SM Entertainment, a major Korean entertainment agency, is facing a lawsuit for non-payment of construction costs for the development of the ‘SMT LA’ complex entertainment building, sparking controversy as more companies come forward seeking unpaid costs.
In addition to Pub Construction, the company that initiated the lawsuit, architectural designers and contractors have also confirmed to the Korea Daily that they have not received payment from SM Entertainment.
“This project underwent five changes due to SM Entertainment’s repeated demands, and we were responsible for designing the third and fifth versions,” stated Steve Kim, an architectural designer, during an interview with the Korea Daily on April 17. “We are owed tens of thousands of dollars, and I know several other companies involved in the project are also owed significant amounts,” he added.
Kim and the other affected companies are preparing to take legal action against SM Entertainment and others involved.
The city of Los Angeles, which had designated the area where SMT LA will be located as “SM Entertainment Square,” finds itself in an awkward position. The suspension of the construction project has rendered the city’s signage meaningless.
In 2020, the city named the intersection of 6th Street and Oxford Avenue, where the project building is situated, as SM Entertainment Square.
About two years later, the city erected an official sign at the intersection, describing SM Entertainment founder Lee Soo Man as a “pioneer of the Korean Wave and the global K-pop phenomenon.” It marked the first instance in the city’s history where a Korean company’s name was included in an official sign.
“Koreatown has already become a popular destination for many non-Koreans due to the emerging Korean culture,” remarked Christine Cho, 33, a Koreatown resident. “But it’s disappointing that the project has been delayed for so many years, especially after they put up a sign that says ‘SM square’.”
Currently, SM Entertainment Square exists only in name. It has been fenced off for years due to construction delays caused by the absence of drawing permits.
“SM hired a third-party contractor to open the sidewalk in front of the building in January last year,” stated John Park, field office manager of Pub Construction. “However, the project was halted while the sidewalk was being removed, and the road conditions at the time posed significant safety risks for pedestrians.”
Pub Construction, responsible for the interior work of the building, had to request SM to implement measures to address the safety concerns.
The suspension of the construction project coincides with a period of internal management issues at SM Entertainment. In February of last year, a conflict between former executive producer Lee Soo Man and SM’s current management escalated, and shortly afterward, Kakao acquired SM Entertainment and assumed leadership. It is speculated that these internal challenges may have affected the SMT LA project as well.
“The SMT LA project was virtually halted during the management transition to Kakao,” explained Pub Construction CEO Chris Yi, “and we are still awaiting a response from SM to resolve the construction cost issue.”
Pub Construction is currently bearing the expenses for security and fencing of the building, despite the suspension of construction.
The Korea Daily reached out to the head of SM Entertainment USA to verify the alleged non-payment and the status of the project, but as of 5 p.m. on April 17, no response has been received.
In addition to the lawsuit, Pub Construction intends to file a formal complaint with the Korean government regarding the situation. This incident directly or indirectly highlights the unfair treatment of Korean companies in the Americas, as explained by Pub Construction.
“SM’s conduct has been exploitative and detrimental, as they continue to transfer their problems to other companies,” stated Yi. “We plan to file a formal complaint with the Korean government in the hope that Korean companies will not suffer further losses due to SM’s inaction.
BY YEOL JANG, HOONSIK WOO [jang.yeol@koreadaily.com]
