After the shocking allegations levied by SM Entertainment’s CEO Lee Sung Soo, HYBE has issued a response to each of his points.
On February 16, Lee Sung Soo uploaded a detailed video to his channel to claim many shocking things against Lee Soo Man including alleging he pocketed 6% of the company’s earnings, delayed aespa’s comeback due to environmental sustainability, ordering SM artists to make statements to the media that they need him, alleging he’s evading taxes and more.
In response to his claims, HYBE drew a line and issued an explanation for the points he’s made or alleged.
In summary, the statement is as follows:
- First, regarding the part about allowing producer Lee Soo Man’s overseas producing, Hybe explained that it refers to “personal producing work that is conducted unrelated to SM” and that “returning to SM after three years does not mean anything.”
- Regarding the suspicion raised by CEO Lee Soo Man that royalties will be directed to CT Planning Limited, referred to as “overseas Like planning,” Hybe drew a line saying that they have not received any information regarding CT Planning Limited.
- Hybe added that they have confirmed that “there is no transaction relationship between SM and the former general manager under the stock trading agreement, and no royalties will be generated after the contract is signed,” and that “if a contract exists, it must be completely resolved.”
- Regarding “tree planting” and “sustainability,” Hybe stated that “there is no reason to be involved if any form of activity or campaign related to the former general manager is not directly linked to SM,” and that they have not received detailed information on ESG-related campaigns.
The following is a statement from HYBE:
We would like to provide the following explanation regarding the HYBE-related content mentioned in the ‘SM Entertainment CEO Lee Sung-soo’s statement release_1st’ uploaded on the YouTube channel by Lee Sung-soo, CEO of SM Entertainment, this morning.
- Lee Soo-man’s former overall role can perform personal producing work overseas unrelated to SM Entertainment, and it does not mean returning to SM Entertainment after three years have passed.
- We have not received any information regarding CT Planning Limited, which is said to be related to Lee Soo-man’s former overall role, and will resolve it in accordance with the stock trading agreement regarding the content related to SM Entertainment.
- We will not be involved in Lee Soo-man’s former overall role’s personal activities if they are not related to SM, and we have not received any details regarding the ESG activities that Lee Soo-man’s former overall role is pursuing.
For more detailed explanations, please see below.
Point 1
The statement clarifies that the former head of SM, Lee Soo Man, can engage in producing work in a personal capacity overseas, but it does not mean that he will return to SM Entertainment after three years. HYBE has not received any information regarding CT Planning Limited, which is said to be associated with Lee Soo Man, and will resolve any matters related to stock trading contracts with SM Entertainment.
The company will not be involved in Lee Soo Man’s personal activities that have no connection to SM, and has not received any information regarding the details of the ESG activities that Lee Soo Man is promoting. The statement refutes the claim that the agreement between HYBE and Lee Soo Man stock trading contract allows for unlimited overseas producing work and states that it only applies to personal producing work that is not related to SM.
The restriction on Lee Soo Man’s domestic producing work for three years is a customary practice related to non-competition, and it does not mean that he will return to SM after three years. HYBE also promises to will take appropriate legal action against any rumors or false claims that may harm the company and its stakeholders. The company will continue to focus on its business and work to create value for its shareholders.
Point 2
HYBE said, “We entered into a stock purchase agreement with the assumption that there was no transactional relationship between the former co-CEO and SM. We have confirmed that there is no ongoing relationship or royalty agreement between them after the contract was signed, and we included a clause stating that we need to completely resolve any such relationship if it exists.”
Therefore, if it is found that the former CEO owns CT Planning Limited (CTP) and there is a contract between SM and CTP, as claimed by Lee Sung-soo, the provision will be resolved in accordance with the clause.
Based on this contract, we explain as follows: At the time of entering into the stock purchase agreement with the former CEO, the Company did not receive any information that the former CEO owned a company called CTP, or that CTP had a contract with SM. In order to address the possibility of an unknown transaction relationship, the Company included a provision requiring the former CEO to fully resolve any such relationships, should any be discovered.
If it is confirmed that the former CEO owns CTP and that there is a contract between CTP and SM, the Company will have the right to terminate the contract between CTP and SM in accordance with the provisions of the stock purchase agreement.
We have already taken measures such as lifting the sunset provision and acquiring stakes in related companies for the improvement of SM’s governance structure. If it is determined that measures are necessary regarding unknown transaction structures, including CTP, we will consistently work to improve SM’s governance structure by organizing them in accordance with previous measures. We plan to conduct a detailed review of CTP in the future, and if it is confirmed that this company has indeed entered into problematic contracts with SM as claimed by Representative Lee Sung-soo, we will also investigate the parties within SM who approved such contracts.
Point 3
“It’s okay, we have the ability to plant trees” (a Korean proverb meaning that even if things seem difficult or bad, there is still hope for the future)
Lee Sung Soo alleged,
“Given this situation, it is even more doubtful when HYBE emphasizes in its announcement that even if it acquires SM, Lee Soo-man will not participate in management or producing.
Sustainability is a term that Lee Soo-man has been using frequently lately, and it appeared in the official position of the acquisition announcement. Does HYBE know the meaning of tree planting and sustainability? We do not know if HYBE is unaware or complicit, or whether it accepted Lee Soo-man’s proposed conditions because it simply wants to acquire SM, but it is a problem either way.”
HYBE’s explanation:
Firstly, we would like to clarify that if any activities or campaigns related to the former CEO are not directly linked to SM, we have no reason to be involved in them.
At the time of signing the stock purchase agreement with the former CEO, we did not receive any detailed information about the ESG-related campaigns being pursued by SM. Therefore, we are not aware of the content that CEO Lee Sung Soo has claimed. We are also strengthening our ESG-related policies and have agreed to cooperate if the former CEO’s campaign is linked to ESG activities. However, such cooperation should be based on mutual agreement in advance, depending on the specific details and scope of the ESG activities the campaign aims to pursue.
Source: (A)
