With the spotlight trained on the Korean entertainment industry with the Burning Sun scandal involving BIG BANG's Seungri and several other artists, it is now the CEO of SM Entertainment, Lee Soo Man who is under the microscope for allegedly engaging in illegal internal transactions.
Based on a report by The Korea Economy Daily, SM Entertainment was discovered to be paying over 10 billion won per year to a company called Like Planning which makes up about 44 percent of the company's entire profits. The report indicated that this was highly irregular since CEO Lee Soo Man was found to have links with the company.
The report stated that Like Planning was founded by Lee Soo Man to produce the audio for SM Entertainment's albums. It was noted that 100 percent of the shares were registered to Lee Soo Man himself, casting doubt on the legality of the payments.
With steadily increasing payments since 1998, it was cited that Like Planning received 81.6 billion, which is equivalent to some USD$68.5 million in the past 10 years. Apart from allegations of backdoor transactions, Lee Soo Man was also accused of not paying dividends to SM Entertainment's shareholders since the company got listed in KOSDAQ in 2000.
SM Entertainment has since responded to allegations and clarified that their CEO Lee Soo Man was not in any way involved with illegal activities concerning the payments made to Like Planning. In its statement, the company explained the nature of SM Entertainment's relationship with the company and cited that the latter is in charge of producing content for the agency to make it globally competitive in the promotion of Hallyu on the international front, reported Soompi.
SM Entertainment further assured that before entering into a contract with Like Planning, the contract was reviewed and compared with similar precedents from other international companies by professional third-party organizations to ensure that the transaction will be above board and free from an anomaly.
The statement further solidified SM Entertainment's commitment to producing high-quality content with its stable of talented artists like TVXQ, Super Junior, EXO, HOT, SES, and NCT, among others. It also assured the public that it would remain transparent with its plans, programs, and sales reports among its shareholders through a detailed communication plan to prevent misunderstandings in the future.
"As a company that will continue to lead in Korean and global entertainment markets, we hope to achieve further growth in profits by expanding businesses to not only in Asia, but also in North and South America and Europe. Therefore, we plan to maximize the profits of our stockholders, employees, and artists," SM Entertainment concluded.
