[비즈한국] As controversy grows over HYBE352820 failing to pay approximately 120 million won in waste disposal fees due to underreporting its sales, it has been confirmed that the company also omitted an affiliate from its public disclosures. The affiliate omitted by HYBE is 'Ocean Drive Investment,' a company founded by former HYBE CEO Park Ji-won. Although the company became a HYBE affiliate immediately upon its establishment on September 29, 2021, HYBE did not disclose this fact until its large business group status disclosure on June 18 of this year.
Omitted from the Affiliate List in Business Reports
Ocean Drive Investment was founded on September 29, 2021, by Park Ji-won, who was the CEO of HYBE at the time. Park was first registered as an internal director at HYBE on March 30, 2021, and took office as CEO on July 1 of that same year. Because the company was founded and headed by the sitting CEO, it is automatically classified as a HYBE affiliate. Park served as HYBE's CEO until September 12, 2024.
However, HYBE had not previously reported Ocean Drive Investment as an affiliate. It is absent from the affiliate list in the annual business reports, as well as the semi-annual report disclosed on August 19.
That said, the inclusion of Ocean Drive Investment as an affiliate was revealed in the large business group status disclosure on June 18. As HYBE was designated as a large business group, it was required to disclose all of its "actual" affiliates.
Noh Jong-eon, an attorney at the law firm Jongeun, explained, "Even if it's not a large business group, another company led by the CEO is naturally incorporated as an affiliate. This remains the same even if there is no equity stake. It is a matter that must be stated in the business report. However, since there is no revenue, such (omissions) usually end with a verbal correction order."
Regarding HYBE's omission of the affiliate disclosure, an official from the Financial Supervisory Service (FSS) stated, "Large business group status disclosures determine whether a company is a subsidiary according to the Fair Trade Act, and Ocean Drive Investment appears to have been disclosed because it fell under those criteria. However, business reports are judged according to the Act on External Audit of Stock Companies, which does not view it as a subsidiary. That said, it is still an affiliate. We instructed HYBE to include (Ocean Drive Investment) in the affiliate list in its business reports as well. HYBE replied that they 'did not know the criteria well.'"
In response, HYBE only stated, "The disclosure of the same person and related affiliates was made in accordance with the designation of the business group subject to disclosure, and Ocean Drive Investment has no business relationship with our company."
What Kind of Company is Ocean Drive Investment?
Questions remain regarding the reason for founding Ocean Drive Investment. Former CEO Park Ji-won founded it while serving as HYBE CEO. The capital is 260 million won. According to the corporate registry, the purpose of Ocean Drive Investment is investment advisory, management consulting, and real estate trading. Its address is in Yeoksam-dong, Gangnam-gu, Seoul, where it appears to be using a shared office space.
Park Ji-won served as the CEO of Ocean Drive Investment until February 3, 2022. Afterward, a person named Choi, who was the existing auditor, took over as CEO. CEO Choi's registered address is the same as Park Ji-won's, and an apartment under Park's name is located at this address. Former CEO Park also owns 100% of the shares in Ocean Drive Investment.
Although it has been four years since Ocean Drive Investment was founded, its revenue is 0 won and its operating profit is negative 1 million won. No representative products are listed. In the large business group status disclosure, HYBE specified that it did not list representative products for 2023 because no revenue was generated. The business type was marked as "Other Professional Services" (M7160).
An interesting point is that around the same time, former CEO Park Ji-won served as an auditor for Ocean Drive Studio, a subsidiary of Kakao Games293490. Ocean Drive Studio is a game developer headed by Kim Hee-jae, former head of Nexon One Studio. Former CEO Park resigned as auditor of Ocean Drive Studio on January 28, 2022—just days before he resigned as CEO of Ocean Drive Investment. According to HYBE's quarterly report from November 2021, former CEO Park concurrently served as auditor of Ocean Drive Studio and CEO of Ocean Drive Investment. Since he was serving as CEO of HYBE at the time, it would have been difficult to accomplish this without HYBE's approval.
Why did HYBE allow former CEO Park's concurrent positions? HYBE replied, "It is difficult to disclose information beyond what is in the public filings."