The Democratic Party of Korea and the government said on the 29th that they will abolish the crime of breach of trust under the Criminal Act to rationalize economic criminal penalties. The plan is to move away from penal populism, streamline excessive regulations that stifle corporate activity, and shift to a system centered on civil liability that strengthens protection for victims. They also said they would swiftly push alternative legislation to minimize any enforcement gap. In response to the People Power Party's claim that abolishing the breach-of-trust provision in the Criminal Act is "for a get-out-of-jail-free card for President Lee Jae-myung," they countered that "this is an issue steadily raised by past governments and the business community" and called it "a political offensive."
Kwon Chil-seung, Director General of the Democratic Party's "Task Force on Rationalizing Civil Liability for Economic Crimes," said at a briefing on the results of the party-government consultation that "the party and the government have shared the view that excessive economic criminal penalties hinder corporations' creative innovation and impede investment decisions," adding, "We need to rationally pare back penal populist regulations and move to a system that substantially protects victims by strengthening civil liability."
Through the consultation that day, the party and the government finalized 110 priority tasks. ▲ Respect normal business judgment and protect business owners who fulfill their duty of care ▲ Ease criminal penalties and strengthen monetary accountability ▲ Convert minor administrative- duty violations into fines ▲ Impose criminal penalties only after administrative corrective orders are not complied with ▲ Ensure fairness across laws are the key points.
In particular, they said they would proceed with the abolition of the crime of breach of trust under the Criminal Act as the basic policy. Director General Kwon said, "There has been continual criticism that the elements of breach of trust are abstract and excessively broad, discouraging corporate activity," adding, "We will start from abolishing the breach-of-trust provision in the Criminal Act, but we will prepare reasonable alternative legislation to ensure there is no legislative gap."
Regarding the timetable for alternative legislation on breach of trust, Director General Kwon said, "No deadline has been set. It was discussed that the Ministry of Justice would take the lead and prepare alternative legislation as swiftly as possible."
The People Power Party argues that abolishing the breach-of-trust provision in the Criminal Act is "for a get-out-of-jail-free card for President Lee Jae-myung." President Lee faces breach-of-trust allegations related to the Seongnam FC illegal sponsorship case, the Baekhyeon-dong preferential treatment suspicion, and the Daejang-dong development corruption scandal.
In response, the Democratic Party countered that "it is nothing but a political offensive." Lawmaker Oh Ki-hyoung, who attended the briefing, said, "Former FSS Governor Lee Bok-hyun also argued for abolishing breach of trust last year, so the business community is also talking about breach of trust. It was discussed during the Yoon Suk-yeol administration as well." Lawmaker Kim Nam-geun also said, "There was discussion that, from the very stage of opening an investigation, whether breach of trust falls within the realm of business judgment should be determined first so investigations can begin accordingly, and that is how (abolishing breach of trust) began," adding, "Twisting that all of a sudden is overly political."
As alternative legislation to supplement the abolition of breach of trust, they said they would push for the introduction of a punitive damages system. Oh said, "Even if we discuss abolishing breach of trust, there must be in-depth debate on typology over what level of alternative legislation is socially feasible so there is no legislative or enforcement gap." He added, "If we are to move to a civil-liability system, when economic issues become problematic, we need a punitive damages system," emphasizing that measures such as supplementing discovery procedures to secure evidence for civil liability must also be discussed.