Imposing criminal punishment on financial company staffs who received money or valuables

[25-2(A) KCCR 122, 2011Hun-Ba397, 2012Hun-Ba407(consolidated), July 25, 2013]

In this case, the Constitutional Court held that Article 5 Section 4 Item 5 of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, which punishes any officer or employee of a financial institution who accepts money or other benefits in connection with his/her duties by life imprisonment or imprisonment with prison labor for not less than 10 years when the value of the money or profit accepted is 100 million won or more, violates neither the principle of proportionality between responsibility and punishment nor breaks the balance in the punishment system.

Background of the Case

(1) Complainant A, who was manager of OO Trust Company, was indicted for ‘receiving 270 million won from investors in connection of his job duties to undertake asset management for investors and return the benefits from the investment’ in violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (acceptance of property). On November 30, 2011, the district court sentenced him to five years' imprisonment and the Supreme Court upheld the lower court's sentence. While the case was pending in the district court, complainant A filed a motion to request for constitutional review of Article 5 Section 4 Item 1 of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes but the motion was denied. Upon which complainant A filed this constitutional complaint on December 28, 2011.

(2) Complainant B was indicted for ‘receiving money and valuables worth 200 million won from Lee O-i and others in connection of his job duties as a deputy general manager of OO Bank in charge of purchase, management and payment of advertisement’ in violation of the Act on

the Aggravated Punishment, etc. of Specific Economic Crimes (acceptanceof property). On June 22, 2012, the District Court sentenced him to five years' imprisonment and the lower court's sentence was finalized by the high court. While the case was pending in the high court, complainant B filed a motion to request for constitutional review of Article 5 Section 4 Item 1 of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, but the motion was denied. Upon which complainant B filed this constitutional complaint on November 20, 2012.

Provisions at Issue

The subject of review is whether Article 5 Section 4 Item 1 of the former Act on the Aggravated Punishment. Etc. of Specific Economic Crimes (amended as Act No. 8444, May 17, 2007, but before revised as Act No. 11304, February 10, 2012) and Article 5 Section 4 Item 1 of the Act on the Aggravated Punishment. Etc. of Specific Economic Crimes (amended as Act No. 11304, February 10, 2012) (hereinafter together referred to the “Provision”) is constitutional.

Former Act on the Aggravated Punishment Etc. of Specific Economic Crimes (amended as Act No. 8444 on May 17, 2007, but before revised as Act No. 11304 on February 10, 2012)

Article 5(Crime of Acceptance of Property)

(4) In cases referred to in paragraphs (1) through (3), if the value of the money or other profit accepted, demanded or promised (hereinafter referred to as an “accepted amount”), is 30 million won or more, the punishment shall be aggravated as follows:

1. When the accepted amount is 100 million won or more, he shall be punished by life imprisonment or by imprisonment with prison labor for not less than ten years;

Act on the Aggravated Punishment. Etc. of Specific Economic Crimes (amended as Act No. 11304 on February 10, 2012)

Article 5(Crime of Acceptance of Property)

(4) In cases referred to in paragraphs (1) through (3), if the value of the money or other profit accepted, demanded or promised (hereinafter referred to as an “accepted amount”), is 30 million won or more, the punishment shall be aggravated as follows:

1. When the accepted amount is 100 million won or more, he shall be punished by life imprisonment or by imprisonment with prison labor for not less than ten years;

Summary of the Decision

1.Whether the Provision violates the principle of proportionality between responsibility and punishment

Financial institutions are private companies, but considering the gravity of financial business in affecting the economy and life of our citizens, it is very important for them to perform their duties transparently and fairly in order for the proper operation of market economy. In this regard, securing and maintaining transparency and integrity in the work of financial institutions and their staffs can be considered as a very important public interest. Therefore, aggravated punishment upon acceptance of money or other profits in relation to one's job on a par with punishment of bribery has legitimate reasons. When an officer or employee of a financial institution is indicted for accepting money or other benefits of 100 million won or more in connection with his/her duties, the judge who can nevertheless mitigate punishment in extenuation of circumstances, is prevented from sentencing probation unless the case falls under the category of mitigation stipulated by law. This is the result of legislative decision placing emphasis on the gravity of action and culpability of the crime, which does not excessively restrict judicial discretion in sentencing. Regarding the crime of accepting money or valuables in connection with one's job, criminal intent and elements of the crime, etc. are comparatively well categorized, compared to other

crimes in general. Also as damage and ills on our the national economy inflicted by the crime worsen as the value of money or profits received increases, it is reasonable to see that the more the value of money or profit received increases, the more culpability will be attached to the crime. Although the value of money or profits received is not the only standard that decides the relative seriousness of a crime, it is nevertheless an important standard in deciding the range of punishment. Therefore the Provision which aggravates punishment according to the value of money or profits received has reasonable ground and does not violate the principle of responsibility and punishment.

2. Whether the Provision breaks the balance in punishment system

The crime of acceptance of money or valuables in connection with one's job duties committed by attorney at law or public accountant, etc., which requires ‘improper solicitation’ as one of the elements of the crime, affects only the people who are directly related to the case. But the crime by staff of financial institutions, through collapse of integrity and public character of financial institutions, widely affects society and may have serious economic impact. For this reason, the legislature requires staff of financial institutions the same level of integrity as public officials. Therefore, even though the Provision places a graver and harsher punishment than on attorney at law or public accountant, etc., it does not break the balance in the punishment system.

Dissenting Opinion of Four Justices

1.Whether the Provision violates the principle of proportionality between responsibility and punishment

In principle, a criminal sanction may be imposed in the private sector of the economy only when the order of fair competition based on freedom and creativity is impaired by ‘improper solicitation.’ This is

because the private sector is based on freedom and creativity as opposed to the public economy sector where integrity and incorruptibility are specially valued. Cases and legislation of other countries also show that statutory sentences or sentencing guidelines for the crime of receiving money or valuables in relation to jobs in the private sector are lower than those for the crime of bribery by public officials. Other additional elements should also be satisfied to be punishable as a crime of receiving money or valuables, such as ‘for the purpose of influencing or being compensated’ (the crime of acceptance of money or valuables under the US federal law). In our legal system, it is very rare to punish an individual, as opposed to public officials, who accepts money or valuables in connection with his/her duties without requiring the element of ‘improper solicitation.’ The Provision is the only statutory provision that imposes aggravated punishment depending on the value of money or other profits accepted. It is common to mitigate a punishment in extenuating circumstance in the current sentencing practice so that, for example, in such cases where the value of money or other profits accepted exceeds 100 million, the courts uniformly sentence five year imprisonment in general even though the actual values of money or profits accepted in each case may differ even by four times or more. In most cases, punishment and sentences are mitigated. The Provision, however, stipulates that when the accepted amount is 100 million won or more, he shall be punished by life imprisonment or by imprisonment with prison labor for not less than ten years without consideration of the nature of crime such as the criminal's character or behavior, criminal record, criminal intent or circumstances after conduct of crime, etc. As a result, the judge's discretion in sentencing is severely restricted as it is impossible for the judges to suspend sentence even when they decide to mitigate punishment unless there is any separately stipulated basis for the mitigation of punishment. Therefore, the Provision violates the principle of proportionality between responsibility and punishment.

2. Whether the Provision breaks the balance in the punishment system

The Provision stipulates excessively harsh punishment, compared to other crimes of accepting profits in connection with ones' job duties with similar nature and legal interests to be protected. For accountants or attorneys who execute duties strongly related to public value, the sentence is lower than the crime of bribery committed by public officials, or a fine can be an alternative. Also there is no provision stipulating aggravated punishment in accordance to the value of profits accepted. Moreover the element of ‘improper solicitation’ is also required to constitute such a crime. Therefore, the Provision violates the principle of equality, running afoul of the rule of balance in the punishment system.