News Tapa reported on October 4th that SM Entertainment's Lee Soo Man had established multiple paper companies in Hong Kong, known as the place people go to evade taxes.
In response, SM Entertainment released an official statement stating, "The Hong Kong-based corporations were established through legal procedures on the property of the producer's father," and stated that the agency is looking to take legal action against News Tapa for defamation.
New Tapa made a report titled "The Koreans who went to the place of evading taxes in 2021" as one of the projects from 'Pandora Papers,' in which 600 reporters participated in the project led by the International Consortium of Investigative Journalists (ICIJ). In the reports, News Tapa claimed that Lee Soo Man was in control of Hong Kong offshore companies based on the customer management files leaked from the Ilshin Accounting Firm. In addition, they reported that Lee Soo Man purchased a villa in Malibu, California, through a company called 'Polex Development' to avoid the limitations of overseas real estate purchases.
In response, SM Entertainment said in the statement, "The Hong Kong-based corporations reported by News Tapa as being established by SM's slush funds and hidden overseas assets is actually established and are operated with the overseas assets of Lee Soo Man's father, James Hee Jae Lee, who immigrated to the United States."
The agency continued to explain, "At that time, Lee Soo Man's father set up a corporation in Hong Kong by converting and remitting money from his bank account in Korea through legal procedures." SM Entertainment explained that Lee Soo Man's father's assets were given to his wife and were ultimately donated to JG Christian Charity Foundation.
SM stated, "The suspicions raised by News Tapa has already been cleared during the 2014 tax investigation by the National Tax Service, the 2014 investigation into foreign exchange transactions by the Financial Supervisory Service, the 2015 investigation into foreign exchange transactions by the Public Prosecutor's Office, and the 2020 tax investigation by the National Tax Service. Each of these times, it has been cleared in every investigation by the relevant government agency that the companies were not established and operated with illegal funds from SM or Lee Soo Man.
Then the agency continued to say, "SM Entertainment and executive producer Lee Soo Man will take all possible legal actions against News Tapa and its reporters as they seriously damaged the reputation of the company and the executive producer."