Lee Soo-man

Embezzlement case and conviction

In 2002, the Supreme Prosecutors' Office of the Republic of Korea found evidence of Lee earning tens of billions of won worth of illegal market profits in August 1999 by acquiring 1.1 billion won worth of stocks when listing stocks of SM Entertainment at KOSDAQ by a paid-in capital increase.^[1] The Supreme Prosecutors' Office of the Republic of Korea also investigated Lee regarding circumstantial evidence of lobbying to producers in broadcasting stations and keeping a tremendous amount of cash in his personal office and vaults.^[2]

Lee tried to escape prosecution by staying overseas from June 2002, and was found in a golf course in Los Angeles on 2 August in the same year.^[3] While on the run, Lee's passport was nullified and Lee was chased by Interpol.^[4] Lee eventually came back to Korea to be investigated on 22 May 2003.^[5] A pre-arrest warrant was issued on 7 October,^[6] and Lee was arrested on 8 October.^[7] On 14 October, Lee was approved of bail after paying 30 million won. On 19 October, Lee was prosecuted without detention.^[8]

In September 2004, the Supreme Court of Korea sentenced Lee to two years of imprisonment along with three years of probation.^[9] Lee was released in a special exemption in 2007 commemorating the fourth year of Roh Moo-hyun's presidency.

Slave contract

In 2009, three members of the boy band TVXQ took their management agency SM Entertainment owned by Lee to court, claiming that the agency's 13-year-contract (often nicknamed a slave contract) was too long, too restrictive, and gave them almost none of the profits from their success.^[10][11] The following year, in 2010, South Korea's Fair Trade Commission (KFTC) created a rule that limited entertainment contracts to seven years.^[12]

Other controversies

In 2015, Lee Soo-man was alleged to have violated foreign exchange rules, having failed to report real estate purchased in Los Angeles, as mandated by the Foreign Exchange Law. His company responded that it was a "mistake" made by their American subsidiary.^[13] In 2021, he was included in the names of figures in the Pandora Papers. He was mentioned 399 times across 280 documents, tying him to eight paper companies in Hong Kong, five of which used a nominee service to conceal the source of their funds. SM Entertainment denied the allegations and said the companies had been founded using his father's assets.^[14] Lee and SM were investigated by the National Tax Service following suspicions that he had omitted financial information and leaked company money in corporate transactions. As a result, SM was ordered to pay the government 20.2 billion won.^[15]

1. Lee, Sang-rok (25 July 2002). "SM 3년 전 코스닥 등록 때 이수만씨 수백억 시세 차익" ["Lee Soo-man's tens of billions in capital gains when SM registered on KOSDAQ 3 years ago"]. The Dong-A Ilbo (in Korean). Archived from the original on 20 July 2023. Retrieved 13 July 2023 – via Naver.
2. "이수만씨 비밀금고에 거액 보관" [Lee Soo-man kept a large sum of money in his secret safe]. Yonhap News Agency (in Korean). 18 August 2002. Archived from the original on 20 July 2023. Retrieved 13 July 2023 – via Naver.
3. LA골프장에 나타난 이수만씨 [Lee Soo-man appeared on an LA golf course]. Yonhap News Agency (in Korean). 4 August 2002. Archived from the original on 20 July 2023. Retrieved 13 July 2023 – via Naver.
4. Oh, Sang-heon (15 January 2003). 검찰, 이수만.서세원씨 '인터폴에 수배' [Prosecutors: Lee Soo-man and Seo Se-won 'wanted by Interpol']. Korea Economic Daily (in Korean). Archived from the original on 13 March 2021. Retrieved 13 July 2023 – via Naver.
5. Park, Chang-wook (22 May 2003). 이수만씨 귀국, 검찰 조사 [Lee Soo-man's return to Korea, prosecution investigation]. Yonhap News Agency (in Korean). Archived from the original on 21 July 2023. Retrieved 13 July 2023 – via Naver.
6. Lee, Sang-rok (8 October 2003). 서세원-이수만씨 사전 영장청구 [Seo Se-won and Lee Soo-man's preliminary warrant request]. The Dong-A Ilbo (in Korean). Retrieved 13 July 2023 – via Naver.
7. 이수만·서세원씨 등 오늘 구속 수감 [Lee Soo-man, Seo Se-won, etc. arrested today]. SBS (in Korean). 9 October 2003. Archived from the original on 20 July 2023. Retrieved 13 July 2023 – via Naver.
8. Lee, Tae-hoon (19 October 2003). [연예]이수만씨 불구속 기소 [[Entertainment] Lee Soo-man indicted without detention]. The Dong-A Ilbo (in Korean). Archived from the original on 20 July 2023. Retrieved 13 July 2023 – via Naver.
9. Lee, Kwang-cheol (3 September 2004). '자금횡령' 이수만씨 집행 유예 [Lee Soo-man's sentence for embezzlement of funds is suspended]. Yonhap News Agency (in Korean). Archived from the original on 20 July 2023. Retrieved 13 July 2023 – via Naver.
10. Williamson, Lucy (15 June 2011). "The dark side of South Korean pop music". BBC News. Archived from the original on 30 May 2018. Retrieved 19 June 2017.
11. Han, Sang-hee (11 August 2009). "Is There a Solution for Slave contracts?". The Korea Times. Archived from the original on 19 August 2017. Retrieved 19 June 2017.
12. Kim, Hyo-jin (3 December 2014). "K-pop stars punished by unfair contracts". The Korea Times. Archived from the original on 19 August 2017. Retrieved 19 June 2017.
13. Kim, Jae-won (13 January 2015). "Chaebol scions, SM chief and actress in W130 bil. illegal FX deals". The Korea Times. Archived from the original on 20 July 2023. Retrieved 13 July 2023.
14. Hyun-su, Yim (4 October 2021). "Lee Soo-man named in leaked offshore data, S.M. Entertainment denies wrongdoing". The Korea Herald. Archived from the original on 4 October 2021. Retrieved 4 October 2021.
15. Yoon, So-yeon (5 February 2021). "SM Entertainment hit with 20.2-billion-won charge". Korea JoongAng Daily. Archived from the original on 20 July 2023. Retrieved 13 July 2023.