the defense and the court are frustrated. About 25 witnesses were requested for the Kakao case trial, but only two have been examined so far. Notably, among the key witnesses requiring questioning are figures who were also under investigation, such as Kang Ho-jung, Kakao’s Head of Investment Strategy, and Lee Jun-ho, Head of the Investment Strategy Division. The court intended to seat these two witnesses sequentially, but Kang refused to appear even before the court summons arrived, citing 'uncertainty about whether he will be indicted.' Lee’s situation is similar. The presiding judge expressed frustration at a previous hearing, stating, 'It is preferable for the prosecution to complete the investigation and indict all at once for the benefit of the defendants’ defense and the trial,' and requested a prompt decision on any additional indictments.

Due to the prosecution’s 'salami slicing' indictments, the Kakao case trial, which began with great fanfare, continues with tedious disputes between both sides without key evidence. The possibility of a change in leadership at the Seoul Southern District Prosecutors’ Office soon is another variable. There are concerns that the noisy stock price manipulation investigation might end up as a 'flash in the pan.'