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HYBE and SM Entertainment issued consecutive statements to refute each other regarding the current situation of the two companies.
After SM CEO Lee Sung-soo video On February 16, HYBE issued a statement, the main contents of which are as follows:
1. The fact that former chief producer Lee Soo Man can go abroad to engage in personal production business that has nothing to do with SM Entertainment does not mean that he will return to SM Entertainment after three years.
2. Information about the relationship between CT Planning Limited and SM Entertainment, which has not been heard of the involvement of former chief producer Lee Soo Man, will be terminated according to the share purchase agreement (SPA).
3. We will not get involved if the individual activities promoted by former chief producer Lee Sooman have nothing to do with SM Entertainment, and we have not received any details about the ESG activities promoted by former chief producer Lee Sooman.
In response, SM Entertainment issued the following statement on February 17:
The international version of Like Planning, CTP (CT Planning Limited), directly contracts with overseas labels instead of SM, concealing the real purpose. This is not a problem that can be solved by HYBE’s termination of the contract. CTP has no business relationship with SM. In the video uploaded on behalf of Lee Sung Soo, it is also mentioned that the matter involved is a direct contract between former chief producer Lee Soo Man and an overseas label, not a contract between CTP and SM.
It can be seen that HYBE’s statement is distorting the fundamental problem of CTP, namely the suspicion of offshore tax evasion.
If HYBE knows the international version of Like Planning CTP when signing the share sale contract, it means [HYBE] Participate in or turn a blind eye to the alleged tax evasion of former chief producer Lee Soo-man, if [HYBE] Signing the contract without knowing it is tantamount to admitting being cheated by the former chief producer Lee Soo Man. Therefore, this means that HYBE’s management needs to explain to various shareholders and relevant institutions why a merger costing more than 1 trillion won (approximately US$768.4 million) was completed without due diligence.
In addition, HYBE stated in an official statement issued when announcing the signing of the SPA contract with former chief producer Lee Soo-man, “Chairman Bang Si-hyuk expressed his deep approval for Lee Soo-man’s humanitarian and sustainable development movement announced earlier this year, and told Lee Soo-man that he hopes Harnessing the influence of sustainable K-pop together,” and “Chairman Bang Si-hyuk stated that HYBE fully agrees with strategic directions such as the implementation of the metaverse, the establishment of a multicultural-tag system, and the movement to save the planet.” We believe that It is hard to believe that Chairman Bang Si-hyuk himself was not informed of the details of the campaign that he claimed to “strongly agree with”.
HYBE then responded to the statement again later in the day on February 17:
Hello everyone, this is HYBE.
In response to the rebuttal statement issued by SM Entertainment (hereinafter referred to as SM) today, HYBE’s statement is now released as follows.
In our press release on February 16, in response to SM Entertainment representative Lee Sung-soo’s mention of doubts about CT Planning, we said:
While completing the SPA with Lee Soo Man, we were not told that Lee Soo Man had ownership of CTP’s company, nor was we told about the contract between CTP and SM. In addition, in the case of a business relationship that we do not know, Lee Soo-man will be included in the contract to resolve any business relationship that is discovered.
If CTP and SM didn’t sign directly as stated in SM’s rebuttal, we naturally don’t know this. However, according to our contract with Lee Soo Man, the two parties have agreed that for SM artists who have already signed with CTP, even if they are not directly signed with SM, they will not receive any profit. In addition, we will manage the transparent contract through the board of directors so that there will be no problems in the future, so the question raised by SM is meaningless. We are currently working hard to fix SM’s issues, and there is no reason for any distortion or reason to question our efforts.
However, if SM thinks that the contract with CTP cannot be resolved through our SPA with Lee Soo Man, then in addition to exposing this contract, we also want to ask SM what attitude towards this.
Especially since such contracts are not well known outside of entertainment companies, it is imperative that the management of entertainment companies manage these contracts transparently and fairly for both the company and the artistes. This contract must have been approved by board members when it was completed, and no matter which board member approved it, we hope that the current board members have taken sufficient action on this contract.
What SM has exposed and questioned is exposing the problems of SM’s corporate governance, and unfortunately, these problems are all happening within SM. We actually solved SM’s structural problems one by one with a positive attitude towards the company, and we will continue to work hard to solve them.
However, SM will have to grapple with real issues internally for these changes to take effect. We don’t think it’s right to question the largest shareholder who is addressing SM.
For fans, employees, artists, and shareholders of SM.
Thanks.
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