HYBE Addresses Allegations Brought Up By SM Entertainment’s Co-CEO Lee Sung Soo In His Video
HYBE addressed the questions surrounding their acquisition of Lee Soo Man‘s shares that Lee Sung Soo first brought up in the latter’s YouTube video.
On February 16, SM Entertainment‘s Co-CEO, Lee Sung Soo, released a YouTube video in which he made several allegations against Lee Soo Man.
In his video, Lee Sung Soo brings up several questions regarding HYBE’s acquisition of Lee Soo Man’s shares.
First, Lee Sung Soo alleges that Lee Soo Man had created a foreign business entity in Hong Kong called CTP, which is used as a vehicle to collect 6% of album sales released by SM Entertainment’s artists. Lee Sung Soo goes on and alleges that the business entity might have been created so that Lee Soo Man could avoid taxes.
I would like to question whether the profits generated by CTP through unsubstantiated means aren’t a classic case of offshore tax evasion. Due to CTP taking 6% from each label preemptively, CTP’s cut is twice as large as that of Like Planning.
— Lee Sung Soo
Lee Sung Soo then questions whether HYBE had prior knowledge of CTP when they made the agreement to purchase Lee Soo Man’s shares.
(In the contract with HYBE), Lee Soo Man’s role as a producer domestically is limited to three years, but there are no limits to his role as a producer overseas. Why did you make a clause for overseas production at all in a stock acquisition contract? Did HYBE agree, knowing the possibility that Lee Soo Man’s foreign business(CTP) might be illegal? Or did they sign the contract without knowing?
— Lee Sung Soo
A HYBE representative has since addressed the questions brought up by Lee Sung Soo in a statement. According to the representative, they have severed any ties Lee Soo Man may have with SM Entertainment. The label also stated that the agreement had a clause nullifying any contract or prior agreement Lee Soo Man may have had with SM Entertainment.
In the case there were things undisclosed, such as the CTP transactions, we had included a clause in the agreement saying the purchaser (HYBE) would nullify all existing transactions.
— HYBE Representative
The HYBE representative then shot back at SM Entertainment, saying it was a bigger issue that a company that is listed on the stock market didn’t disclose the existence of the CPT contract.
It’s more of an issue that SM, which is a publicly-traded company, didn’t disclose information as important as this.
— HYBE Representative
Previously, HYBE announced it had purchased Lee Soo Man’s shares of SM Entertainment, becoming the company’s largest shareholder.
