“I will build my leadership for new Kakao.”
Kim Beom-su, the founder of the mobile platform giant Kakao Corp., pledged last December to completely reform the IT company in response to mounting criticism over numerous allegations, including stock price manipulation. However, criticism continues to mount over Kim’s “revolving door” appointments.
Even Kakao’s compliance and trust committee, on March 14, urged the company to come up with measures to handle the controversy over a recent board appointment.
Kim personally appointed his former colleague, Kim Jeong-ho, as the head of management at Kakao’s Corporate Alignment Council. Within his first two months of employment, Kim Jeong-ho reportedly used profanity during a meeting. While making an apology, he took to social media to publicly slam the company and revealed what he asserted was internal corruption.
Kakao made the decision to dismiss the executive for reasons including spreading groundless rumors that tarnished the company’s reputation, leaking confidential information, and violating guidelines on media management. Kim’s departure after only six months further intensified doubts surrounding Kakao founder’s reform plan.
Jung Gue-don, the former chief technology officer (CTO) of Kakao Bank, who sparked controversy by exercising stock options worth some 7 billion won ($ 5.25 million) after Kakao Bank’s listing, was nominated last month as the new CTO of Kakao. The company justified his nomination based on his technical understanding of complex Kakao services and relevant experience, but it failed to convince the public.
Another controversy is Kakao Mobility Corp.’s proposal to reappoint Ryu Gung-seon as an inside director. The Financial Supervisory Service (FSS) recommended his dismissal. “I don’t understand the company’s insistence on Ryu as a leader despite his accounting fraud allegations and President Yoon Seok-yul’s denouncement of its unfair commission practices, calling it “unethical.”
Kakao founder Kim Beom-su returned to the company in November last year as a chairman of the internal committee dedicated to management reform and he hired and promoted people close to him. Kim replaced Hong Eun-taek, who was personally recruited by him to work at Kakao, with his appointee., Chung Shin-ah, as the company’s new captain. Chief Operating Officer (COO) Kwon Gi-Soo and Global Strategy Officer (GSO) Jang Yoon-joong replaced Co-CEOs of Kakao Entertainment Kim Sung-soo and Lee Jin-soo - two major figures who have developed Kakao’s entertainment business but are under investigation by prosecutors for allegedly manipulating stock prices of SM Entertainment. Cho Kye-hyun, CEO of Kakaogames Corp. CEO also stepped down from his position and Chief Strategy Officer (CSO) Han Sang-woo has taken his place.
Industry experts point out that Kakao’s series of controversial leadership reshuffles amid the company’s crisis limit the authenticity of its reforms. “The tech giant hurriedly formed a “compliance & trust committee,” an external organization somewhat similar to Samsung Electronics’ compliance committee, but its continual revolving-door recruitment still shows that the company may not know what and how to make a change,” said a business insider.
Kim Junic, an associate professor of Strategy & International Business at Konkuk University, said “The revolving door practice resulting in the existing cartel power at Kakao led to unsatisfactory personnel restructuring,” adding, “An extensive leadership change and innovation is needed to overturn the prevailing mindset within the company.”
Some critics say what the Kakao founder has done so far exacerbated the crisis rather than ending it. “Kim Beom-su should have been a troubleshooter, but instead, he has become the one who fanned the flames during the situation,” said Hwang Yong-sik, a professor of Business Administration at Sejong University. “Kim’s clique has shown lax management behavior. The current leadership structure will make them unite but still, the revolving door undermines the organizational culture, I think.”
“Only Kakao founder Kim, who has ownership, can make bold decisions,” said Byung-tae Lee, a professor of information systems in the College of Business at KAIST. “His role must meet the expectations of investors, but it seems he lacks understanding of his role in resolving the emergency.”
