The government and the Democratic Party of Korea have decided to abolish the crime of breach of trust under the Criminal Act. The move follows ongoing criticism that the elements of the offense are abstract and its scope overly broad, which has dampened normal management activities by corporations. However, the government plans to prepare substitute legislation as quickly as possible to prevent any gap in punishment for certain serious crimes.
On the 30th, the government and the Democratic Party of Korea held a party-government consultative meeting and announced the first plan for rationalizing economic criminal penalties, including the abolition of the breach of trust offense. They plan to first revise 110 economic criminal penalty provisions, accounting for 1.6% of all penal provisions (about 6,000).
Breach of trust is currently stipulated in several laws, including the Criminal Act, the Commercial Act, and the Act on the Aggravated Punishment of Specific Economic Crimes. Among these, the breach of trust under the Criminal Act that the government has decided to abolish is Article 356 of the Criminal Act, which states, "A person who commits breach of trust in violation of occupational duties shall be punished by imprisonment for not more than 10 years or a fine not exceeding 30 million won."
There has been steady criticism that the elements of breach of trust are excessively comprehensive. President Lee Jae-myung also said on Jul. 30, "In Korea, if you make a mistake while managing a corporation, you could end up in prison, so there are cases where people shun domestic investment," noting the need to ease the breach of trust offense. Since last month, the government has analyzed 3,300 first-instance sentencing precedents related to breach of trust and has been reviewing whether to abolish it.
An official at the Ministry of Justice said, "An analysis of precedents shows that breach of trust leaves room for arbitrary judgment by investigative agencies or courts, and it has often been applied excessively to civil areas beyond corporations," adding, "It is difficult for businesspeople, organizations, and public officials to predict what actions constitute breach of trust," explaining the reason for pushing to abolish the offense.
However, the Ministry of Justice viewed that punishment is still necessary for acts within breach of trust where officers or employees use corporate funds for personal purposes, leak trade secrets, or otherwise harm corporate interests. The government plans to swiftly pursue substitute legislation to punish these serious crimes without gaps.
In addition to breach of trust, the government decided to further rationalize 110 economic criminal penalty provisions that can be promptly streamlined. This is intended to resolve the risk of criminal punishment for business owners and reduce situations in which ordinary people face criminal penalties due to simple mistakes or lack of familiarity with regulations.
The standards for streamlining presented by the government are as follows: ▲ establishing immunity provisions for good-faith business owners ▲ easing criminal penalties and strengthening monetary accountability ▲ converting criminal penalties to fines for minor violations of obligations ▲ restructuring administrative sanctions to "administrative measures first, criminal penalties later."
A representative revision is "the introduction of an immunity clause into the joint penalty provision of the Minimum Wage Act." Under the current Minimum Wage Act, if a corporation or business owner pays wages below the minimum wage, the joint penalty provision punishes not only the actor but also the corporation, etc. Regarding this, the Constitutional Court ruled that "a joint penalty provision without an immunity clause is unconstitutional." The Ministry of Employment and Labor decided to prepare an immunity provision under which business owners who exercised considerable care and fulfilled their supervisory duties would not be punished.
Measures to ease criminal penalties for minor legal violations closely tied to people's daily lives also stand out. If a 1-ton truck owner slightly changes the size of the cargo bed of their own truck without obtaining approval from the head of the local government, the penalty was lowered from up to one year in prison and a 10 million won fine to a corrective order and a 10 million won fine. If the product name or manufacturer on packaging is damaged due to moisture or friction, the penalty will be reduced from up to two years in prison and up to a 20 million won fine to abolition of criminal penalties and up to a 2 million won fine.
The government plans to submit a bill to the regular National Assembly to collectively amend the first package of improvements. However, in the case of breach of trust, it will be abolished as soon as substitute legislation is prepared, so the revision will proceed separately from the 110 items. A Ministry of Economy and Finance official also said, "Within one year, we will streamline 30% of the provisions related to economic criminal penalties among the laws under the jurisdiction of all ministries," adding, "Each ministry will select them autonomously and prepare improvement plans within the year."