CONTENTS
- 1. The Story of the Client Charged with Occupational Breach of Trust
- - Assistance Provided by the Daeryun Breach of Trust Specialist Attorney
- 2. Result of the Occupational Breach of Trust Case
- - Level of Punishment for Occupational Breach of Trust
- 3. How to Respond to an Occupational Breach of Trust Charge
- - Daeryun's One-Stop Response System
1. The Story of the Client Charged with Occupational Breach of Trust
The client, who faced the risk of punishment for occupational breach of trust, was a management executive who had overseen the operation of facilities connected with public-purpose energy and infrastructure projects.
The client came to be charged with occupational breach of trust as a result of an internal report concerning the operation entrustment agreement for the facilities in question.
The accusation contained the claim that the client had provided information favorable to a particular company during the bidding process and had adjusted the operating workforce, thereby causing loss to the company.
The client, however, expressed that the matter was unjust, stating that they had merely reviewed the overall operating structure and, after reporting to the board of directors, pursued a reasonable operational improvement plan, and that they had neither improperly intervened in the bidding process nor provided any benefit to a third party.
Amid concern that a single business judgment could lead to criminal punishment, the client determined that they needed the assistance of a breach of trust specialist attorney with extensive experience handling occupational breach of trust cases, and turned to Daeryun Law Firm.
Assistance Provided by the Daeryun Breach of Trust Specialist Attorney
The Daeryun breach of trust specialist attorney provided assistance for the client as follows.
1) Structuring the occupational breach of trust charge as a "business judgment"
The breach of trust specialist attorney reconstructed the case on the premise that the matter was not a simple question of cost expenditure or a contract, but a business judgment aimed at improving the efficiency of facility operations and the loss-making structure.
The attorney organized as objective material the fact that the analysis of the operating status, the review of safety management laws and regulations, the examination of equipment technology, and the review of labor relations laws had been carried out through reporting to the board of directors.
Through this, the attorney emphasized that the very "breach of duty" that is the premise for establishing occupational breach of trust was not at issue in this structure.
2) Numerical and comparative analysis of the occupational breach of trust claim
In response to the accusation's claim that the adjustment of the operating workforce and the calculation of the entrustment consideration had caused loss to the company, the breach of trust specialist attorney precisely compared the contract amounts and the service consideration.
As a result, the attorney proved that the total contract amount had in fact decreased and that the per-day service consideration had been substantially reduced compared to the prior level.
In particular, the attorney presented as a key legal argument for the occupational breach of trust determination that, taking into account the rate of increase in the government-published labor unit cost, it was difficult to find that the company had suffered any actual loss.
3) Legal response regarding the absence of intent
· Daegu District Court Decision 99Gahap13533
Moreover, company management by its nature inevitably entails a certain degree of risk.
Therefore, if a representative director, in executing their duties, judged within the scope of reasonable choices required of a manager and executed their duties accordingly, then even if the company subsequently suffers loss as a result of that act, the representative director cannot be held liable on the ground of having breached the duty of care of a good manager.
· Supreme Court Decision 2009Do1149
On the basis of the precedent legal principles concerning a representative director's management conduct, the breach of trust specialist attorney emphasized that the intent of occupational breach of trust could not be recognized in this matter.
The attorney argued that, examining comprehensively the background and motive of the decision at issue, the company's financial situation, and the probability of loss and the probability of pursuing benefit, there existed no intent to pursue private gain or to provide benefit to a third party.
2. Result of the Occupational Breach of Trust Case
Through the assistance of the Daeryun breach of trust specialist attorney, the investigative authorities rendered a decision of non-referral (no suspicion of crime) on the occupational breach of trust charge.
By this, the client not only escaped the risk of criminal punishment but also had the legitimacy of the business judgment officially recognized, enabling them to continue their management activities going forward.
This outcome was a result made possible by Daeryun's specialized assistance, which simultaneously carried out the organization of the facts and the legal response in the occupational breach of trust case.
Level of Punishment for Occupational Breach of Trust
Occupational breach of trust is an offense that may be established where a person who handles another's affairs, through an act in breach of their duty, causes property loss and obtains a benefit for themselves or a third party.
In particular, the offense of occupational breach of trust is not established merely on the ground that a management loss has occurred, and the causation among the breach of duty, the intent, and the property loss is judged strictly.
In the case of a representative director or management, it is the position of the precedents that if a reasonable judgment was made within a scope that does not violate statutes and the articles of incorporation, it is difficult to hold them liable for breach of trust merely on the basis of a subsequent occurrence of loss.
(2) The same punishment as in the preceding paragraph shall apply to a person who handles another's affairs and, through an act in breach of their duty, obtains a property benefit or causes a third party to obtain it, thereby causing loss to the principal.
Article 356 of the Criminal Act (Occupational Embezzlement and Breach of Trust) A person who commits the offense under Article 355 in breach of an occupational duty shall be punished by imprisonment for up to 10 years or a fine of up to 30 million won.
If a charge of occupational breach of trust is recognized, one may be subject to imprisonment for up to 10 years or a fine of up to 30 million won.
3. How to Respond to an Occupational Breach of Trust Charge
If you are placed at risk of punishment for occupational breach of trust, you can respond as follows.
Category | Response Point |
Organizing the facts | Organizing the background of the decision and the board reporting and approval procedures |
Reviewing whether there was loss | Comparing contract amounts and cost-reduction or cost-increase factors |
Judging intent | Reviewing whether there was a pursuit of private gain and an awareness of providing benefit to a third party |
Legal response | Applying precedent regarding the scope of business judgment discretion |
Early response | Establishing a strategy through a consultation with a breach of trust specialist attorney |
Daeryun's One-Stop Response System
Although the procedure to abolish the crime of breach of trust under the Criminal Act is currently underway, the provision remains in effect for now and the relevant law still exists. For this reason, companies need to carefully review and remain mindful of the legal principles relating to occupational breach of trust during internal decision-making and asset management.
Occupational breach of trust cases are complex matters that must be reviewed not only from a criminal defense perspective but also with regard to corporate management, labor, administrative, and internal audit issues.
Daeryun analyzes cases from multiple angles through a one-stop response system in which specialists in the criminal and corporate fields collaborate under the lead of an attorney experienced in breach of trust matters.
If there is a concern that a business judgment may give rise to criminal risk, we recommend making a 🔗legal consultation reservation before the matter expands, so that you may receive Daeryun's professional assistance.
This content is based on actual case studies of Daeryun Law LLC with some adaptations, and the copyright belongs to our firm.
Unauthorized reproduction, duplication, or distribution and other copyright infringements may result in legal action under applicable laws.
