Dispatch has detailed a prolonged, 118 level checklist of info and statements relating to the continuing dispute between Lee Soo Man, founding father of SM Leisure, and Lee Sung Soo, presently the co-CEO of SM Leisure.
The interpretation beneath retains Dispatch’s quirkiness and magnificence in narrating.
1. Lee Soo Man. His initials, as we all know, are SM.
2. SM Leisure had plans to be listed on the KOSDAQ inventory change in 1999.
3. At the moment, the requirement for being listed was ₩1.00 billion KRW (about $775,000 USD) in capital. However in 1999, SM Leisure’s capitalization was solely ₩50.0 million KRW (about $38,800 USD).
4. SM Leisure needed to enhance their capital. They wanted cash. To do that, the corporate issued new shares, rising their capitalization to ₩1.15 billion KRW (about $892,000 USD).
5. Lee Soo Man had his hand in firm funds. He withdrew ₩900 million KRW (about $698,000 USD) from SM Leisure’s account and ₩250 million KRW (about $194,000 USD) from SM Enterprise’s account.
6. Lee Soo Man used this cash to pay for the ₩1.15 billion KRW (about $892,000 USD) wanted to extend the corporate’s capitalization.
7. In different phrases, it was a disguised fee.
8. Lee Soo Man took the cash out of SM Leisure and put it again into SM Leisure.
9. SM Leisure’s take off got here from Lee Soo Man’s embezzlement.
A capital enhance is used to draw funds from outdoors traders into the corporate. Nevertheless, within the case of disguised fee, no new cash truly entered the corporate. He took the cash out from the corporate and put it again in, making a web zero. That is an act of deceiving traders as if the corporate attracted an funding. That is mainly fraud.
— Inventory change official
10. Round March 2000, Lee Soo Man’s stake in SM Leisure was 66.99%. He had 1,607,800 shares. 4% was owned by his father, 3.3% was owned by his mom.
11. In April 2000, SM Leisure turned listed on the KOSDAQ inventory change with a public providing value of ₩12,000 KRW (about $9.30 USD). On June 9, 2000, SM Leisure held a market capitalization of ₩180 billion KRW (about $140 million USD). The worth of the corporate had greater than quadrupled.
12. The ₩1.15 billion KRW (about $892,000 USD) taken by Lee Soo Man. How a lot did that develop in a yr? It was calculated to finish up round ₩90.0 billion KRW (about $69.8 million USD). As of June 2000, Lee Soo Man held 53.59% of the shares for SM Leisure.
13. In January 2003, Lee Soo Man was positioned on Interpol’s needed checklist. He returned to Korea voluntarily in Might 2003 and was questioned by prosecutors. He was sentenced to 3 years probation with two years in jail ought to he violate the probation.
14. Dispatch was capable of safe the paperwork sharing the court docket’s ruling on the time.
Lee Soo Man embezzled ₩1.15 billion KRW (about $892,000 USD) in firm funds and used them to purchase shares within the firm. He pretended to pay for the shares with out proof of truly utilizing the capital but it surely was reported as if the whole capital of the corporate had elevated. As a result of severe nature of the crime, a punishment corresponding the severity of the crime is inevitable.
— Court docket ruling
15. However wait, what was Lee Soo Man’s place on this? There was a “defend” defending him.
Lee Soo Man is just not the one one who took cash from the corporate. He didn’t do that on his personal. It was determined at a gathering between the executives of the corporate and Lee Soo Man took the reigns. Additionally, he paid again the quantity straight away.
— Lee Soo Man’s “defend”
16. Dispatch was capable of safe a dialog with an individual who was an govt at SM Leisure at the moment.
There was a disguised fee made for the aim of getting listed on the inventory change. We didn’t maintain a board assembly. The assembly notes had been simply rapidly made on the legal professional’s workplace. All the things was achieved underneath Lee Soo Man’s path. When the investigation started, Lee Soo Man hurriedly paid again the remainder of the cash.
— Former SM Govt “A”
17. Lee Soo Man took ₩1.15 billion KRW (about $892,000 USD) from the corporate. Nevertheless, that cash was returned in earnings that had been 40 instances, no, 400 instances the quantity.
18. For instance, right here is how Lee Soo Man and his dad and mom made cash from SM Leisure’s shares.
19. Between November 28 and December 18, 2001, Lee Soo Man bought 100,000 shares of SM Leisure inventory. The common promoting value of the shares was ₩9,900 KRW (about $7.68 USD). Thus, he “robbed” the market of just about ₩1.00 billion KRW (about $775,000 USD).
20. Between Might 16-18, 2001, Lee Soo Man’s mom bought 80,000 shares with a mean value of ₩11,900 KRW (about $9.23 USD).
21. Lee Soo Man’s mom earned almost ₩1.00 billion KRW (about $775,000 USD) because of her son.
22. The yr is 2005. The yr Lee Soo Man and his father turned wealthy.
23. To start with, this was Lee Soo Man’s father’s “departure” from SM Leisure. On June 20, 2005, he bought the rest of his shares within the firm.
24. He bought 157,618 shares at a mean value of ₩34,600 KRW (about $26.80 USD). The revenue from this sale got here out to ₩5.45 billion KRW (about $4.23 million USD).
25. Lee Soo Man additionally bought 312,382 shares to the general public market. At a mean value of ₩33,500 KRW (about $26.00 USD), that totals ₩10.5 billion KRW (about $8.14 million USD) value.
26. Lee Soo Man and his father pocketed ₩15.9 billion KRW (about $12.3 million USD) in June 2005 alone.
27. Nonetheless, Lee Soo Man held a 43.87% stake in SM Leisure with over 2.07 million shares within the firm.
28. The following factor can be about how Lee Soo Man elevated his inventory.
29. On April 9, 2002, SM Leisure merged with ForME, which turned SM Enterprise. ForME was owned by Lee Soo Man and was a administration firm. The trick that he used with this firm can be defined in level 86.
30. Lee Soo Man acquired 870,000 new shares after he “gave” ForME to SM Leisure. This elevated his whole variety of shares to 2.38 million and his whole stake to 54.8%.
31. On June 20, 2005, Lee Soo Man bought 312,382 shares and performed a 100% free capital enhance per share on July 8. A free capital enhance is the place shareholders will obtain new shares of the identical firm based mostly on a ratio set by the corporate. Thus, the variety of shares held elevated to 4,386,866.
32. On November 24, 2005, Lee Soo Man bought 800,000 shares throughout after-hours buying and selling. The value per share was ₩13,300 KRW (about $10.30 USD), totaling ₩10.6 billion KRW (about $8.22 million USD).
33. Two months later, SM Leisure performed a paid-in capital enhance associated to shareholder allocation. Paid-in capital enhance refers to an organization elevating cash by issuing inventory to traders. Lee Soo Man was allotted 673,741 shares. The value was ₩9,020 KRW (about $6.99 USD), value a complete of ₩6.10 billion KRW (about $4.73 million USD).
34. With this maneuver, Lee Soo Man turned a genius.
35. He bought his shares at a price of ₩13,300 KRW (about $10.30 USD). However the shares had been re-introduced at a value of ₩9,020 KRW (about $6.99 USD).
36. On December 15, 2010, Lee Soo Man bought 500,000 extra shares. The promoting value was ₩15,700 KRW (about $12.10 USD) per shares. It was bought to a Hong Kong based mostly fund. Lee Soo Man secured ₩7.80 billion KRW (about $6.05 million USD).
37. SM Leisure was Lee Soo Man’s unending fountain of cash.
38. Lee Soo Man bought inventory at a excessive value after which would concern new shares, and would purchase again his shares at a less expensive value. For instance…
39. On January 12, 2012, Lee Soo Man bought 400,000 shares at ₩44,200 KRW (about $34.30 USD) every for a complete of ₩17.7 billion KRW (about $13.7 million USD).
40. On March 28, 2012, Lee Soo Man purchased 351,597 shares at a value of ₩40,200 KRW (about $31.20 USD). He then carried out a free-capital enhance and acquired a further 399,306 shares freed from cost.
41. Ultimately, lastly…
42. Lee Soo Man handed over 14.5% of his stake to HYBE for ₩423 billion KRW (about $328 million USD). 3,523,420 shares had been transferred. The unit value was ₩120,000 KRW (about $93.00 USD) however Lee Soo Man nonetheless has 868,947 shares left.
43. When Lee Soo Man was cornered, he bought his stake in SM Leisure to HYBE. He threw his remaining shares at HYBE.
44. Lee Soo Man embezzled cash and listed SM Leisure on the inventory change. He has bought tons of of hundreds of shares and picked up over ₩450 billion KRW (about $349 million USD), excluding the worth of the shares he nonetheless presently holds however will ultimately unload.
45. Lee Soo Man’s expertise for earning profits is nice. However subsequent, is the corporate Like Planning.
46. In 1995, Lee Soo Man based SM Leisure. In 1997, Lee Soo Man based each Like Planning and SM Enterprise.
47. In April 2000, Lee Soo Man launched shares of SM Leisure to the general public. Like Planning and SM Enterprise had been affiliate corporations to SM Leisure.
48. Dispatch took a have a look at the corporate introduction that SM Leisure submitted to the inventory change.
SM Enterprise is the administration firm for our artists. SM Leisure pays 20% of the album gross sales of our artists to SM Enterprise as fee.
— SM firm introduction
Like Planning is answerable for music session and manufacturing of SM’s artists. SM Leisure pays 15% of the album gross sales to Like Planning as fee.
— SM firm introduction
51. SM Leisure’s tragedy begins right here. To start with, Like Planning.
52. Even after SM Leisure’s inventory itemizing in 2000, Like Planning offered manufacturing companies to SM Leisure.
53. Lee Soo Man was a registered director at SM Leisure. On the similar time, he was the manager producer. So he was receiving a wage from SM Leisure.
54. Nevertheless, did he additionally obtain a separate fee for producing? The 15% of album gross sales? Keep in mind, that was 15% of album gross sales, not revenue.
55. Simply how a lot did Like Planning earn?
56. In 2000, SM Leisure paid ₩2.10 billion KRW (about $1.63 million USD) for companies to Like Planning. That very same yr, SM Leisure’s working revenue was ₩1.85 billion KRW (about $1.43 million USD). Like Planning received out.
57. For the subsequent 22 years, SM paid Like Planning for his or her companies. In 2015, the service charge was renamed to a licensing charge.
58. How a lot did Lee Soo Man make in whole from this?
59. In brief, ₩174 billion KRW (about $135 million USD).
60. A extra detailed breakdown is as follows:
2000 – ₩2.09 billion KRW (about $1.62 million USD)
2001 – ₩1.62 billion KRW (about $1.26 million USD)
2002 – ₩2.38 billion KRW (about $1.84 million USD)
2003 – ₩870 million KRW (about $674,000 USD)
2004 – ₩1.87 billion KRW (about $1.45 million USD)
2005 – ₩1.36 billion KRW (about $1.05 million USD)
2006 – ₩1.45 billion KRW (about $1.12 million USD)
2007 – ₩1.28 billion KRW (about $993,000 USD)
2008 – ₩2.02 billion KRW (about $1.57 million USD)
2009 – ₩3.53 billion KRW (about $2.73 million USD)
2010 – ₩6.20 billion KRW (about $4.81 million USD)
2011 – ₩4.77 billion KRW (about $3.70 million USD)
2012 – ₩6.36 billion KRW (about $4.93 million USD)
2013 – ₩7.46 billion KRW (about $5.79 million USD)
2014 – ₩7.46 billion KRW (about $5.79 million USD)
2015 – ₩9.89 billion KRW (about $7.66 million USD)
2016 – ₩11.0 billion KRW (about $8.56 million USD)
2017 – ₩10.8 billion KRW (about $8.40 million USD)
2018 – ₩14.5 billion KRW (about $11.3 million USD)
2019 – ₩15.1 billion KRW (about $11.7 million USD)
2020 – ₩12.9 billion KRW (about $10.0 million USD)
2021 – ₩24.1 billion KRW (about $18.7 million USD)
2022 – ₩25.5 billion KRW (about $19.8 million USD)
61. How can Like Planning even be justified?
62. In accordance with Lee Soo Man, Tradition Expertise. In brief, the worth is Lee Soo Man’s know-how.
63. The entire mental property of SM Leisure is made with Lee Soo Man’s cultureal expertise, in order that they must pay him for that, proper?
64. Lee Soo Man outlined himself because the supply for all of SM Leisure’s artists. Subsequently, 6% of SM Leisure’s whole gross sales had been taken underneath the guise of licensing prices.
65. On March 28, 2022, Lee Sung Soo appeared on SamproTV. Lets return to that point, 1 yr in the past.
Why is 6% of SM Leisure’s gross sales transferred to Like Planning?
SM Leisure is an organization that creates, commercializes, and expands its core IPs. SM Leisure declared themselves a digital nation in 2012. They had been wanting forward 10 years into the longer term for enterprise. That is the idea of SM’s manufacturing. It’s Lee Soo Man, the manager producer, the one one who can do that.
— Lee Sung Soo
Is there any uniqueness in SM’s manufacturing? What solely Lee Soo Man can do, however not J.Y. Park or Bang Si Hyuk?
Ought to all cooks be paid the identical? That may’t occur. You need to have the ability to see the music lyrics, one singular phrase, the way forward for the IP itself, all of that. SM wants eyes that may absolutely perceive the trade to create the perfect content material. We have now already been doing this for the previous 30 years.
— Lee Sung Soo
Is that this usually the case abroad?
We’re not a communist nation, are we? It is a nation the place free contracts are allowed. The contract was referred to an exterior advisory board and an acceptable price of 6% was determined. I’m sorry, however we’ve got been doing this for over 20 years and different newcomers within the trade don’t do that, so we should always change it? I’m undecided about that.
— Lee Sung Soo
72. Co-CEO Lee Sung Soo acknowledged that he would add another element.
An organization needs to do world leisure enterprise. Who do you want? Wouldn’t you need to recruit Lee Soo Man? You would need to pay him 6% of gross sales to recruit him. I feel I might have the ability to signal that deal.
— Lee Sung Soo
74. SM Leisure gave this cash to Lee Soo Man utilizing such a logic.
75. However what was the injury of SM’s logic?
76. Between 2002-2004, SM recorded a deficit inside their funds. Specifically, in 2004, even their working revenue was within the pink at minus ₩588 million KRW (about $456,000 USD).
77. Nevertheless in 2004, Like Planning acquired ₩1.87 billion KRW (about $1.45 million USD) in service charges. If the cash was not paid to Like Planning, SM would have as an alternative had an working revenue of ₩1.20 billion KRW (about $930,000 USD).
78. SM’s working revenue returned to the inexperienced in 2005. In March 2005, the inventory value soared from round ₩2,000 KRW (about $1.55 USD) per share to ₩17,000 KRW (about $13.20 USD) per share.
79. However it later plummeted. In 2006, 2007, and 2008, SM Leisure as soon as once more was within the pink for working revenue, dropping cash total.
80. Specifically, 2008 appears to be like particularly unfair from the attitude of the shareholders.
81. In 2008, SM’s working deficit was ₩1.69 billion KRW (about $1.31 million USD), but the corporate additionally paid Like Planning ₩2.02 billion KRW (about $1.57 million USD).
82. What if Lee Soo Man’s service charges didn’t must be paid? The corporate would have profited ₩326 million KRW (about $253,000 USD) on the yr.
83. In October 2008, SM Leisure’s inventory fell to a measly ₩833 KRW (about $0.65 USD) per share. Would anybody be persuaded by the assertion that not all cooks must be paid the identical?
84. Lee Soo Man’s artistic malpractice was additionally proven via SM Enterprise.
85. SM Leisure itself is a administration firm. Nevertheless, when Lee Soo Man took the corporate public in 2000, he operated a separate administration service firm referred to as SM Enterprise.
86. The singers that SM Enterprise managed included H.O.T., S.E.S., Shinhwa, Fly to the Sky, BoA, and extra.
87. SM paid 20% of the album gross sales to SM Enterprise within the identify of administration service bills.
88. The cash despatched to SM Enterprise totaled ₩5.96 billion KRW (about $4.62 million USD) over three years: ₩2.78 billion KRW (about $2.15 million USD) in 2000, ₩2.13 billion KRW (about $1.65 million USD) in 2001, and ₩994 million KRW (about $771,000 USD) in 2002.
89. Lee Soo Man merged SM Leisure and SM Enterprise in 2002. At that time, no more cash was despatched to SM Enterprise.
90. Lee Soo Man’s greed was changing into world-class, He established an organization abroad and developed Like Planning season 2.
91. In 2019, Lee Soo Man fashioned CT Planning Restricted in Hong Kong.
92. CT Planning Restricted was Lee Soo Man’s logic and counter. A spot the place 6% of gross sales could be deducted from abroad and logically, 6% of gross sales could be justified in Korea.
93. SM Leisure launched SuperM globally in 2019 in partnership with Capitol Music. In 2022, aespa was launched to america’ market alongside Warner Information.
94. Lee Soo Man is thought to have requested each corporations for six% of the gross sales underneath the guise of manufacturing charges.
95. In accordance with Lee Sung Soo, the licensing price of 6% of gross sales was despatched to Lee Soo Man’s abroad firm, CT Planning Restricted. This was tax evasion.
96. So is SM Leisure a conspirator or a bystander? Again to SamproTV.
Does Lee Soo Man get his 6% of gross sales wherever apart from SM?
In fact. We launched SuperM’s album in collaboration with the Beatles’ label Capitol Information. In addition they pay 6% royalties to Lee Soo Man.
— Lee Sung Soo
99. Level 99 mysteriously doesn’t exist on Dispatch’s article.
100. Present me the Cash
101. How a lot cash did Lee Soo Man take out of SM Leisure’s pockets?
102. His remaining shares, 868,948 shares, had been calculated on the closing value of ₩132,000 KRW (about $102 USD) as of February 16, totaling ₩115 billion KRW (about $89.2 million USD). He acquired ₩173 billion KRW (about $134 million USD) from Like Planning and ₩5.90 billion KRW (about $4.57 million USD) from SM Enterprise.
103. Lee Soo Man took ₩744 billion KRW (about $577 million USD) from SM Leisure over a span of 23 years.
104. Lee Soo Man is grasping as ages. Is SM gaslighting?
License prices scale back revenue margins? That’s true in the case of the numbers. However what in case you suppose like this. He has been producing for 30 years since 1995. H.O.T., Shinhwa, S.E.S., TVXQ, f(x), and extra lately, aespa and GOT the Beat, over 90% of his concepts have succeeded. That is unprecedented on this world. Does such a producer exist? Sure. That producer is Lee Soo Man. By paying 6% of the gross sales, the revenue margin might lower. However the firm is making a much bigger slice of the pie. We will settle for paying for that.
— Lee Sung Soo
106. An excellent greater pie made by SM? Whose mouth is that pie feeding?
107. Lee Soo Man opened his mouth. And SM Leisure’s previous and current executives put the pie into his mouth.
108. On the time, he didn’t know that the cash was to be returned to the shareholders.
109. Lee Soo Man was not stabbed within the again by his nephew, Lee Sung Soo. Lee Soo Man’s greed fostered Lee Sung Soo’s anger.
110. SM Leisure’s present administration doesn’t should be upset, as in the event that they solely simply realized what occurred.
111. Only one yr in the past, they had been performing as Lee Soo Man’s representatives, not the CEO’s.
Lee Soo Man is retiring? I don’t know if I can discover another person like him. That’s my largest fear.
— Lee Sung Soo
113. In 2021, SM’s gross sales had been ₩41.7 billion KRW (about $32.3 million USD) and the working revenue was ₩74.0 billion KRW (about $57.4 million USD). The licensing charge paid to Lee Soo Man was ₩24.1 billion KRW (about $18.7 million USD).
114. SM’s working revenue ratio is about 17% of its whole gross sales. If the ₩24.1 billion KRW (about $18.7 million USD) was not taken out, the working revenue ratio would rise considerably, to 23%.
115. SM Leisure paid ₩6.00 billion KRW (about $4.65 million USD) to 4 registered executives in 2022. Lee Sung Soo and co-CEO Tak Younger Joon every acquired ₩1.80 billion KRW (about $1.40 million USD).
116. SM’s working revenue ratio is the bottom amongst the large 3 of SM, JYP, and YG. Nevertheless, the fee for the corporate’s administrators is the best. The irony.
117. What if the corporate put shareholder pursuits first? SM’s price-to-earnings ratio would have been at the least 25 instances extra that it was.
118. Lee Soo Man is just not in SM Leisure anymore. The revelation about his actions is welcome, however reflection from the corporate’s administration also needs to be welcomed.