[1] In a case where Gap, who was a director of the acquired company, planned to promote the acquisition and merger, provided in advance information about the sales business of the acquired company to the group of the acquired company, and acquired a large amount of property profit from the representative director Eul of the acquiring company, the case reversing the judgment below which acquitted the defendant Gap on the charges of taking in breach of trust and giving in breach of trust by the defendant Eul

[2] The standard for determining whether a crime of breach of trust is established in the acquisition of a company using so-called loan purchase or LBO (a weak control of Leveraged Buy-Out)

[3] The standard for determining whether embezzlement is established in a case where a person who keeps the company's secret funds uses the company's secret funds

[1] In a case where Gap, a director of the acquiring company, who has been appointed as a director of the acquiring company under an action plan for acquisition and merger, provided in advance information on the sales business of the acquiring company to the group of the acquiring company, and acquired a large amount of property profits from the representative director Eul of the acquiring company, the case affirming the judgment below which acquitted the defendant Gap on the ground that the defendant Gap, as a director of the acquiring company, was in a position of participating in the sales procedure by attending and speaking at the board of directors as a director's original business and making a resolution, provided information on the sales business of the acquiring company to the group of the acquiring company before and after the director's appointment, and recommended this group to the acquiring company as an acquiring company, and concluded a management consulting contract with the acquiring company, and there is no special reason for receiving the above information in addition to the above information provision, and some funds were paid from the non-financial funds of the acquiring company, etc., it is reasonable that there was an implied solicitation to assist the acquisition through information, etc., on the ground that such solicitation is an unlawful solicitation contrary to social rules or the good faith principle.

[2] The so-called so-called "loan purchase or LBO" is not a single legal concept, but generally, a method of corporate acquisition to provide the assets of the acquired company as security or to appropriate the considerable part of the funds for corporate acquisition with the funds borrowed by having the acquired company repay the considerable part of the funds borrowed with the assets of the acquired company as a whole, and its specific form in transaction reality is very diverse. Unless there is a law separately regulating such loan purchase, it cannot be uniformly determined that the related persons who led corporate acquisition by the method of borrowing and/or to not be established or established the crime of breach of trust is not established. Whether the crime of breach of trust is established or not should be determined individually depending on whether the act in the course of the loan purchase constitutes the elements of the crime of breach of trust.

[3] For embezzlement to be recognized, the intent of a person who keeps another’s property without authority to dispose of the property as his/her own property should be recognized, and this does not change if the person who keeps the company’s secret funds uses secret funds. Meanwhile, as to the use of secret funds, whether the main purpose of the use of secret funds can be deemed to be for the personal purpose of the defendant, or whether the defendant’s intent of unlawful acquisition can be recognized should be determined by comprehensively taking into account the timing, circumstances, and result of the use of secret funds.

[1] Article 357 (1) and (2) of the Criminal Act / [2] Articles 355 (2) and 356 of the Criminal Act / [3] Articles 355 (1) and 356 of the Criminal Act

[3] Supreme Court Decision 2007Do4784 Decided February 28, 2009

Defendant 1 and two others

Prosecutor

Attorneys Son Ji-yol et al.

Busan High Court Decision 2009No184 decided June 25, 2009

The part of the judgment of the court below on the defendant 1 and the part on the evidence of violation of trust against the defendant 2 are reversed, and this part of the case is remanded to Busan High Court. The remaining appeal is dismissed.

We examine the grounds of appeal.

1. The part against Defendant 1 and the charge of giving property in breach of trust by Defendant 2

A. The crime of taking property in breach of trust is established in a case where a person who administers another person's business obtains property or pecuniary benefits in exchange for an illegal solicitation in connection with his/her business (Article 357 (1) and (2) of the Criminal Act). On the other hand, the crime of taking property in breach of trust is just the acquisition or grant of property or pecuniary benefits, and it is not required that the crime of taking property in breach of trust should be immediately taken, and that the act of taking property in breach of trust or giving of pecuniary benefits should not be taken out (see Supreme Court Decision 87Do1560, Nov. 24, 1987).

Here, “a person who administers another’s business” refers to a person who is acknowledged to have a fiduciary relationship to handle the business in light of the principle of good faith in the internal relationship with another person. It does not necessarily require that the person has the authority to conduct the business in an external relationship with a third person. A fiduciary relationship to handle the business may also arise through statutory provisions, legal acts, customs, or business management.

In addition, “the duties” refers to the duties entrusted by a person who administers another’s business, but it includes not only the original duties due to the entrustment relationship, but also the duties within the scope closely related to such duties, and also includes the cases where a person is in charge of such duties directly or indirectly as an auxiliary agency without limited authority (see Supreme Court Decision 2003Do1435, Dec. 10, 2004, etc.).

On the other hand, "illegal solicitation" refers to solicitation against social norms and the principle of trust and good faith, and in determining this, the contents of the solicitation, the amount and form of the property received or provided in relation thereto, the integrity of the business administrator, which is the legal interest protected by the law, should be comprehensively considered, and such solicitation does not necessarily require explicit identification (see Supreme Court Decision 96Do837 delivered on June 9, 1998).

B. Review of the evidence and records duly admitted by the court below reveals the following facts.

In 206, Defendant 1 was proposed by Nonindicted Co. 2, a statutory administrator of Nonindicted Co. 1, a reorganization company, to enter Nonindicted Co. 1 in order to resolve the dispute regarding the construction right agreement entered into when selling the building site of marina factories to Nonindicted Co. 3, 2004. During that process, Defendant 1 became aware that Nonindicted Co. 1’s above sales price was in company and that the acquisition and merger of Nonindicted Co. 1 would be promoted immediately after being in company. Accordingly, Defendant 1 was sold to Nonindicted Co. 5, the head of the corporate acquisition and merger team team leader of Nonindicted Co. 4, who was known at the end of July 2006 or at the beginning of August, 206, and that he would introduce Nonindicted Co. 1, a legal administrator, as he was well aware of Nonindicted Co. 2.

In August 2006, Nonindicted 5 submitted a review report on the acquisition of Nonindicted Company 1 to Defendant 2, who was the head of the investment business group of “○○ Group,” which was a business group subject to the limitations on mutual investment in August 2006, and Defendant 2 expressed that Nonindicted 5 had the intent to promote the acquisition of Nonindicted Company 1 in ○○ Group on September 2006, and Nonindicted 5, upon introduction by Defendant 1, promoted Nonindicted 2 to ○○ Group.

On the other hand, on September 27, 2006, the Changwon District Court, which was in progress with respect to the company reorganization procedure against the non-indicted 1 corporation, selected the main agent for the sale of the non-indicted 1 corporation, and announced the sale of the company for the acquisition and merger of the non-indicted 1 corporation on November 14 of the same year. The non-indicted 6 corporation established the non-indicted 7 corporation as a special purpose company for the acquisition of the non-indicted 1 corporation on December 13, 2006, and appointed the defendant 2 as its representative director. The "non-indicted 6 corporation consortium", which was the main axis of the non-indicted 7 corporation, was selected as the priority negotiation object on January 21, 2007, and acquired the non-indicted 1 corporation by acquiring KRW 20 billion of the non-indicted 1 corporation and KRW 30 million of new shares and KRW 30 billion of new shares on January 31, 2007.

Defendant 1, who was appointed as a director of Nonindicted Co. 1 on October 18, 2006 and worked for the vice president of the Construction Industry Headquarters, recommended ○○ Group to acquire Nonindicted Co. 1’s company. Nonindicted Co. 6’s consortium completed the acquisition of Nonindicted Co. 1’s company as above and appointed a photo of Nonindicted Co. 1’s company, as well as Nonindicted Co. 2 and Nonindicted Co. 8, on February 6, 2007, retired from the office of director of Nonindicted Co. 1. At the time of the above reorganization court decided to pay KRW 483 million with retirement pay and special remuneration to Nonindicted Co. 2, and KRW 160 million to Nonindicted Co. 8. However, Defendant 1 did not make such decision with respect to Defendant 1. However, in the document of “the matters related to the existing officer of Nonindicted Co. 1’s corporation,” written by Defendant 2, stating Defendant 1 as the subject of active support to the head of M&A, i.m.

After that, Defendant 1 demanded KRW 3 billion to Defendant 2 and received KRW 2.1 billion as a result of consultation with Defendant 2. Defendant 2 attempted to pay the said money to Nonindicted Co. 7’s acquisition of Nonindicted Co. 1’s acquisition funds. However, Defendant 2 intended to obtain approval only for KRW 1.2 billion from the lender, part of the remainder is paid to Nonindicted Co. 9 (the Director of the Construction Business of Nonindicted Co. 1) who borrowed his name from the lender, and some of Defendant 1 paid the money to Nonindicted Co. 6’s non-indicted Co. 9 (the Director of the Construction Business of Nonindicted Co. 1) who borrowed his name. For this purpose, on February 9, 2007, the agreement between Nonindicted Co. 7 and Defendant 1 and Nonindicted Co. 9 on management consulting (the advisory fee of KRW 1,289,427,500) and the agreement on management consulting between Nonindicted Co. 7 and Nonindicted Co. 9 on management consultation (the contents and management consulting fee of each of the above agreement were prepared 305.585.

On April 20, 207 and April 23, 2007, Defendant 2 remitted 300 million won of the non-indicted 6 corporation to the account in the name of the non-indicted 10 corporation. On June 19, 2007, Defendant 2 remitted 950 million won to Defendant 1’s account, and 339,427,500 won to the non-indicted 9’s account, a borrowed account, and 339,427,500 won in the form of advisory fee from May 20 to August 2007, Defendant 2 paid 967 million won of the non-indicted 6 corporation (the amount after deducting taxes from the advisory fee of KRW 10,000) to Defendant 1. Meanwhile, around September 207, Defendant 2 received a large amount of money from the non-indicted 167,7777,500 won, and Defendant 2 received the above 300 billion won of the monthly loan from Defendant 16.

C. Based on its stated reasoning, the lower court affirmed the first instance judgment that acquitted Defendant 1’s act of taking property in breach of trust and giving property in breach of trust by Defendant 2, on the grounds that, even after Defendant 1 was not in the position of a person in charge of the affairs of Nonindicted Co. 1 before he was appointed as a director of Nonindicted Co. 1, he was not in charge of the affairs of selling Nonindicted Co. 1, and even after he was appointed as a director of Nonindicted Co. 1, he could not be recognized that there was an illegal solicitation between Defendant

D. Of the above determination of the court below, the part that Defendant 1 was not in the position of a person who administers the affairs of Nonindicted Co. 1 before he was appointed as a director of Nonindicted Co. 1 is justified in light of the above legal principles. However, the remaining parts are not acceptable for the following reasons.

Although Defendant 1 was appointed as a director of Nonindicted Co. 1 and was in charge of the construction business sector, he was in a position to participate in the sale procedure of Nonindicted Co. 1 by attending, speaking and passing a resolution with the board of directors as well as other directors’ duty to monitor other directors. In fact, as seen earlier, in contact with ○○ Group before and after the director was appointed, he provided information on Nonindicted Co. 1 and recommended ○○ Group as an assignee, as well as participated in the sale process by entering into a management consulting agreement with Nonindicted Co. 7, the acquiring company. Thus, the above duties of Defendant 1 do not have a close relationship with the sales business of Nonindicted Co. 1, and thus, Defendant 1 was in a position to deal with the sales-related affairs of Nonindicted Co. 1.

Furthermore, in full view of the fact that Defendant 2 paid KRW 2.1 billion to Defendant 1 or KRW 1.9 billion actually paid to Nonindicted 2 or Nonindicted 8 was significantly large compared to retirement pay and special remuneration paid to Defendant 1, Defendant 1 did not have any special reason to receive any compensation from Defendant 2, the representative director of the acquiring company, except for Defendant 1 who aided in connection with the acquisition of Nonindicted Company 1; Defendant 1 received the above money on the confidential interest of other executives and employees in Nonindicted Company 1; KRW 6.4835 million out of the paid money was paid out of Nonindicted Company 6’s non-indicted 6’s funds; and KRW 60 million was remitted to the account of Nonindicted Company 10; KRW 344 million was remitted to Defendant 1’s account; Defendant 1 did not have any clear evidence to acknowledge that there was an unlawful solicitation between Defendant 2 and Defendant 1; Defendant 1 was in violation of the principle of trust and good faith and good faith and acceptance of Nonindicted Company 17.

Nevertheless, the lower court determined otherwise that Defendant 1’s crime of taking property in breach of trust and giving property in breach of trust by Defendant 2 did not constitute the crime of taking property in breach of trust, erred by misapprehending the legal doctrine on taking property in breach of trust, thereby affecting the conclusion of the judgment. The purport of the appeal pointing this out

2. The charge of giving property in breach of trust to Defendant 3

In order to constitute a joint principal offender, the subjective requirement is the intention of joint process and objective requirements, and requires the fact of execution of a crime through functional control based on the intention of joint process. The subjective requirement of joint process is not sufficient to recognize another person’s criminal act but to accept it without restraint. The subjective requirement of joint process is one of the two parties to commit a specific criminal act with the intent of joint intent, and it is to move one’s own intent by using another person’s act (see Supreme Court Decision 2003Do1469, Jun. 13, 2003).

Therefore, in order to punish Defendant 3 as a co-principal with regard to the crime of giving and taking the property in breach of trust by Defendant 2, Defendant 3 should have tried to realize the intent of giving and taking the property in breach of trust through Defendant 2’s act of giving and taking the property in breach of trust.

However, the evidence duly adopted by the court below is insufficient to recognize that Defendant 3 had the intent to jointly process the above facts. Thus, it is justifiable in its conclusion that the court below affirmed the judgment of the court of first instance that acquitted Defendant 3 of the charge of giving property in breach of trust. Contrary to the allegations in the grounds of appeal, there is no error of law by misapprehending the legal principles on

3. Defendant 2 and 3’s violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation)

The so-called so-called loan purchase or LBO (the weak term of Leverd Buy-Out) is not a single legal concept, but generally, it is a business term that offers the assets of the recipient company as security or appropriates the considerable part of the fund for corporate acquisition with the funds borrowed by the recipient company to repay the considerable part of the fund to the assets of the recipient company, and its specific form is diverse in the transaction reality. Unless there is a law regulating the purchase of the loan separately, it is difficult to uniformly conclude that the related parties who led the acquisition of the company by the method of borrowing have not established or established the crime of breach of trust. Whether the crime of breach of trust is established or not should be determined individually depending on whether the act in the course of the purchase of the loan constitutes the element of the crime of breach of trust.

The lower court acknowledged the facts as indicated in its reasoning regarding the process of acquisition and merger of Nonindicted Co. 6 Company 1 and the process thereof, and determined that the aforementioned merger could not be deemed to have suffered losses on the grounds that it was different from the method of directly offering the assets of the acquired company as collateral and acquiring the company, and that there was no defect in the substance or procedure of the said merger.

In light of the records and relevant legal principles, the above determination by the court below is just and acceptable. Contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles as to the establishment of breach of trust in the merger-type borrowing.

4. Defendant 2’s violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement)

A. As to KRW 365 million paid to retired officers of Nonindicted Co. 11

The court below maintained the conclusion of the judgment of the court of first instance that it is difficult to view that Defendant 2 had a criminal intent to embezzled the funds of Nonindicted 6 with the intent of unlawful acquisition when paying KRW 365 million out of the non-indicted 6’s non-indicted 6’s non-indicted 6’s non-indicted 11’s non-indicted 12, etc. as retirement compensation.

In light of the records and relevant laws, the above fact-finding and determination by the court below is just, and there is no error in the misapprehension of legal principles as alleged in the grounds of appeal.

B. As to KRW 650 million used to pay to Defendant 1

In order to be recognized as embezzlement, a person who keeps another’s property without authority to dispose of the property as his/her own property, and this does not change if the person who keeps the company’s secret funds uses secret funds. Meanwhile, in relation to the use of secret funds, whether the main purpose of the use of secret funds can be deemed to be the Defendant’s personal purpose, or whether the existence of an intent of unlawful acquisition may be recognized, by comprehensively taking into account the timing, circumstances, and result of the use of secret funds (see Supreme Court Decision 2007Do4784, Feb. 28, 2009).

Of the non-indicted 6 corporation's non-indicted 6 corporation's non-indicted 6 corporation's non-indicted 6 corporation's non-indicted 6 corporation's non-indicted 6 corporation's non-indicted 6 corporation's payment of KRW 650 million to Defendant 1 who aided in the process of taking over the non-indicted 1 corporation. Thus, even if Defendant 2's payment of the above money to Defendant 1 was illegal as it constitutes a crime of breach of trust, Defendant 2 cannot be held liable for the crime of occupational embezzlement because there is no intention of unlawful acquisition.

Therefore, the court below affirming the judgment of the court of first instance which held that Defendant 2 did not have any intent to obtain unlawful acquisition on the ground that the said money was not used for the capital in breach of trust. However, the conclusion is justified, and the conclusion does not affect the conclusion of the judgment. Ultimately, the ground of appeal on this part is without merit.

5. Conclusion

Therefore, among the judgment of the court below, the part against Defendant 1 and the part against Defendant 2 regarding the giving of property in breach of trust against Defendant 2 are reversed, and this part of the case is remanded to the court below for a new trial and determination, and the remaining appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices

Justices Kim Ji-hyung (Presiding Justice)