Lee Soo Man Accused Of Funneling SM Funds Through Ghost Company
SM Entertainment Chairman Lee Soo Man is being accused of suspicious "internal transactions".
According to a report by Economic Daily on the 29th, Lee Soo Man received over 10 billion won (~$8,500,000) a year under the guise of "music advisory" via a ghost company 'Lake Planning' owned by SM Entertainment where Lee Soo Man is also a 100% stake owner.
According to the media report, for the past 5 years, 44% of SM's operating profit has been funneled to this ghost company. Local activists are demanding a prima facie explanation requesting explanations from SM as to why they didn't disclose that Lee Soo Man owns a 100% stake in the ghost company nor the fact that the company has yet to declare any dividends since it's listing. According to leaks, the amount of money funneled from SM to 'Lake Planning' has been increasing each year.
In 2017, the ghost company reported 10.8 billion in operating profit which is about the same as SM's overall reporting profit of 10.9 billion won. In 2018, it raked in 14.5 billion won, a 34.4% increase from the year before. In a span of 10 years, the company made withdrawals amounting to 81.6 billion won and yet no dividends were ever paid out since the company was listed in the year 2000. Critics point out that the company only filled the pockets of its largest shareholders with no profits shared with its other shareholders.
KB Asset Management is planning to send an open shareholder letter to SM to ask for the company to improve its governance structure. It plans to ask for clarifications and improvement regarding the Lake Planning contract and the reasons behind why the company didn't pay out any dividends.
Meanwhile, SM shares closed at 37,650 won, same as the previous day on the KOSDAQ. So far this year, SM's share prices have fallen over 28.01%.
Following are comments from Korean netizens:
[+2,012, -123] YG articles have disappeared on Naver~
[+1,560, -10] We're gonna have to go through all the entertainment agencies..
[+1,222, 130] JYP too, let's root them all..
[+458, -10] SM = Slightly M: Is that it?
[+234, -3] Daebak! 헐...
[+194, -1] We have to dig here too. It looks clean because of the big wave by YG but this is a joke too. Anyone who's ever been a fan of SM singers knows that. There's always been a lot of bad news about this company, we need to dig it up too. There's no way they're clean~
[+161, -3] SM did more..I don't think they're clean.
[+159, -30] Look at YG bast*rds using this story to bury themselves..they've dirtied the investigations already..
[+92, -2] SM=YG
[+90, -2] For all them... SM YG JYP..the big 3...it's well known that the fish rots from the head 그래
[+65, -1] If it's true, they're a publicly traded company...isn't this embezzlement of shareholder money??
[+59, -1] I had a feeling SM was trying to hide behind the Burning Sun noise. As always, SM is one step ahead of YG
[+43, -1] The whole neighborhood is a pharmacy 거다
This article is originally published on blog Daily Naver.