Employees of HD Hyundai Heavy Industries were sent to trial after replacing work computers (PCs) and hard drives ahead of a Korea Fair Trade Commission (FTC) probe into alleged "subcontracting abuse," but the Supreme Court did not recognize the charge of evidence destruction. The gist is that eliminating evidence to avoid their own punishment is an act protected as part of the right to defense.
The Supreme Court's third division (presiding Justice Lee Suk-yeon) said on the 24th that on the 15th it overturned the lower court ruling that sentenced Hyundai Heavy Industries' executive director A to one year in prison for instigating evidence destruction and remanded the case to the Seoul Central District Court. Head of Team B, who was indicted together for evidence destruction and was sentenced to eight months in prison on appeal, also had the case quashed and remanded by the Supreme Court.
A and B belonged at the time to the Offshore Labor-Management Cooperation Support Team of Hyundai Heavy Industries' Offshore Plant Division. From late 2017 to July 2018, Hyundai Heavy Industries' partner firms reported to the Korea Fair Trade Commission (FTC) that Hyundai Heavy Industries was violating the Fair Transactions in Subcontracting Act. At the time, the Korea Fair Trade Commission (FTC) signaled a policy to conduct an ex officio investigation into subcontracting law violations by the three shipbuilders, including Hyundai Heavy Industries.
From July to October 2018, A instructed B and other employees to "delete the problematic materials." B and others, together with other employees, deleted the problematic materials by replacing 101 PCs and the hard drives of PCs used by 273 executives and employees.
The first trial acquitted A and B. The first trial court found it could not be deemed proven that the defendants had intent to destroy evidence related to a "criminal case." The reason was that the defendants destroyed evidence in preparation for a Korea Fair Trade Commission (FTC) investigation, not in preparation for a subsequent prosecution investigation.
The first trial court said, "Although the defendants did something that deserves strong condemnation, the conclusion that criminal punishment cannot be imposed may appear contradictory," but added, "The Fair Transactions in Subcontracting Act only designates acts obstructing a Korea Fair Trade Commission (FTC) investigation as subject to fines."
The second trial sentenced A to one year in prison and B to eight months. The appellate court found them guilty on the grounds that they destroyed evidence while knowing it could become a criminal case in the future.
The Supreme Court approached it from a different angle. For the crime of destroying evidence under the Criminal Act to be established, one must destroy evidence related to another person's criminal or disciplinary case. According to Supreme Court precedents, if a defendant destroyed evidence out of fear of being directly subjected to criminal sanctions, the defendant cannot be punished. This is to protect the right to defense. In addition, if a person in charge destroyed evidence in a situation where the corporation would be punished for its business, the person cannot be punished.
The Supreme Court said, "Even if it is recognized that A and B were aware they were destroying evidence related to a criminal case, it is hard to rule out the possibility that they destroyed materials that could serve as evidence in a situation where they themselves could be directly subjected to criminal punishment." It then quashed and remanded the case for a new review and judgment.
In Dec. 2019, the Korea Fair Trade Commission (FTC) imposed a penalty surcharge of 20.87 billion won on Hyundai Heavy Industries for violating the Fair Transactions in Subcontracting Act by failing to issue contracts to subcontractors and cutting payments, and filed a complaint with prosecutors.
In Jan. 2024, the Seoul High Court recognized Hyundai Heavy Industries' abuse of power and unfair practices but found that the Korea Fair Trade Commission (FTC) miscalculated the penalty surcharge. The ruling was finalized by the Supreme Court in Nov. of the same year. In Sept. last year, the Korea Fair Trade Commission (FTC) recalculated the penalty surcharge at 12.734 billion won and adopted the decision.