The government announced on the 1st that it will officially embark on amending the crime of breach of trust. In the past, investigative agencies have prosecuted corporate executives for breach of trust related to losses incurred during business operations, and courts have also rendered guilty verdicts. The government is reportedly considering amending the law so that if actions are recognized as business judgments by corporations, they will not be prosecuted for breach of trust.
On that day at 3 p.m., the government held the first meeting of the "Economic Punishment Rationalization Task Force (TF)." This was due to President Lee Jae-myung instructing on the 30th of last month to prepare improvement measures, noting that the abuse of the crime of breach of trust is stifling corporate activities.
The TF stated that it would overhaul 30% of the economic punishment regulations across all government ministries within a year. The crime of breach of trust is cited as a typical economic punishment regulation under criminal law. Breach of trust punishes those who handle others' affairs and, through actions contrary to their duties, gain financial benefits or cause losses to the corporation.
The crime of breach of trust was introduced to prevent corporate executives from abusing their managerial positions to benefit personal companies or acquaintances. To charge theft, it must be proven that company funds or assets were directly embezzled. However, breach of trust allows for prosecution if the company representative or executive provides benefits to themselves or third parties and causes harm to the corporation. For example, there have been cases where an owner was prosecuted for breach of trust and confirmed guilty for using company funds to build a private golf course or giving corporate credit cards to acquaintances.
However, there have been cases where investigative agencies applied and prosecuted the crime of breach of trust when companies incurred losses due to unforeseen circumstances. Lee Jae-yong, chairman of Samsung Electronics, was acquitted in the appeal trial regarding the 'unfair merger allegations between Samsung C&T and Cheil Industries,' with one of the main charges being breach of trust.
The government is reportedly considering a plan to codify a provision in the criminal law stating that 'business judgments will not be prosecuted for breach of trust.' Kim Tae-nyeon, a member of the Democratic Party of Korea, has already proposed a bill reflecting this content.
Meanwhile, the TF is led by Vice Minister Lee Jin-soo of the Ministry of Justice and Vice Minister Lee Hyung-il of the Ministry of Economy and Finance. The TF includes 15 ministries, including the Fair Trade Commission, the Ministry of Land, Infrastructure and Transport, and the Financial Services Commission. The TF plans to announce priority tasks that need immediate action in September, followed by submitting relevant legislation to the National Assembly. It will also look to identify additional improvement tasks by the end of the year.
Vice Minister Lee Jin-soo of the Ministry of Justice stated, "We plan to prepare improvement measures for the crime of breach of trust that corporate executives can feel comfortable with so that they can engage in proactive investment activities without feeling the burden of criminal punishment."