[THE INVESTOR] Embattled game developer Nexon’s entertainment expense from 2004 to 2015 was more than triple that of its main rival NCSOFT, according to conglomerate tracker Chaebul.com on July 12.

Between 2004 and 2015, financial documents from NXC -- the Jejudo Island-based holding company of Nexon Korea -- showed that the firm and its local subsidiaries spent 17.43 billion won (US$15.13 million) on entertainement expenses. 

The figure compares dramatically with industry competition NCSOFT, which spent 4.86 billion won from 2004 to 2015.

Since 2012, Nexon has been spending more than an annual 2 billion won on such expenses. For the period between 2004 and 2015, the company spent an average 1.45 billion won a year on such expenses.

The year with the highest entertainment expenses was 2013, when it spent 2.89 billion won.

The proportion of these expenses to sales at Nexon was also much higher than NCSOFT.

The ratio, which had stood at 0.09 percent during 2004-2005, surged to 0.4 percent from 2006 to 2008.

NCSOFT’s ratio remained at 0.13-0.15 percent of sales from 2004 to 2008.

Nexon is currently caught up in a scandal involving allegations that its founder Kim Jung-ju offered gifts to senior prosecutor Jin Kyung-joon, who is one of Kim’s college buddies.

Primarily, the gifts were in the form of Nexon’s unlisted stocks.

The allegations first broke in April this year when Jin was discovered to have pocketed billions of won from selling Nexon Japan shares.

Jin had bought 10,000 Nexon shares -- unlisted at the time -- in 2005 on loans from Nexon for below the market price.
 
He then sold the stocks at more than double the acquisition price to Silverstone Partners, a paper company belonging to the Nexon founder.

With the proceeds, Jin went on to buy 80,000 Nexon Japan stocks, also unlisted at the time.  

In 2005, Kim had sold Nexon's Korean office to Nexon Japan, a company he had erected in 2002. 

Later in 2011, the value of Nexon Japan stocks skyrocketed by more than 100-fold when it was listed in Japan.
In 2015, Jin sold his Nexon Japan stocks to rake in 12.6 billion won of profit.   

Nexon is currently based in Japan and has offices located in Japan, Korea, United States and Europe.

The Nexon founder is expected to be summoned over the next few weeks. A travel ban has been issued on him. 


By Kim Ji-hyun (jemmie@heraldcorp.com)