So I took some time off from covering the SM Entertainment internal and external mess to let the dust settle a bit as the next major move seemed like it would be Lee Soo Man’s lawsuit against the company. However, CEO Lee Sung Soo went and ruined those plans, as he came out today with a YouTube video on his personal account.
It’s a 28-minute long video, in which LSS addresses a variety of subjects regarding how everything has even reached this point, but perhaps most notably he talked about LSM’s power-hungry actions to remain in control of the company, the possibility of LSM engaging in fraud and tax evasion, LSM purposefully tanking SME’s sales (including delaying aespa‘s comeback), and LSM’s grand vision of music cities with casinos where people can smoke weed.
By the way, if you didn’t know, Lee Sung Soo is Lee Soo Man’s nephew by marriage.
So Lee Sung Soo claims Lee Soo Man did a bunch of things in his attempts to maintain control of the company. Things like:
- Made artists, executives, and staff express the necessity of LSM to SME.
- Had SME sign a consulting deal with LSM to lend legitimacy to his actions.
- Had SME artists sign a contract with LSM’s CT Planning for all of their overseas promotions, or sign a second production contract with LSM in Korea.
- Attempted to lower SME’s revenues for the first quarter of 2023 to prove the company needed LSM, notably through delaying releases slated for February and March until April.
- Created a shareholder response team with a significant budget whose purpose was to strategize ways for LSM to return to SME.
With regards to the fraud and tax evasion allegations, it’s noted that CT Planning is a private company that’s 100% owned by LSM. That’s important because ~6% of overseas revenue would go to this company, with LSS calling it essentially an overseas version of the controversial Like Planning.
He changed the contract structures for the music distribution of WayV, SuperM, and aespa so that they go through the Chinese and U.S. labels as well as CTP. Normally, SM and the relevant labels should settle their profits with each other first, and then Like Planning (Lee Soo Man) should receive 6 percent of what SM gets. However, Lee Soo Man directed separate contracts with each label, and with CTP, he is receiving 6 percent before SM and the labels settle their profits.
LSS then questioned if the purpose of this wasn’t to evade taxes, especially given the issues with Like Planning in 2014 and 2021.
Lee Sung Su alleges that Lee Soo Man did this to evade the Korean National Tax Service. The CTP was not formed just for that exchange but for unlimited global expansion and an attempt to obtain production royalties in advancing abroad.
CTP is a separate overseas corporation from Like Planning. The contracts between CTP and overseas labels are still active—and will continue to be active—and are completely different from the producing contract between SM and Like Planning that was terminated last year.
LSS also mentioned LSM’s contract with SME would pay him for the next 70 years.
This information was about Lee Soo Man receiving 6 percent of sales from already released albums for 70 years and 3 percent of management sales from 2023 for three years, totaling to about 80 billion won (approximately $62 million), although the producing contract between Lee Soo Man and SM Entertainment had already ended.
These deals are the reason Align Partners wanted reform.
As far as HYBE‘s involvement is concerned, LSS notes that LSM’s role is limited to a few years in Korea, but is unlimited overseas and might be illegal.
(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?
LSS also has doubts that LSM wouldn’t be involved in the company’s decisions should HYBE take control.
Perhaps most notably given it’s what fandoms will care about most, LSS mentioned that LSM specifically screwed with aespa’s planned comeback, presumably to lower SME’s first quarter revenue but also due to his desire to insert performative eco-activism into it.
We’re all used to a certain level of cringe by now, but man … that’s something.
In relation to that, LSS followed by mentioning LSM allegedly had the fun idea of making a weed casino.
Lee Sung Su mentions that Lee Soo Man pushed for personal projects such as the construction of a “smart entertainment city” or “music city” and K-pop festivals promoting sustainability and tree planting. The music city Lee Soo Man was envisioning was also linked to a casino, and he also discussed the legality of using marijuana so that tourists can enjoy the casino and festival even more. According to Lee Sung Su, Lee Soo Man wanted to utilize SM artists to market “Lee Soo Man’s world” created in countries across the world.
This is absolutely elite content.
Well, I gotta say, I was skeptical about how much mess this situation would actually lead to, but so far it’s been better than expected and is only improving with time.