Financial media outlets have raised new allegations of "internal corruption" at SM Entertainment as it enters the first month of its post-Lee Soo Man era. This time, the internal corruption suspicions come not at the hands of Lee Soo Man; they involve Jang Jae Ho, Chief Sales Officer (CSO) of SM Entertainment.
Jang Jae Ho, who was appointed to his position as CSO at SME by his close friend Lee Sung Soo (former CEO of SM Entertainment, currently Director of Producing), left the company in October of last year after encountering conflict with the then head producer, Lee Soo Man. Then, exactly a day after HYBE announced its decision to pull out of the acquisition battle on March 13, Jang Jae Ho immediately resumed his position as an internal director.
Suspicions have now been raised that Jang Jae Ho is in fact the key player who allegedly "drove out" Lee Soo Man, "defended" SM from HYBE's "hostile" acquisition, and returned the company to a state of "normalcy" based on self-governance.
Jang Jae Ho first began working at SM Entertainment as director of SM Brand Marketing in May of 2021, after being appointed to the position by Lee Sung Soo. Less than a year later in March of 2022, he was appointed to the position of CSO at SM Entertainment.
Last year, Jang Jae Ho officially began siding with the investment company Align Partners in making preparations to "remove" Lee Soo Man as the unchallenged head of SM Entertainment. Realizing this, Lee Soo Man is said to have scolded his nephew Lee Sung Soo several times for "working with Jang Jae Ho". Disagreements between the two eventually escalating into Jang Jae Ho's resignation from his CSO position by October.
But even after his resignation, Jang Jae Ho had a hand in the management affairs of SM Entertainment through a separate consulting contract. It's believed that Jang was the head overseer of SM's move toward "independence" from Lee Soo Man since January of this year, and was even present in negotiations with HYBE and Kakao during acquisition talks.
In the end, Jang was a key figure in establishing the current management structure of SM Entertainment as of March 31, a structure in which even Kakao cannot directly become involved in the company's management affairs, despite spending some 1.25 trillion KRW (~ $953 million USD) to acquire SM.
Now, insiders predict that with his return as a director at SM Entertainment, Jang will begin "purging" the company of any board members - those at SM Entertainment and those holding board positions at subsidiary companies - who may be inclined to side with Lee Soo Man. The purge will come as the first of Jang's moves to tackle the issue of Lee Soo Man's significant shares in both Dream Maker (24.14%) and SM Brand Marketing (42.31%).
It's also expected that for the next three years, all of SM Entertainment's internal management affairs will likely go directly through Jang Jae Ho and Align Partners. Despite being the company's largest shareholder, Kakao currently has little stake in the internal management affairs, while Jang Jae Ho holds significant power over major decisions.
Financial industry insiders have begun to question whether or not SM Entertainment's "independence" advocated by Align Partners was in fact just a transition from one central hand (Lee Soo Man) to another (Jang Jae Ho).
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