Here’s The Truth About Rumors That Lee Soo Man Embezzled 10 Billion Won
According to a report by Asia Economy Daily, SM Entertainment has been paying over 10 billion KRW (approx. $9.38 million USD) to a private company owned by Lee Soo Man for the past 2 years. This has raised questions of embezzlement and suspicious internal transactions*.
*Note: The term used in the article is “일감 몰아주기” which is a term coined for Chaebol companies. The term is used when profits from internal transactions are distributed to associates within the company.
SM Entertainment’s business report for 2017 shows that Like Planning, Lee Soo Man’s personal company in charge of producing albums for SM artists, was paid over 10.83 billion KRW (approx. $10.15 million USD) last year.
The amount Like Planning received is about 5% of SM Entertainment’s total sales of 216.1 billion KRW (approx. $202.45 million USD).
In 2016, Like Planning received 11.04 billion KRW (approx. $10.34 million USD), which was about 5% of SM Entertainment’s total sales for the year as well.
The business report specifically stated “We pay up to 6% of total sales to Like Planning as royalties.”
Payments to Like Planning have been increasing every year. This is due to the fact that payment regulations were adjusted from 15% of album sales to 6% of total sales in 2015.
In 2014, Like Planning received a payment of about 7.5 billion KRW (approx. $7.03 million USD), and about 9.9 billion KRW (approx. $9.27 million USD) in 2015.
Considering the fact that SM Entertainment’s album sales accounted for 21.95% of sales in the past year, the terms have definitely become more favorable for Like Planning.
Many netizens believe that Lee Soo Man is guilty of corruption, embezzlement, and suspicious internal transactions.
- “So that means the money that was supposed to go to artists and employees is going to decrease.”
- “This isn’t even the first time for Lee Soo Man. I’m not even surprised at his corruption anymore.”
- “In the past, he was wanted by Interpol for his corruption. Looks like he hasn’t changed.”
- “This shouldn’t be overlooked. He has to be investigated by the police.”
- “They call him thief Soo Man. So it’s true? kk”
The heavy backlash has resulted in SM Entertainment releasing an official statement, justifying their actions.
“Our producing contract with Like Planning has been one of the most important reasons for our company’s global contents’ competitiveness and growth. We have been transparent about the contract both before getting listed on KOSDAQ in 2000, and after.”
In the statement, SM Entertainment assures that the contract is legal, and no embezzlement is involved.
“We have consulted with an outside party regarding our contract with Like Planning, and signed a contract that was deemed appropriate. There are no legal issues with the contract, and no suspicious internal transactions.”
Read the statement in full below:
“This is SM Entertainment.
We would like to reveal our official position on the report about the producing contract between our company and Like Planning.
Our producing contract with Like Planning has been one of the most important reasons for our company’s global contents’ competitiveness and growth. We have been transparent about the contract before getting listed on KOSDAQ in 2000, and after.
In addition, we have consulted with an outside party regarding our contract with Like Planning, and signed a contract that was deemed appropriate. There are no legal issues with the contract, and no suspicious internal transactions.
As a company leading the way in global K-Pop, we have continued to grow. We will continue to lead in the global entertainment market and, through the growth of sales in the global market, we will maximize the profits of our stockholders, employees, and artists.”
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