Police Crackdown on “Entertainment Companies”

Police are investigating a practice in which the vast majority of entertainment companies in Korea are sending their entertainers, without government permission, to broadcasting or amusement venues.

However, entertainment companies are protesting the crackdown, saying that the police are stretching the law. A fierce legal battle between the police and the companies is brewing.

On July 25, Seoul Metropolitan Police Agency said that it indicted the CEOs of entertainment companies “I Planning” and “Y Management” without physical detention on charges of breaking “Job Stabilization Laws.”

Police also booked unregistered brokers, who introduced entertainers to promotional events for companies, schools and bars in return for a 10% commission.

According to police, these brokers sent entertainers to broadcasting programs and bars without first securing a ‘laborer-supply business’ permit (LSBP) from the Ministry of Labor.

Police said that almost all entertainment companies are doing business without an LSBP and they are expanding their investigation. Major entertainment companies such as SidusHQ, SM Entertainment and Fantom Entertainment are all included in the police’s investigation list.

“Doing business without government permission can result in imprisonment of up to five years or a 20 million won fine,” said Police.

Entertainment companies, however, reputed, “Entertainers are not laborers, but are self-employed. Hence, there is no need for an LSBP. We are seeking legal advice.”

A Labor Ministry official said, an “LSBP is required before sending entertainers overseas. We have never issued LSBPs for domestic consumption.”

Police said, “There was a legal precedent in 1990, where a court of law pronounced a real prison sentence to the CEO of an entertainment company, who illegally sent ten comedians to amusement venues because he violated the LSBP. Just as one needs a certificate of business registration if he or she wants to operate a construction business, one needs an LSBP to operate in the entertainment business.”

On top of this, police sensed that famous entertainers and their entertainment companies evaded paying income taxes, and are investing the relevant bank accounts.

egija@donga.com