[2] The person who bears the burden of proving the existence of embezzlement as an act of realizing the intent of unlawful acquisition in the crime of occupational embezzlement (=public prosecutor) and the degree of proof

1. As to the Defendants’ grounds of appeal

A. As to Defendant 1 and 2’s violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (hereinafter “Special Economic Crimes Act”) regarding an urban development project of ○○○○○○○ District

(1) In the case of breach of trust, the term “act in violation of the duty” includes any act in violation of a fiduciary relationship with the principal by failing to perform an act that ought to be naturally expected under the statutory provisions, the content of the contract, or the good faith principle, or by doing an act that is anticipated not to perform as a matter of course, in light of the content and nature of the business

In addition, in determining whether there was an intentional breach of trust to a manager of a company in relation to the so-called management judgment, the same legal doctrine as the method of proving an intentional breach of trust is applied to the general crime of occupational breach of trust. However, considering the inherent characteristics in the management of the company, the strict interpretation criteria for recognizing an intentional breach of trust shall be maintained only in cases where it is recognized that the act is an intentional act by itself or a third party in view of all the circumstances, such as the developments and motive leading up to the management judgment in question, the contents of the business subject to the determination, the economic situation of the company in question, the probability of incurring losses and the possibility of acquiring profits, etc. (see Supreme Court Decision 2010Do7546, Jul. 28, 2011). In short, without such recognition, the mere fact that there was an intentional loss on the part of the principal cannot be held liable on the ground that the person was negligent by neglecting the duty of care (see Supreme Court Decision 2002Do4229, Jul. 22, 2004).

On the other hand, the conviction in a criminal trial ought to be based on evidence with probative value, which leads a judge to have the conviction that the facts charged are true beyond a reasonable doubt. Thus, if there is no such evidence, even if there is doubt as to the defendant's guilt, it is inevitable to determine the defendant's interest (see Supreme Court Decision 2008Do4910, Jun. 11, 2009, etc.).

(2) In full view of the evidence as indicated in the judgment below, the court below found that ① Nonindicted Co. 2 established by Nonindicted Co. 1 (hereinafter “Nonindicted Co. 2”) obtained loans worth KRW 17 billion from Nonindicted Co. 3 (hereinafter “Nonindicted Co. 4”) regarding an urban development project promoted in the ○○○○○○○○○ area, with the view to jointly and severally surety, Nonindicted Co. 3 extended loans worth KRW 17 billion to Nonindicted Co. 4 (hereinafter “Nonindicted Co. 4”) by treating the instant loans as credit loans rather than hub loan, and thus, it was merely a company established at the time of establishment to assess credit or financial capability. ② In light of the contents of Nonindicted Co. 4’s agreement on the provision of guarantee for loans with Nonindicted Co. 1, 200, Nonindicted Co. 4, expected by Nonindicted Co. 4 Co. 1, 2006, which did not have any significant effect on the provision of loans to Nonindicted Co. 4, 2006, which was established for the purpose of the above urban development project.

(3) However, it is difficult to accept such determination by the lower court for the following reasons.

First of all, according to the facts acknowledged by the court below, when entering into a contract on the provision of guarantee for the lending and borrowing of money with Nonindicted Company 4, Nonindicted Company 2 has an obligation to use the loan for the purpose of reporting it to Nonindicted Company 4 and Nonindicted Company 3, such as cost of acquiring business rights, land purchase deposit, etc., and in return for the provision of guarantee, 1% of the amount guaranteed each year should be granted to the person designated by Nonindicted Company 4, in addition to the payment of guarantee fees, at least 10% of the amount guaranteed by Nonindicted Company 4, the construction profit was guaranteed, and 40% of the business profit was paid. If Nonindicted Company 2 was unable to repay the loan at maturity and Nonindicted Company 4 made repayment on behalf of Nonindicted Company 4, Nonindicted Company 4 agreed to intervene for the transfer of business rights, etc. for the said urban development project, and was jointly and severally guaranteed by Nonindicted Company 7 (hereinafter “Nonindicted Company 7”).

Furthermore, according to the records, ① Nonindicted Co. 1 was an affiliated company of Nonindicted Co. 8 (hereinafter “Nonindicted Co. 1”) and was under the control of Nonindicted Co. 1’s financial partner in the urban development project of ○○○○○○○○○○○○ Group, and was under the control of Nonindicted Co. 1’s financial institution’s business feasibility for 3 to 4 months. On May 209, Nonindicted Co. 2 established Nonindicted Co. 2 while acquiring the above business right at KRW 1.25 billion, employed 5 executives and employees of Nonindicted Co. 8, including Nonindicted Co. 9, etc., and continued to participate in the urban development project of ○○○○○○○○○○○ Group. The same reasoning was that Nonindicted Co. 8 did not obtain consent from Nonindicted Co. 159 (No. 47.9%) among the owners of ○○○○ District Co. 1’s investment in the urban development project, and it was meaningful for Nonindicted Co. 2 to obtain consent from the owners of the said urban development project.

As such, the joint and several surety in this case appears to have been characterized as an investment taking into account the overall interests of the △△△△ Group rather than a mere debt guarantee, and as such, at the time of the joint and several surety in this case, it is difficult to view that Nonindicted Co. 4’s golf club operated by Nonindicted Co. 1 was in a state of loss of ability to repay debts beyond a simple amount of debts. It can be seen that acquiring Nonindicted Co. 7 in the △△△△ Group was expressed that the continued corporate value of Nonindicted Co. 7 can be evaluated as considerable. If a general company, such as Nonindicted Co. 4, takes a joint and several surety in obtaining a loan from a third party who falls short of security, there is no evidence to deem that there was a provision that the borrower should control and supervise the borrower’s use of the loan in practice, and even if there was no practice that supervision over the borrower’s right to manage funds, the Defendants did not know the above Defendants’ act of breach of trust or did not know the above Defendants’ act of violation of trust.

Nevertheless, the lower court found the Defendants guilty of this part of the facts charged solely for the reasons indicated in its holding. In so determining, the lower court erred by misapprehending the legal doctrine on the intention of the crime of occupational breach of trust and management judgment, thereby failing to exhaust all necessary deliberations, thereby adversely affecting the conclusion of the judgment. The instant Defendants’ ground of appeal

B. As to Defendant 1 and 3’s violation of special law on the construction project of an apartment building with a room (Misappropriation)

The court below affirmed the first instance court which found Defendant 1 and 3 guilty of this part of the facts charged that Defendant 1 and 3 conspired to obtain pecuniary benefits equivalent to KRW 8.5 billion in total from Nonindicted Company 11 and that Nonindicted Company 10 (hereinafter referred to as “Nonindicted Company 10”) suffered economic damage equivalent to the same amount as the victim Nonindicted Company 10 was guilty, without taking necessary measures, when they lend funds necessary for the apartment construction project promoted by Nonindicted Company 11 (hereinafter referred to as “Nonindicted Company 11”) to Nonindicted Company 11, which was operated by Seocho-gu Seoul, Seocho-gu, Seoul, for the purpose of controlling and supervising the use of loans by Nonindicted Company 11, without taking necessary measures.

However, such determination by the court below is difficult to accept for the following reasons.

First of all, according to the facts acknowledged by the court below, when entering into an agreement on loans with Nonindicted Company 11, Nonindicted Company 11 was obligated to use the above loans only as purchase funds for business site and acquisition expenses for business right, and subsequently, Nonindicted Company 11 was decided to establish a collateral security right on real estate to be acquired by Nonindicted Company 11, and it was jointly and severally guaranteed by Nonindicted Company 12, Nonindicted Company 7, and Nonindicted Company 13, and Nonindicted Company 10 demanded the return of the total amount of five billion won after the expiration of 11 day and 7 days from the date of each loan, on the ground that the right to collateral security was not created after lending the funds to Nonindicted Company 11.

Furthermore, according to the records, ① Nonindicted Company 10 was not a financial institution mainly aiming at recovering principal and interest income, but is not a company under strict supervision by the financial supervisory authority, ② Nonindicted Company 1 was offered business rights transfer from Nonindicted 14 in Seocho-gu Seoul Metropolitan Government (hereinafter omitted) and conducted a review on feasibility of the apartment construction project for three to four months, and it was determined that there was business feasibility, and it was acquired by Nonindicted Company 11 on July 2008, and was conducted with Nonindicted Company 14 in the name of Nonindicted Company 11 (representative 15) and employment of Nonindicted Company 14 in the business feasibility of the above apartment construction project. ③ Nonindicted 1 was conducted with Nonindicted 14 in the name of the above △△△△△△△△△△△△△△△△△△△△△△△△△△△’s business feasibility after examining the business feasibility of the apartment construction project, and it was also necessary for Defendant 1 to have reported it to Defendant 3 on the business feasibility of the apartment construction project.

In light of the above circumstances, the loan of this case also seems to have been characterized as an investment taking into account the overall interests of △△△△ Group. There is no evidence to deem that there was a statute or internal regulation stipulating that a general company, such as Nonindicted Company 10, should control and supervise the third party’s use of the funds when lending money to a third party lacking security. In the practice of so-called Brazil loan, there is a commercial practice that a general company as the lending entity must secure the right to control funds from the borrower, and even if there is existence, there is no record as to whether the above defendants knew of the existence of such a practice, and as seen earlier, it seems that the continuous business value of Nonindicted Company 7 was considerable, or that the above defendants were aware on the premise of the existence of such a practice, or that Nonindicted Company 1 was aware that it was against the above agreement, or that the above Defendants did not take special measures against the above Defendants’ act of lending money to another company or that it was in breach of trust for the reason that the above Defendants did not take measures against the above Defendants.

Nevertheless, the lower court found the Defendants guilty of this part of the facts charged solely for the reasons indicated in its holding. In so determining, the lower court erred by misapprehending the legal doctrine on intentional occupational breach of trust and managerial judgment, thereby failing to exhaust all necessary deliberations, thereby adversely affecting the conclusion of the judgment. The instant Defendants’ ground of appeal pointing this out

C. As to Defendant 1’s violation of the Special Economic Crimes (Misappropriation) on the loan of funds to Nonindicted Incorporated Company 17

Examining the reasoning of the lower judgment in light of the evidence duly admitted by the lower court, the lower court’s determination that Defendant 1 was guilty of violating the Act on Special Economic Crimes (Misappropriation) regarding Defendant 1’s loan of funds to Nonindicted Co. 17, on the grounds indicated in its reasoning is acceptable. In so determining, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence in violation of logical and empirical rules, or by misapprehending the legal doctrine on occupational duties, recognition of damages, and intent of breach of trust

D. As to the violation of the Mutual Savings Banks Act against Defendant 1 and 3

Defendant 1 and 3 appealed against the violation of the Mutual Savings Banks Act among the guilty portion of the judgment of the court below, but there are no grounds for objection in the petition of appeal and the appellate brief.

2. As to the Prosecutor’s ground of appeal

A. As to the violation of the Special Economic Act (Misappropriation) due to the cancellation of the pledge right by Nonindicted 18 Stock Company

Of the acquittal portion of the lower judgment against Defendant 1, the Prosecutor appealed against the violation of the Special Economic Act (Misappropriation) due to the cancellation of the pledge right by Nonindicted Co. 18. However, there is no statement in the petition of appeal and the appellate brief on this part.

B. As to the violation of the special law regarding the sale price of real estate at Silung-dong (Embezzlement)

In the crime of occupational embezzlement, it is necessary for a prosecutor to prove that there is an act of embezzlement as an act of realizing the intent of unlawful acquisition in the crime of occupational embezzlement. The evidence should be proved by strict evidence with probative value that makes a judge not having any reasonable doubt, and if there is no such evidence, even if there is no doubt about the defendant's guilt, it is inevitable to determine it as the defendant's interest (see, e.g., Supreme Court Decision 2008Do6755, Jun. 24, 2010).

In light of the above legal principles and records, the court below acquitted Defendant 1 of this part of the facts charged against Defendant 1 on the ground that there is insufficient proof as to the fact that Defendant 1 had an intention to obtain unlawful acquisition and ordered the non-indicted 16 corporation to lend an amount equivalent to KRW 6.44 billion to the non-indicted 19 corporation on the grounds of its stated reasoning. In so doing, contrary to what is alleged in the grounds of appeal, the court below did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal principles

C. As to the violation of the special law on the lending of funds to Nonindicted Co. 20

As to this part of the facts charged against Defendant 1, the lower court acquitted Defendant 1 on the grounds that it is difficult to readily conclude that Defendant 1 was a disadvantageous disposition against the management interest of Nonindicted Co. 4 for personal interests, on the grounds that there are reasonable grounds to deem that Nonindicted Co. 4’s lending of funds to Nonindicted Co. 20 for Nonindicted Co. 4 was necessary for the interest of Nonindicted Co. 4.

Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower court’s aforementioned determination is acceptable, and contrary to what is alleged in the grounds of appeal, there were no errors by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the

D. As to the violation of special laws on double payment of part payments by Nonindicted Company 10

As to this part of the facts charged against Defendant 1, the lower court determined that it is difficult to view Defendant 1 as an unlawful acquisition intent, since it is reasonable to view that Defendant 1’s act of paying Nonindicted Company 10 to Nonindicted Company 21 is an act necessary for the management interest of Nonindicted Company 10 and within the scope of the business judgment.

Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower court’s aforementioned determination is acceptable, and contrary to what is alleged in the grounds of appeal, there were no errors by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal doctrine on the intent of unlawful acquisition

3. Scope of reversal

For the same reason as seen above, among the judgment below, the part on Defendant 1’s violation of the Act on Special Cases concerning the Urban Development Projects in ○○○○○○ District (Misappropriation) and the part on Defendant 2, and the part on Defendant 1 and 3’s violation of the Act on Special Cases Concerning the Construction Projects of Urban Development Projects in ○○○○○ District (Misappropriation of Trust) should be reversed. Since the remaining guilty part on Defendant 1 and the remaining part on Defendant 3 are punished as concurrent crimes, the judgment below should be reversed in its entirety.

4. Conclusion

Therefore, without further proceeding to decide on Defendant 1’s remaining grounds of appeal, the part on conviction against Defendant 1 and the part on Defendant 2 and 3 among the judgment below is reversed, and the case is remanded to the court below for further proceedings consistent with this Opinion. The prosecutor’s appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Poe-dae (Presiding Justice)