By Lee Min-hyung
Kim Beom-soo, chairman of Kakao, the operator of messenger app KakaoTalk, is suspected of having habitually gambled at casinos in the United States.
The gambling allegations, if proved true, will put the company's management at risk as it will tarnish its brand image and lose public trust at a critical time when it needs to find a new growth engine.
During a day of gambling at a luxury casino in Las Vegas in November 2007, he lost $16,993 (19.7 million won), the Hankook Ilbo reported Thursday, citing a document which it says came from the U.S. Department of Justice and Department of the Treasury.
Regarding the report, Kakao backed down from its previous stance that it would take legal action against anyone reporting on allegations about Kim's gambling.
"We are checking the report," said a spokesman who did not completely deny the allegations. He said the company has yet to verify the authenticity of the document.
The report came two days after Kakao said it will provide the records of conversation by users to the prosecution, withdrawing its earlier decision to reject all warrants requesting monitoring.
On Tuesday, Prosecutor General Kim Jin-tae said during a National Assembly audit, "The prosecution will get users' chatting records from Kakao in criminal investigations."
Following that, the company has been under fire for its flip-flop on its position on the provision of data to the prosecution. The company previously remained firm in refusing prosecution warrants to monitor conversation records.
In October of last year, the company pledged not to comply with any prosecution warrants for monitoring users' conversations. At that time, former Kakao CEO Lee Sirgoo said the company will not respond to any prosecution warrants even if the company is punished by law.
The latest controversy is expected to hamper Kakao's much-touted bid to obtain a license for an Internet-only bank, which the company identified as its next-generation growth engine.
Last week, Kakao applied for a license to run Kakao Bank by forming a consortium of 11 investors, competing with two other consortiums, led by KT and Interpark.
The Financial Services Commission (FSC), the nation's top financial regulator, is expected to pick one consortium for the Internet-only bank this year. If the Kakao executive was confirmed to have been involved in gambling, chances are slim that the company will secure a license.
On Wednesday, FSC Chairman Yim Jong-ryong said during a National Assembly audit, "We are planning to exclude consortiums whose major shareholders are not eligible to run the Internet-only bank."
In its bid to counter the argument, Kakao denied rumors about Kim gambling. The company said the rumor began to circulate years ago, but it turned out not to be true.
The issue is also expected to be a severe blow to its gaming business.
As a breakthrough to tackle the fierce competition in the mobile gaming industry, the company announced its plan to launch web-board games late this year.
Kakao posted gloomy sales during the second quarter of this year, and attributed it to its disappointing performance in the mobile gaming business.
Kakao has pushed to gain a leading position in the web-board game market, as the industry remains less competitive and saturated than existing mobile gaming businesses.
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| Kim Beom-soo |
The gambling allegations, if proved true, will put the company's management at risk as it will tarnish its brand image and lose public trust at a critical time when it needs to find a new growth engine.
During a day of gambling at a luxury casino in Las Vegas in November 2007, he lost $16,993 (19.7 million won), the Hankook Ilbo reported Thursday, citing a document which it says came from the U.S. Department of Justice and Department of the Treasury.
Regarding the report, Kakao backed down from its previous stance that it would take legal action against anyone reporting on allegations about Kim's gambling.
"We are checking the report," said a spokesman who did not completely deny the allegations. He said the company has yet to verify the authenticity of the document.
The report came two days after Kakao said it will provide the records of conversation by users to the prosecution, withdrawing its earlier decision to reject all warrants requesting monitoring.
On Tuesday, Prosecutor General Kim Jin-tae said during a National Assembly audit, "The prosecution will get users' chatting records from Kakao in criminal investigations."
Following that, the company has been under fire for its flip-flop on its position on the provision of data to the prosecution. The company previously remained firm in refusing prosecution warrants to monitor conversation records.
In October of last year, the company pledged not to comply with any prosecution warrants for monitoring users' conversations. At that time, former Kakao CEO Lee Sirgoo said the company will not respond to any prosecution warrants even if the company is punished by law.
The latest controversy is expected to hamper Kakao's much-touted bid to obtain a license for an Internet-only bank, which the company identified as its next-generation growth engine.
Last week, Kakao applied for a license to run Kakao Bank by forming a consortium of 11 investors, competing with two other consortiums, led by KT and Interpark.
The Financial Services Commission (FSC), the nation's top financial regulator, is expected to pick one consortium for the Internet-only bank this year. If the Kakao executive was confirmed to have been involved in gambling, chances are slim that the company will secure a license.
On Wednesday, FSC Chairman Yim Jong-ryong said during a National Assembly audit, "We are planning to exclude consortiums whose major shareholders are not eligible to run the Internet-only bank."
In its bid to counter the argument, Kakao denied rumors about Kim gambling. The company said the rumor began to circulate years ago, but it turned out not to be true.
The issue is also expected to be a severe blow to its gaming business.
As a breakthrough to tackle the fierce competition in the mobile gaming industry, the company announced its plan to launch web-board games late this year.
Kakao posted gloomy sales during the second quarter of this year, and attributed it to its disappointing performance in the mobile gaming business.
Kakao has pushed to gain a leading position in the web-board game market, as the industry remains less competitive and saturated than existing mobile gaming businesses.
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