HYBE Conducts Coercive Late-Night Audit of NewJeans’ Stylist Team Leader

In a phone interview with Ilgan Sports on May 10, Ms. A struggled to say, “(The HYBE audit team) said it was embezzlement and breach of fiduciary duty, and that I might have to go to the police, so I was scared.”

Ms. A said, “There was already a precedent at my previous company where I received payment for advertising work, and ADOR had also approved converting it into incentives, so I never expected something like this to happen,” adding, “They said it was embezzlement and even breach of fiduciary duty, which really scared me.”

Ms. A explained, “I received a call from HYBE’s Audit Committee saying they were conducting an internal audit and that there were illegal activities and violations, and they wanted to meet with me. I asked if we could postpone since I had other commitments, but they said they could proceed and file charges without hearing my side, but they wanted to give me a chance to explain.”

She continued, “Around 7 PM, I was on the phone on the 4th floor of the office and was about to leave for another matter when I found the audit team right in front of me. They said I could be sued if I didn’t cooperate and asked me to cooperate.”

Ms. A said, “They told me to tell the truth, so I did. The audit team said that receiving money externally was a violation of the non-compete clause, and that it constituted embezzlement and even breach of fiduciary duty, which really scared me. When I asked if that meant I had to go to the police station, (the HYBE audit team) said it would be better to talk here rather than being investigated at the police station. So I told them everything truthfully.” She added, “The whole atmosphere itself felt coercive.”

Ms. A said, “(The HYBE audit team) said my laptop was also evidence and that I might have to go to the police station if I didn’t submit it. So around 10:30 PM, one person came with me to my home and took my laptop.” She added, “They also asked for my mobile phone, but I refused that.”

Ms. A said, “After that, we took a taxi back to the office together and I was audited until midnight. I did sign the (information asset) consent form, but when I told ADOR’s lawyer about the situation, they said it was illegal and offered to revoke it on my behalf, and I understand they made a call about it.”

Ms. A expressed her frustration, saying, “This is money I earned by scheduling my own work and getting proper approval—it’s not like I gave any of it to CEO Min Hee-jin. I just worked hard, and I’m so bewildered and upset.”

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.

This is an announcement from HYBE.

We would like to inform you that the audit conducted by our audit team on the evening of May 9 regarding a certain team leader at ADOR was carried out lawfully, with all procedures conducted in a non-coercive atmosphere with the auditee’s consent.

We clearly explain below regarding the false claims made by CEO Min Hee-jin’s side.

▲ Regarding the claim that the audit continued from 7 PM past midnight

The team leader in question arrived at work at 6 PM yesterday. Upon receiving contact from the audit team while commuting, the team leader responded that they would be available for the audit starting at 7 PM, and thus the audit began.

▲ Regarding the claim that a female employee was coerced by following her to her home past 10 PM late at night

During the audit process, the team leader admitted to receiving hundreds of millions of won in payments from an outside vendor over several years with CEO Min Hee-jin’s approval. The team leader then expressed willingness to submit their personal laptop, which had been left at home, to the company. Accordingly, with the team leader’s consent, only our female staff member accompanied the team leader inside to their residence, and the laptop was handed over.

▲ Regarding the claim that consent for personal information use was coerced

The team leader, as the auditee, consented to the use of personal information and expressed willingness to cooperate, which led to the submission of the laptop.

▲ Regarding the claim that surrender of personal mobile phone was demanded

CEO Min Hee-jin and some ADOR employees have not used the company’s official work messenger at all and have conducted all work conversations exclusively through KakaoTalk. Therefore, we requested submission of data stored on the mobile phone, but the team leader did not comply, and HYBE’s audit team made no further requests for submission.

▲ Regarding the claim that it is standard advertising industry practice and embezzlement cannot be established

There is no practice where a company’s full-time employee directly receives hundreds of millions of won in profits from advertisers. When amounts that should be recognized as company revenue are privately handed over, and the CEO has knowingly condoned this for years, it is not a practice but clear illegality. Moreover, as CEO, Ms. Min has not taken any follow-up measures such as recovering the illegally received amounts or imposing penalties. We expect that future investigations will clearly reveal where the hundreds of millions of won in unjust profits received by the team leader flowed to.

We are publicly disclosing below, as an attachment, portions of the conversations between CEO Min Hee-jin and ADOR management regarding this matter that were confirmed during the audit process.

Ms. Min is very well aware that substantial payments were received with her tacit approval. When HYBE HR inquired about this matter, Ms. Min, despite knowing the seriousness of the issue, brushed it off as if it were nothing significant. Internally, she is discussing stopping the team leader’s receipt of payments while using HYBE as an excuse.

We express strong regret toward Ms. Min’s side for once again attempting to mislead the public by issuing a statement based on false information. This constitutes serious defamation against the company.

We also express strong regret that the team leader was not protected and was instead identified to the media. This audit was conducted on an ADOR employee who is not an executive, and HYBE had no plans to disclose this matter to the media. However, by issuing her statement, Ms. Min has made the entire nation aware of the audit on the employee. If Ms. Min had any intention of protecting the employee as their superior, this should not have been done.

We inform you that we will take all possible civil and criminal measures regarding this matter.