🔗 2024-05-10 CEO Min Hee-jin Official Statement (Full Text)

Ahead of ADOR’s board meeting scheduled for today, we are issuing this statement regarding an unfortunate incident in which an ADOR employee suffered from an illegal audit based on unreasonable accusations by HYBE’s audit team until early this morning.

After business hours, around 7 PM on May 9, HYBE’s audit team began an audit of ADOR’s Style Directing Team Leader. The audit continued for over 5 hours, past midnight on May 10, and eventually escalated to following the employee—who was working at the office—to their home, demanding not only their laptop but also their personal mobile phone, which is not company property, conducting an audit that exceeded the scope of their authority. Furthermore, they engaged in unconscionable behavior by abusing their audit authority to psychologically pressure our employee with severe threats such as “you will have to go to the police station if you don’t cooperate.” Despite being informed that the employee had a schedule early the next morning, the coercive audit conduct clearly constitutes obstruction of business.

According to the employee, HYBE’s audit team raised issues about the contractual relationship between ADOR and the Style Directing Team Leader, applying psychological pressure by stating things like “the circumstances of breach of fiduciary duty and embezzlement are clear, so we plan to proceed with charges.” However, such contractual arrangements are standard industry practice, and this information had already been shared with HYBE’s HR and ER departments back in February. This information could have been easily verified without conducting such an inappropriate audit on the employee.

In the advertising industry, it is standard practice to use outsourced personnel for hair, makeup, and styling when shoots are conducted. Generally, freelancers are hired, and separate contracts are established between advertisers and freelancers.

At ADOR, instead of using outsourced personnel for styling during NewJeans’ advertising shoots, internal employees have been performing these duties. This was because internal employees could perform the work more reliably than outsourced personnel, maintaining consistent styling quality, responding flexibly to sudden schedule changes, and helping manage the artists’ privacy. In these cases, internal employees received styling fees directly from advertisers, and ADOR took these direct payments from advertisers into account when calculating the internal employees’ incentives.

During the 2023 bonus calculation process, it was determined that NewJeans had more advertising work than initially expected and that other tasks had increased, making it difficult to handle all advertising styling work internally. Accordingly, it had been agreed that starting in 2024, the process would be modified so that styling for advertising shoots would be handled through outsourced personnel. This information had already been shared with HYBE’s HR and ER departments back in February. What HYBE is currently taking issue with is that internal employees received amounts that would have been paid to freelancers by advertisers, instead of receiving incentives from ADOR. Since this caused no financial damage to ADOR, contrary to HYBE’s claims, embezzlement cannot be established. These matters can be easily verified through the HR-related records that HYBE provides as shared services.

Even though this was content that had been agreed upon between the parties through a rational decision-making process, yesterday HYBE suddenly raised it as an issue and not only conducted an unreasonable audit on the Style Directing Team Leader, but also followed a female employee to her home past 10 PM late at night and forced her to sign a laptop usage consent form—unconscionable behavior that no proper company would engage in. The very act of claiming “the circumstances of breach of fiduciary duty and embezzlement are clear” when there are no procedural or substantive issues proves that HYBE’s management lacks understanding of the industry. The manner of this audit also constitutes illegal methods including obstruction of business, coercion, and invasion of privacy.

The reason ADOR takes this matter seriously is that, similar to the coercive audit conducted on the Deputy CEO not long ago, we can see HYBE’s intent to create problems to find fault with ADOR and CEO Min Hee-jin by any means necessary. Since HYBE publicly announced the audit findings to the media simultaneously with the audit on April 22, they have been conducting smear campaigns through various forms of media manipulation. We are transparently informing you of these facts first out of concern that this coercive audit may also be used for such media play.

Currently, the employee is experiencing psychological distress due to anxiety. We plan to revoke the personal information consent form that was signed during the over 5 hours of coercive circumstances, and we are also considering filing charges for obstruction of business and coercion.

HYBE’s management is demonstrating their own lack of understanding of the industry by unilaterally labeling as embezzlement a transaction that was conducted rationally in both procedure and substance, without considering the characteristics of the job. We believe you can easily judge which side is causing inefficiency and obstruction of business under the guise of an audit.