Samsung Electronics(005930) As it became known that Choi Seung-ho, Chairperson of the Samsung Electronics branch of the Samsung Group supra-enterprise labor union, the largest union, purchased rally supplies from a company run by the father-in-law, the question of whether the offense of occupational breach of trust is established has emerged as a key issue. Although there was a transaction with the father-in-law's company, the comparative quotes disclosed by the union showed the price was the lowest.
The legal community says the mere fact of a transaction with a relative's company does not by itself establish breach of trust; the key is whether the union suffered property damage by granting preferential treatment during the vendor selection process.
◇ Purchased rally vests from father-in-law's company… some union members push back
According to related industries on the 10th, after forming a joint struggle headquarters in March, the supra-enterprise union purchased some rally vests from Company A, whose representative is the Chairperson Choi's father-in-law.
According to the statement disclosed by the union, the quoted price per vest was 8,500 won from Company A, 10,000 won from Company B, and 12,000 won from Company C. The union said it put Company C's quote on hold and purchased goods from Companies A and B. It said it comprehensively considered price, quality, delivery schedule, and work experience, and that there was no rebate or commission returned to Chairperson Choi personally.
Explanations surrounding the vendor selection procedure differ. The supra-enterprise union said it contracted with the consent of the executive committee of the joint struggle headquarters, but the companion union countered that it had not been informed in advance.
Some members also raised issues with the propriety of how union dues were spent. One member said, "The supra-enterprise union alone has more than 50,000 members, yet the procedures for spending union dues seem to have been run far too loosely," adding, "A third-party review is needed to determine whether the process of concluding a contract worth hundreds of millions of won with the Chairperson's father-in-law's company was appropriate."
◇ If it was the lowest price, breach of trust is not easy… the key is "union damage"
Occupational breach of trust is established when a person handling another's affairs, by an act contrary to duty, confers a property benefit on themself or a third party and causes loss to the principal.
The core of this matter is also whether the union suffered property damage. If the necessary goods were purchased at a reasonable price and delivered per the contract, it may be difficult to recognize loss for breach of trust. The fact that Company A's quote of 8,500 won was the lowest among the disclosed comparisons is a circumstance favorable to Chairperson Choi.
A corporate criminal attorney who previously served as a senior prosecutor said, "If there was no property damage, it is basically difficult to establish breach of trust," but added, "You have to look comprehensively not only at the unit price but also quality, quantity, contract term, and delivery conditions."
Even if the price was the lowest, there is room to recognize loss if quantities were ordered in excess of need or if quality/specifications and delivery conditions were unfavorable to the union. Conversely, if under similar conditions the necessary goods were supplied at the actually lowest price, it becomes harder to recognize loss.
◇ A transaction with the father-in-law's company alone is not breach… the selection procedure is key
The mere fact of a transaction with a company run by the father-in-law does not in itself establish the offense. However, given the private interest, it is important whether the vendor selection process reflected a rational judgment for the union's benefit.
If the familial relationship was concealed and the vendor was predetermined, with comparative quotes obtained only pro forma, or if normal competitive procedures were excluded to channel volume, that could weigh against a finding on duty violation and intent for breach of trust. Conversely, if the familial relationship was disclosed and prices and quality from multiple vendors were actually compared to choose the economically advantageous one, it is difficult to recognize breach solely on the familial tie.
The point that Chairperson Choi received no personal rebate is also a factor, but not decisive. Breach of trust can be established even if the person did not benefit directly, where a third party obtained a property benefit through a duty-violating act and the union suffered corresponding loss.
Kim Gi-dong, managing partner at the law firm Robecks, said, "You have to look both at whether reasonable review procedures such as multiple quotes and price comparisons were followed and whether the actual price was reasonable," adding, "Even if procedures were followed, if it was in substance purchased at an expensive price, it can be breach of trust."