Defendant 1 and 5

Defendants

ElucidationS

Law Firm Mau, Attorneys Han Young-young et al.

Daejeon District Court Decision 2006Gohap301 Decided September 5, 2008

All appeals by the Defendants are dismissed.

1. Summary of grounds for appeal;

The facts charged in this case are not recognized, since small and medium enterprises that can be loaned within the limit of KRW 8 billion include not only individual entrepreneurs but also individuals who have completed business registration with no human and material facilities. ② Defendant 1, 2, 3, and 4 deleted the penal provisions under the current law, and thus, a judgment of acquittal should be rendered. ③ The Defendants are erroneous that their actions do not constitute a crime under the laws and regulations, and there are justifiable grounds for misunderstanding, thereby not guilty should be pronounced) and unjust sentencing.

2. Relevant regulations and basic facts

(a) the relevant regulations;

Mutual Savings Banks Act (amended by Act No. 6992 of Dec. 11, 2003)

Article 1 (Purpose)

The purpose of this Act is to contribute to the development of the national economy by promoting the financial convenience of ordinary people and small and medium enterprises, protecting customers, and maintaining order in credit by inducing the sound operation of mutual savings banks.

Article 2 (Definitions)

The definitions of terms used in this Act shall be as follows:

1. The term "small and medium enterprises" means small and medium enterprises under Article 2 (1) of the Framework Act on Small and Medium Enterprises;

Article 12 (Limit on Loans, etc. to Same Person, etc.)

(1) No mutual savings bank may grant loans to a same person in excess of the limits prescribed by Presidential Decree, within the extent of 20/100 of its equity capital.

Article 39 (Penal Provisions)

(3) Any of the following persons shall be punished by imprisonment for not more than one year or by a fine not exceeding 10 million won:

4-2. A person who violates the provisions of Article 12 (1), (2) or (4);

Article 39-2 (Joint Penal Provisions)

When a representative of a corporation, or an agent, employee or other servant of a corporation or individual commits an offence under Article 39 in connection with the business of the corporation or individual, not only shall such offender be punished, but also the corporation or individual shall be punished by a fine

Enforcement Decree of the Mutual Savings Banks Act (amended by Presidential Decree No. 18305, Mar. 9, 2004)

Article 9 (Limit on Loans, etc. to Same Person, etc.)

(1) The limit on loans, etc. to the same person under the provisions of Article 12 (1) of the Act shall be the amount within 20/100 of equity capital and determined as follows:

1. Loans to small and medium enterprises and other corporations, etc.: Eight billion won;

3. Loans, etc. to those who do not fall under subparagraphs 1 and 2: Three hundred million won.

Amendment to Mutual Savings Banks Act (Law No. 8522, July 19, 2007, January 20, 2008),

(3) Any person who falls under any of the following subparagraphs shall be punished by imprisonment with prison labor for not more than one year or by a fine not exceeding 10 million won.

Small and Medium Enterprises

Article 1 (Purpose)

The purpose of this Act is to provide for basic matters concerning direction-setting for small and medium enterprises and policies for fostering small and medium enterprises, thereby supporting their creative and independent growth, upgrading their industrial structure, and developing the national economy in a balanced manner.

Article 2 (Scope of Small and Medium Entrepreneurs)

(1) A small and medium enterprise owner subject to a policy to foster small and medium enterprises (hereinafter referred to as "policy for small and medium enterprises") shall be an operator of an enterprise that meets all of the following requirements (hereinafter referred to as "small and medium enterprise"):

1. The scale of business shall meet the standards prescribed by Presidential Decree, considering the following matters:

(a) Characteristics of business type;

(b) Number of regular workers;

(c) Size;

(d) Sales, etc.;

2. Actual independence of ownership and management shall meet the standards prescribed by Presidential Decree.

Enforcement Decree of the Small and Medium Enterprises

Article 3 (Scope of Small and Medium Enterprises)

Small and medium enterprises under Article 2 (1) of the Framework Act on Small and Medium Enterprises (hereinafter referred to as the "Act") shall meet all of the following standards:

1. A company whose type of business and the number of regular workers, capital or sales of which meet the criteria set forth in attached Table 1: Provided, That any of the following enterprises shall be excluded herefrom:

(a) An enterprise with at least 1,00 full-time workers;

(b) A corporation whose total assets (referring to the total assets indicated on the balance sheet as of the end of the immediately preceding business year) are 500 billion

2. An enterprise whose substantial independence of its ownership and management meets the standards in attached Table 2.

(b) Basic facts

Comprehensively taking account of the evidence duly adopted and examined by the court below, the following facts may be recognized:

A) In order to purchase the land on the site of the Daejeon High District Urban Development Project through the instant loan, Nonindicted Co. 1 was working as the Daejeon High District Branch, and Nonindicted Co. 2 was registered as the trade name on March 22, 2005, which was in order to purchase the land on the site of the Daejeon High District Urban Development Project through the instant loan, and Nonindicted Co. 1 borrowed a total of KRW 8.942 million from Defendant 5 Co. 2 and KRW 4.5 million from Defendant 6, but did not actually conduct the business.

B) Upon the recommendation of Nonindicted 4 from the head of the business team of Defendant 5 corporation, Nonindicted 3 borrowed a total of KRW 5,340,000,000 as indicated in the attached Table 1, and at the request of Nonindicted 4, Nonindicted 3 was registered as the trade name of △△ on March 22, 2005, but there was no actual business operation.

C) Nonindicted 5 received a total of KRW 85,100,000 from Nonindicted 6 and Nonindicted 4, who worked in Defendant 5 Stock Company, on the recommendation of Nonindicted 6 and Nonindicted 4, as indicated in the attached Table 1, and received a total of KRW 85,100,000 as stated in the attached Table 1. Although there was a business registration for housing lease on September 27, 2001, there was no fact that

D) Upon Defendant 1’s recommendation, Nonindicted 7, a long period of time, received loans from Defendant 5 Company totaling KRW 720,000,000 from Defendant 5 Company and KRW 2.5 billion from Defendant 6 Company, as indicated in the separate list of crimes in the separate sheet of crimes. Nonindicted 7, a business registration was made on May 29, 2004 with the trade name of △△△ Advertising, but there was no actual operation of sales.

E) Nonindicted 8 obtained a loan of KRW 2.77 million in total, as indicated in the attached Table 1, upon Defendant 1’s recommendation, which is a long-standing place of business. Although there was a fact that Nonindicted 8 was registered as a business on September 27, 2001, it was not a fact that he operated a real estate brokerage business after the establishment of the real estate brokerage business in 1995.

F) Around June 30, 2003, Non-Indicted 9 (hereinafter “Non-Indicted 9”), upon Defendant 4’s recommendation, borrowed a total of KRW 3.63,5 million as indicated in the annexed Table 2, and Non-Indicted 9 was registered as an individual employee on June 30, 2003, but did not operate an individual employee month business.

G) Nonindicted 10 received a recommendation from Defendant 2, who had been aware of his trade relation for more than 10 years, and received a total of KRW 3.1 billion from Defendant 5 Co., Ltd. and KRW 2.7 billion from Defendant 6 Co., Ltd., respectively. On June 4, 2002, Nonindicted 10 was registered as the trade name of △△ Steel, but there was no fact that he was operating the said trade name after the early 2002.

H) Nonindicted 11 borrowed a total of KRW 3.822 million, as indicated in the attached Table 1, at the recommendation of Nonparty 13, who worked for Defendant 5 Co., Ltd., as Defendant 5, with a total of KRW 3.82 million as indicated in the attached Table 1. On March 6, 2003, Nonindicted 11 was registered as a trade name Madle Madle Madle Mad

I) At Defendant 1’s recommendation, Nonindicted 12 obtained a total of KRW 5 billion from Defendant 5 Co., Ltd. and KRW 3 billion from Defendant 6 Co., Ltd., as indicated in the list of crimes in the annexed sheet. He heard that the above loan requires a business registration certificate for the above loan, and there was a business registration on March 16, 2005, but there was no fact that he actually operated the business.

3. Determination

A. Whether an individual entrepreneur who has completed business registration without human and physical facilities is included in the “small and medium enterprise” of this case

Article 12(1) of the Mutual Savings Banks Act aims to prevent insolvency of the mutual savings banks established for ordinary people and financial convenience of small and medium enterprises due to excessive loans to a specific borrower. However, according to the delegation of the above provision, Article 9(1) of the Enforcement Decree of the Mutual Savings Banks Act, which provides for the lending limit to the same person, provides that the specific limit shall be determined by Presidential Decree. However, there is a big difference in the lending limit to the amount of KRW 30 million for individuals, and the amount of KRW 8 billion for small and medium enterprises. Therefore, it is reasonable to consider the actual financial ability for repayment, but it is also reasonable to consider the legislative intent of the Mutual

Meanwhile, Article 2 subparagraph 1 of the Framework Act on Small and Medium Enterprises provides that a small and medium enterprise that is the object of a policy to foster small and medium enterprises (hereinafter “small and medium enterprise policy”) shall be an enterprise that satisfies all of the following requirements (hereinafter “small and medium enterprise”), and that its scale shall meet the standards prescribed by Presidential Decree in consideration of its characteristics of business, number of regular workers, size of assets, sales, etc., and Article 3 of the Enforcement Decree of the Framework Act on Small and Medium Enterprises provides that a small and medium enterprise under Article 2 (1) of the Framework Act on Small and Medium Enterprises shall be an enterprise that meets all of the following standards, while its main type of business, the number of regular workers, capital, or sales shall meet the standards set forth in subparagraph 1, and the scale of its total capital, sales

Therefore, in full view of the legislative intent and each of the above provisions, it is clear that only the formal business registration certificate has been prepared, and there is no human and material facilities such as regular workers and capital, and it cannot be viewed as a small and medium enterprise that does not actually engage in business. Therefore, the Defendants’ assertion on this part is without merit.

B. Whether a judgment of acquittal is a judgment of acquittal

The provisions of Article 1(2) of the Criminal Act shall apply only to cases where the evaluation of acts deemed a crime in the past has changed depending on the changes in the legal ideology which served as the reason for the enactment of the penal law, and thus the evaluation thereof has been recognized and punished as a crime, and where the Acts and subordinate statutes have been amended or amended in order to cope with the special needs at the time due to changes in other circumstances, not to change the legal ideology, but to cope with the changes in other circumstances. Thus, even if the Acts and subordinate statutes were amended or amended, the punishment shall not be imposed on the situations at the time of the acts at the time of the last observation of the acts committed before. Thus, even if the Acts and subordinate statutes were amended or amended, the punishment therefor shall not be deemed abolished (see Supreme Court Decision 97Do2682, Dec. 9, 197, etc.)

First, as to whether there was the abolition of punishment against the actual actors who violated the lending limit under the Mutual Savings Banks Act, Article 39 (3) 4-2 of the former Mutual Savings Banks Act provides that the subject of punishment is "a person who violates the provisions of Article 12 (1), (2) or (4)" but Article 39 (3) 4-2 of the amended Mutual Savings Banks Act (amended by Act No. 8522 of July 19, 2007) provides that the subject of punishment is different in relation to the excess loans of the same person by prescribing "mutual Savings Banks in violation of Article 12 (1) through (3) or (5)."

(1) However, the Mutual Savings Banks Act provides that the amount of loans to be extended to not more than 3 years shall be reduced to not more than 10,000 won and ultimately, to foster the ordinary people and regional economy. Article 2 of the Mutual Savings Banks Act provides that if the amount of loans to be extended to not more than 3 years exceeds 1,000 won and the amount of loans to not more than 4,000 won shall be reduced to not more than 5,00 won, not more than 1,000 won and not more than 3,00 won shall be reduced to not more than 1,00 won and not more than 2,000 won shall be reduced to not more than 4,000 won, not more than 1,000 won, and the Act provides that if a natural person commits an act of lending to not more than 3,000 won, not more than 1,000 won, it shall also be punished to a fine not exceeding 3,000 won.

Next, even if the provision on punishment for executive officers and employees was deleted due to the amendment of the Mutual Savings Banks Act, it can be deemed as a result of a policy measure that, rather than due to the change of the economic environment, the punishment itself unfair under the previous provision due to the change of the legal ideology, rather than due to the reflective consideration that the punishment itself is unfair. Therefore, it is difficult to deem that the punishment of the above Defendants’ violation, such as Defendant 1, 2, 3, and 4, which had already been committed prior to the said amendment, should not be extinguished. Accordingly, this part of the Defendants’ assertion is without merit.

C. Whether liability is removed for falling under Article 16 of the Criminal Act

Article 16 of the Criminal Act provides that an act of misunderstanding that one's act does not constitute a crime under Acts and subordinate statutes shall not be punishable only when there is a justifiable ground for misunderstanding. It does not mean a simple site of law, but it is generally accepted that an act of misunderstanding is a crime but it does not constitute a crime under Acts and subordinate statutes in his own special circumstances, and it is not punishable if there is a justifiable ground for misunderstanding (see, e.g., Supreme Court Decisions 2000Do3051, Sept. 29, 200; 2003Do451, Apr. 11, 2003).

As seen earlier, small and medium enterprises with a loan limit of eight billion won include individuals who registered only formally as the instant loan holders. The Defendants interpreted the meaning of “small and medium enterprises” to implement the instant loan in a more timely manner, unlike the language and text thereof, and made a false credit investigation report by informing the borrower that he/she would be able to receive large amounts of loans if he/she completes his/her business registration, and from around 2002, Article 96 of the Standard Loan Regulations of mutual savings banks provides that the Defendants’ act as a matter of confirmation as to whether he/she continues to engage in business as of the date of the business. In full view of the above, there is no justifiable reason to recognize that the Defendants’ act does not constitute a crime under the law. Accordingly, the Defendants’ assertion on this part is without merit.

D. As to the assertion of unreasonable sentencing

Defendant 1’s primary crime, Defendant 2, 3, and 4 did not have any favorable circumstances for the Defendants, such as the fact that there is no previous conviction of fines. However, even though the mutual savings bank established for the financial convenience of ordinary people and small and medium enterprises for the financial convenience of small and medium enterprises has considerably damaged the legislative intent of Article 12(1) of the former Mutual Savings Banks Act, it appears that the Defendants are not denying and againsting the crime, despite the fact that the legislative intent of Article 12(1) of the former Mutual Savings Banks Act, which was prepared to prevent serious damage to the public nature of the financial intermediary function and the soundness of the capital structure by providing excessive credit to a specific person due to each of the crimes in this case, it appears that the Defendants were not aware of and against the crime. In addition, in full view of the various circumstances that form the conditions for sentencing as indicated in the records, including Defendant 1, 2, 3, and 4’s age, character and behavior, motive, motive, criminal history, criminal conduct law, and the size of loans exceeding the limit, Defendant

4. Conclusion

Therefore, all appeals by the defendants are without merit, and they are dismissed in accordance with Article 364(4) of the Criminal Procedure Act. It is so decided as per Disposition.

【Crime List omitted】

Judges Kim Jae-hwan (Presiding Justice)

Note 1) [Attachment 1] [Attachment 1]

2) If, as alleged by the Defendants, an individual includes an individual who has completed the formal business registration within the scope of a small and medium enterprise, the individual is KRW 30 million, and a small and medium enterprise is 8 billion, Article 9(1) of the former Mutual Savings Banks Act, which has a big difference in the lending limit, will no meaning. In this regard, the Defendants’ assertion is without merit.

3) The Financial Services Commission may, if a mutual savings bank falls under any of the following subparagraphs, impose a penalty surcharge in accordance with the classification set forth in the following subparagraphs:

4) Article 15 (Limit on Credit Extension to Same Borrower, etc.) (1) A merchant bank shall not extend credit in excess of 25/100 of the merchant bank's equity capital to the same individual or corporation, and any person who shares credit risk with it (hereinafter referred to as "identical borrower").

(1) A merchant bank shall not extend credit in excess of 25/100 of the merchant bank's equity capital to an identical individual or corporation, or any person who shares credit risk with the same individual or corporation (hereinafter referred to as "identical borrower").

(1) No merchant bank may extend credit (referring to lending, discount of bills, payment guarantee, purchase of securities for financial support, and other direct or indirect transactions by a merchant bank that involve credit risk; hereafter the same shall apply in this Chapter) in excess of 25/100 of the merchant bank's equity capital (referring to lending, discount of bills, payment guarantee, purchase of securities for financial support, and other direct or indirect transactions by a merchant bank that involve credit risk; hereafter the same shall apply in this Chapter) to the same individual or corporation, and any person who shares credit risk with it (hereafter referred to as "related person" in this Article).