[1] The meaning of "duty" and "illegal solicitation" in the crime of taking property in breach of trust

[2] The case holding that it constitutes a crime of taking property in breach of trust on the ground that the chairman of the Korea Trade Union Federation which is the ordering person of the construction business receives money in connection with the selection of a subcontractor of a construction company which is the contractor of the construction business

[3] Whether it constitutes an illegal solicitation to receive money from a specific person in return for a request (affirmative in principle) where a person who deals with affairs related to a contract entrusted by another person can become the other party to the contract (affirmative)

[4] The purpose of Article 40 of the Act on the Budgeting and Management of Subsidies and the meaning of "the grant of subsidies by false application or other unlawful means" under the same Article

[5] The case holding that even if the ordering person of a construction project actually paid a subsidy that was properly received from the government to a construction project operator and used it as an indirect cost, it cannot be readily concluded that the amount equivalent to the donation was received from the original subsidy under the "false application or other unlawful means"

[1] Article 357 (1) of the Criminal Act / [2] Article 357 (1) of the Criminal Act / [3] Article 357 (1) of the Criminal Act / [4] Articles 40, 41, and 42 of the Act on the Budgeting and Management of Subsidies / [5] Article 40 of the Act on the Budgeting and Management of Subsidies

[1] Supreme Court Decision 88Do167 delivered on December 20, 198 (Gong1989, 205) Supreme Court Decision 95Do2090 Delivered on October 11, 1996 (Gong1996Ha, 3366), Supreme Court Decision 2003Do2450 Delivered on February 13, 2004, Supreme Court Decision 2003Do1435 Delivered on December 10, 2004, Supreme Court Decision 2004Do646 Delivered on January 14, 2005 (Gong2005Sang, 347) / [4] Supreme Court Decision 99Do4101 Delivered on January 5, 201 (Gong201Sang, 469)

Defendant 1 and two others

Prosecutor and Defendant 1

Law Firm Slun Law Firm, Attorneys Go Won-seok et al.

Seoul Southern District Court Decision 2005No1552 Decided January 11, 2006

All appeals are dismissed.

1. Judgment on Defendant 1’s grounds of appeal

The crime of taking property in breach of trust under Article 357 (1) of the Criminal Act is established when a person who administers another's business obtains property or profits from property in exchange for an illegal solicitation in connection with his/her business. The term "duty" refers to the business entrusted by a person who administers another's business, but it includes not only the original business arising from the entrustment relationship but also the business within the scope closely related thereto (see Supreme Court Decisions 2003Do2450, Feb. 13, 2004; 2003Do1435, Dec. 10, 2004; 2003Do1435, Dec. 10, 2004; hereinafter referred to as "illegal solicitation" means that solicitation goes against social norms and the principle of good faith. In determining this, comprehensive consideration of the contents of the solicitation, the amount of property received in relation thereto, form, and integrity of the administrator of the business, which is the legal interest protected for the protection of the law, etc. (see, e.g., Supreme Court Decisions 8Do88888Do16964.

According to the reasoning of the judgment below, Defendant 1 was issued KRW 200 million upon request by Nonindicted 2, a representative director of Nonindicted Co. 1, who was in charge of the reconstruction of the welfare center as the chairperson of the Korea Workers’ Federation of Workers’ Unions (hereinafter “Korea Workers’ Federation”) and was in charge of the reconstruction of the welfare center as the chairperson of the National Workers’ Welfare Center (hereinafter “Welfare Center”).

First, as to whether Defendant 1’s receipt of money in connection with the selection of the subcontractor of Nonindicted Co. 3 is “the duties” of the person handling the affairs of the Korea Labor-Management Corporation, the ordering person of construction work may restrict the subcontractor’s qualification based on the execution capacity (Article 25(2)), and where the subcontractor is deemed significantly inappropriate for executing construction works, the subcontractor’s execution capacity and the contents of the subcontract may examine the subcontractor’s execution capacity and the propriety of the contents of the subcontract. As a result of the examination, where the subcontractor’s execution capacity and the contents of the subcontract are inappropriate, the subcontractor may request the contractor to change the subcontractor or the contents of the subcontract (Article 31(1) and (2)). In executing the subcontracted construction work, the subcontractor has the same duty as the contractor (Article 32(1)) and the subcontractor is closely related to the ordering person in light of the Act on the Construction Industry and Fair Transactions in the written contract for construction work made between the Korea Labor-General and Nonindicted Co. 3.

Next, with regard to whether the request constitutes an "illegal solicitation" for electrical construction among the construction works of welfare centers, it is reasonable to deem that it constitutes an illegal solicitation, in general, where a person in charge of affairs related to a contract entrusted by another person receives money from a specific person as a counter-party to the contract in return for the request, barring any special circumstances. In addition, in principle, Nonindicted Co. 1 was not registered as a cooperative company of Nonindicted Co. 3; Defendant 1 recommended Nonindicted Co. 1 to the subcontractor through the title list, thereby demanding money from Nonindicted Co. 3 after being selected as a subcontractor; and in full view of the fact that the amount received in return for solicitation is a large amount of KRW 20 million and the amount received in the underground parking lot of a hotel, it can be recognized that the above solicitation goes against the principles of trust and good faith.

Therefore, this part of the judgment of the court below to the same purport is just, and there is no error in the misapprehension of legal principles as to the crime of taking property in breach of trust.

2. Judgment on the grounds of appeal by the prosecutor

Article 40 of the Act on the Budgeting and Management of Subsidies (hereinafter “Act”) provides that “Any person who has received subsidies or indirect subsidies by false application or other unlawful means or who has knowingly received subsidies or indirect subsidies shall be punished by imprisonment with prison labor for not more than five years or by a fine not exceeding five million won.” This provision provides separate penal provisions for the violation of administrative procedures, etc. of individual subsidies in Articles 41 and 42 of the Act. In light of the fact that the State’s financial interests are punished by the benefit of the State, and that the provision is abstractly not to punish the violation of the law of the State’s financial interests, and thus, it does not constitute a punishment for the violation of the order or fairness of the administration of subsidies or for the violation of individual administrative procedures. Thus, the term “the person who has received subsidies by false application or other unlawful means” does not fall under the scope of the subsidy granted (see Supreme Court Decision 90Do1508, May 19, 200).

Examining the reasoning of the lower judgment in light of such legal doctrine and the record, the Defendants requested the State to grant subsidies to the construction of the Korea Development Fund for the establishment of a new building by removing the existing office of the Korea Labor Union and rebuilding the welfare center on the same site. The State decided to grant subsidies of KRW 3.4 billion in total by reflecting some of the direct construction costs, such as design, removal, construction, etc. in the subsidy budget, and then to grant subsidies annually from 2001 to 204 (so, the fixed amount of the National Treasury Support Fund is not subject to the State’s Guidelines for Management of the total project cost, or the project was not implemented over several years on the ground that there is a possibility that the total amount of the subsidy would be changed in the construction cost and the total amount of the subsidy for the construction of the Korea Development Fund for the establishment of the Korea Development Fund for the establishment of the new building. The total subsidy for the construction of the Korea Development Fund for the establishment of the Korea Development Fund for the establishment of the new building would be reasonable (the total subsidy for the construction cost of the Korea Labor Management Corporation was excluded).

Therefore, it is proper that the court below found the Defendants not guilty of this part of the charges, and there is no error in the misapprehension of legal principles that affected the conclusion of the judgment, contrary to the allegations in the grounds of appeal.

3. Conclusion

Therefore, all appeals by Defendant 1 and prosecutor against the Defendants are dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Hwang-sik (Presiding Justice)