Reporter's notebook Kakao's 'innovation' of management ethics and morals

Kakao Pay CEO nominee Ryu Young-joon. Korea Times file

By Lee Kyung-min

We judge people. We judge them by their words mostly because it's quicker and easier, unlike actions which can take time to materialize.

It may be words that fascinate and move people instantly. However, they are not as deserving of our trust as actions that cannot as easily be taken back.

The sense of betrayal is beyond imagination, especially if the words were ― or seemed ― genuine and sincere.

When then Kakao Pay CEO Ryu Young-joon celebrated the firm's listing on the benchmark KOSPI Nov. 3, last year, many lauded his expression of gratitude for over 1.82 million retail investors who sought to subscribe to the firm's shares through an initial public offering (IPO) and for 37 million users of the financial subsidiary of Kakao Corp., the country's IT giant.

“The KOSPI listing of Kakao Pay is meaningful, especially because our innovative efforts to develop new technologies used to lower the complicated and complex barriers in the financial system would not have materialized without 37 million users that chose and supported Kakao Pay,” he said at the Korea Exchange in Yeouido, Seoul.

“We will make a leap forward to becoming a financial platform, deeply integrated with the everyday life of the people, an effort to be strengthened further through transparent management that upholds principles and trust deserving of what many of our users have termed as a 'national platform.' We will demonstrate user-oriented financial innovation, mutual growth with a variety of financial services firms and sustainable growth beyond Korea. Please bear witness to our future,” he added.

Further anchoring strong investor confidence in the financial subsidiary was the firm allocating an equal number of shares to those seeking public subscription, regardless of the amount of funds deposited. It meant that those seeking a subscription of a minimum of 20 shares with 900,000 won ($747) in deposit were given an opportunity to apply for the subscription.

This was a highly unusual move by a cash-strapped newly listed firm, almost all of which give a larger number of shares to holders of larger deposits.

“I was proud to be a part of a historic moment where our new small shareholder-centric policy prompted some to apply for the IPO subscription for the first time in their lives. We will continue to make efforts to enhance shareholder value and innovate finance,” he said at the time.

Who would have thought the series of heartening remarks were nothing more than a carefully structured scheme to lock in over 90 billion won in short-term, windfall gains by Ryu and a few managerial figures in a stock sell-off in less than a month after the firm's listing?

Ryu himself netted over half, or 46 billion won. I don't mean to criticize anyone making money, if their individual merit led to significant growth of a company. However, he should have known better than to hurry into cashing out from a firm he built from the ground up, and thought twice about what impression that would leave.

How does he intend to buttress shareholder value, uphold principles and trust and foster innovation, when he is more concerned about making money while he can than outlining a long-term, future-oriented corporate vision?

Or is this what innovation under the leadership of Ryu looks like?

Probably so, given his hastily arranged apologies last week failed to show any true remorse and were full of words put together just to deflect mounting criticism, followed soon by another bout of sell-off of his shares.

Perhaps he should not have mentioned all the “values and principles” at all and been honest that he was in it for the money.

The broken trust involving the once-touted leader of innovation will not be put back together, not now, not ever, if he leaves unaddressed the public fury over his utter lack of ethics and morals as a top corporate figure.

Kakao was one of the fastest-growing players in the market. Complacency will bring it to its demise just as quickly.