Nexon Corp., South Korea’s biggest online game developer, is an up-and-coming information technology firm whose online and mobile games are highly popular worldwide. It is a workplace coveted by many young Korean job seekers.

But a high-profile scandal involving its founder and a senior prosecutor -- the two went to the same university in the same year -- is threatening to inflict severe damage to the reputation of the company which has grown into one of the most successful and revered IT ventures in the country.

At the center of the scandal is the fact -- not an allegation -- that Jin Kyung-joon, a vice minister-level prosecutor, bought Nexon’s unlisted shares with money offered by the company in 2005. The share prices soared with the firm’s listing at the Tokyo Stock Exchange in 2011, and Jin sold the shares in 2015, pocketing a profit of 12.6 billion won ($10.94 million). 

Jin has changed his story about where he got the money to acquire the stock several times, first saying that he bought it with his own money, and later insisting that the money came from his mother-in-law. But an investigation by the government ethics panel found that Nexon provided the money. As a senior public servant, Jin might not avoid punishment for ethical lapses. 

Punishment of Jin aside, the case should shed light on the questionable governance and management accountability of Nexon and its founder Kim Jung-ju since the company provided the money for the suspicious stock transaction.

Nexon and Kim had kept silent initially, and only when the ethics committee verified the source of the money did the company admit to having “lent” 4.25 million won to Jin.

Nexon said in an emailed statement that it needed to secure “friendly long-term” investors to forestall any possible outside pressure on its management. It added it gave the same privilege to two more people close to the founder -- Naver CEO Kim Sang-heon and Park Sung-joon, former auditor of NXC, Nexon’s de facto holding company.

This is hardly convincing. At the time, Kim and his wife controlled about 70 percent of the Nexon stock and the shares given to the three accounted for about 0.7 percent of the total.

What is also suspicious is that none of the three wrote an IOU, and Nexon did not take any interest in what Nexon officials said had been expected to be a short-term loan.  

This raises the possibility that Kim ordered company officials to arrange the deal, which was certain to give the three a huge windfall profit.

Whether there had been any quid pro quo between Nexon or Kim and Jin should be determined by the ongoing investigation, but the way Nexon gave privilege to the prosecutor reminds many of other corrupt Korean conglomerates which tried to buy protection from the power elite.

This betrays the expectation that firms like Nexon, part of a new breed of information tech firms led by young, innovative entrepreneurs, are different from chaebol and other old-time conglomerates that are often accused of committing various misdeeds.

Nexon, which Kim founded when he was 26 years old in a small office in Seoul, now employs 3,500 people and generated a revenue of about 2 trillion won last year. Gamers in about 190 countries enjoy its games, with two-thirds of its revenue in the first quarter of this year having come from the overseas market. It truly is a global company. A firm of this level requires transparent governance, which would not allow the use of company funds at the founder’s personal discretion.

Kim and other self-made IT billionaires like Lee Hae-jin of Naver, Kim Beom-soo of Kakao and Daum founder Lee Jae-ung are seen as role models by many young Koreans. The scandal and the way Nexon and Kim are dealing with it certainly betrays such a public image.

Young Koreans have seen too many bad businessmen who try to build a wall of corrupt politicians and government officials around them and constantly tell lies. What they need are real, good role models, and Kim might know well what he should do to remain one.