Former Kakao Entertainment (Kakao Enter) CEO Kim Sung-su was acquitted on the 30th in the first trial of charges that he used company funds to acquire the drama production company "Baram Pictures" at an inflated price.
The Criminal Agreement Division 15 of the Seoul Southern District Court (Presiding Judge Yang Hwan-seung, Director General judge) on this day acquitted former CEO Kim, who was indicted on charges including breach of trust under the Act on the Aggravated Punishment of Specific Crimes. Lee Jun-ho, former head of investment strategy at Kakao Entertainment, who was indicted together, was found guilty of embezzlement and sentenced to two years in prison, suspended for three years.
The court on this day found not guilty on the charge of breach of trust under the special law. The court said, "Based solely on the evidence submitted by the prosecutor, it is difficult to see that the victim company (Kakao Entertainment) suffered a loss due to the defendants' actions."
It added, "There is no objective evidence that Baram Pictures' actual value falls short of the acquisition price of about 40 billion won," and "One cannot conclude there was property loss merely because there is a possibility it could have been acquired at a lower price."
As for the charge of receiving a bribe in breach of trust, the court said on this day, "It is hard to believe the circumstances under which the former division head handed over money, and there is suspicion that the money was related to the acquisition of Baram Pictures," but added, "Based solely on the evidence submitted by the prosecutor, it is insufficient to recognize that a high-priced acquisition was requested or that a high-priced acquisition actually took place."
Earlier, former CEO Kim and the former institutional sector head Lee were indicted on charges of conspiring to cause the company a loss of about 31.9 billion won by having Kakao Enter acquire Baram Pictures—of which the former institutional sector head Lee was the actual owner—at an inflated price. Prosecutors said the former institutional sector head Lee gained about 31.9 billion won in profit in exchange for selling the company, and former CEO Kim received 1,256,460,000 won from the former institutional sector head Lee.
According to prosecutors, Baram Pictures, founded in Feb. 2017, had no sales for three years and lacked even an office and staff. Then, from Apr. to Sep. 2019, the two are said to have paid 33.7 billion won to Baram Pictures under the pretext of drama planning and development costs and lending as preliminary work for the acquisition. Using part of this money, Baram Pictures recruited writer Kim Eun-hee and director Jang Hang-jun, among others, to boost its valuation, and, while hiding that the former institutional sector head Lee was the actual owner, transferred the company to a private equity fund manager for 40 billion won. After that, Baram Pictures was sold to Kakao Enter for the same amount.