| SM Entertainment Founder Lee Soo-man / Courtesy of SM Entertainment |
Entertainment giant to take legal action against Newstapa
By Kim Jae-heun
SM Entertainment, home to popular K-pop bands like NCT, aespa and Red Velvet, denied allegations that its founder Lee Soo-man had established eight paper companies in Hong Kong to conceal his vast asset holdings, including real estate in the United States.
Local media outlet Newstapa made the allegations on Monday citing the “Pandora Papers,” a leak of millions of documents detailing stashed assets and tax evasion by some of the wealthiest and most powerful people in the world.
SM Entertainment denied the allegations.
“Hong Kong-based companies that Newstapa claims SM Entertainment founder and chief producer Lee Soo-man created with slush funds were established by Lee's father, James Hee-jae Lee, an immigrant to America, with his own assets. Then, Lee's father exchanged his money deposited in a Korean bank and sent it to establish a corporate body in Hong Kong through due process and we have shared all the relevant document with Newstapa,” SM said.
The local entertainment giant added that after the death of the SM founder's father, his assets in Hong Kong were inherited by his wife, Kyong-hyon Grace Lee, and she donated the money to JG Christian Charity Foundation in accordance with Lee Hee-jae's will.
SM Entertainment said it will take legal action against Newstapa for defamation.
“All of the suspicions that Newstapa raised have been cleared in investigations by the National Tax Service in 2014 and 2020 and the Financial Supervisory Service in 2014. They all have concluded that SM Entertainment and Lee Soo-man were not involved in illegal activities then,” an SM Entertainment official said.
Newstapa, also known as the non-profit Korea Center for Investigative Journalism (KCIJ), cited the Pandora Papers leaked Oct. 3 by the International Consortium of Investigative Journalists (ICIJ) that showed Lee Soo-man ran eight paper companies in Hong Kong, five of which were under borrowed names.
On the customers' management documents obtained by ICIJ from Il Shin CPA and Il Shin Corporate Consulting, Lee Soo-man appeared as the “beneficial owner” of number of corporations based in Hong Kong.
Among them, Dream Maker Entertainment Ltd. and Culture Technology Group Asia Ltd. appear as overseas affiliates of SM Entertainment managing its global concerts and music copyrights, respectively. CT Planning Limited registered Lee Soo-man as a board member.
Lee's name did not appear in the public documents of other shell companies. But he is under suspicion of borrowing other people's names to establish and run them.
SM Entertainment said Lee Hee-jae's assets were inherited by his wife in 2010 to establish Sky Creative Development Limited and Pacific Leading Development, two of the five shell companies that the entertainment giant alleges has no connection with Lee Soo-man. However, Lee's mother was in her 90s and Newstapa claimed that she was too old to have been involved in the business.