Kakao launches audit over SM Entertainment charges of breach of trust = South Korea

The audit committee under the board of directors of IT giant Kakao, along with a law firm, conducted a financial statement audit of SM Entertainment (hereinafter referred to as SM Entertainment), a major entertainment production company affiliated with the company.
It became clear that he was doing so. The background appears to be allegations of breach of trust related to investments made without Kakao's consent after SM Entertainment was acquired by Kakao.
Prior to this, in September last year, SM Entertainment transferred the artist management business headquarters of peer company 10x Entertainment (hereinafter referred to as 10x Entertainment) to 22
It was acquired for 100 million won (approximately 243.03 million yen). At the time, Creation Music Rights, a wholly owned subsidiary of SM Entertainment, acquired the company.
The problem is that at that time, there was only one celebrity affiliated with 10x Entertainment, and the amount of cash held was 3.12 million won (approximately 340,000 yen), and the debt was large.
This was 800 million won (approximately 88.37 million yen) more than that. Despite this, the company reportedly valued the management rights at 3 billion won (approximately 331.45 million yen) and proceeded with the acquisition.
One of 10xEnter's internal directors was also serving as 10xEnter's representative director at the time of the acquisition. That person is Lee Seung Man, the former general manager of SM Entertainment.
He is believed to be a close aide to former SM Entertainment CSO (Chief Strategy Officer) Jang Jae-ho, who was the driving force behind Dusa's dismissal. Management consulting companies and advertising agencies related to Changmae CSO
is said to have received a contract bonus of several billion won. CSO Chan resigned immediately after these allegations surfaced. Kakao's audit will confirm these suspicions.