[1] Whether the so-called “exchange” constitutes a “credit extension exceeding the limit to an individual borrower” subject to prohibition and punishment under the Mutual Savings Banks Act (negative in principle), and whether the same legal principle applies to a case where a loan actually takes place due to the said loan (negative)

[2] Where a loan exceeding the limit of the same person constitutes a violation of the Mutual Savings Banks Act and an occupational breach of trust, the relationship between the two crimes (=ordinary concurrence)

[3] The measures to be taken by the court in a case where a part of the facts charged with ordinary concurrent relations is first prosecuted and the remaining facts charged are additionally prosecuted

[1] Although the so-called substitution, which performs an existing obligation through a new loan only formally without actually receiving funds, constitutes a separate loan, barring any special circumstance, it is merely an extension of the maturity of the existing obligation, and thus, is subject to prohibition and punishment in the Mutual Savings Banks Act. However, it does not constitute a “credit extension exceeding the limit on an individual borrower,” which is subject to prohibition and punishment in the Mutual Savings Banks Act. However, the same does not apply in a case where a loan actually

[2] In a case where both the crime of violation of the Mutual Savings Banks Act and the crime of occupational breach of trust are established by causing damage to the mutual savings bank due to the excess loans extended by the same person, the above two crimes are in a commercial concurrent relationship under Article 40 of the Criminal Act.

[3] In a case where part of the facts charged in a commercial concurrent relationship is first prosecuted and the remaining facts charged are found to be in a commercial concurrent relationship, the purport of applying for the punishment of all the facts charged before and after the additional indictment is deemed to have been included. As such, there is a difference between the procedure and the amendment of indictment, such as adding the facts charged, and there is no difference between the substance and substance. Therefore, in a case where it becomes clear that the additional indictment was not filed in duplicate prosecution for one of the crimes by the prosecutor’s seat with the purpose of supplementing additional indictment by making the prosecutor disclose the true purport of the additional indictment by exercising his/her right of explanation and making the prosecutor disclose the purport of the additional indictment, the court does not need to make a decision on the whole facts charged before and after the additional indictment and dismiss the additional indictment.

[1] Articles 12(1) and 39(3)4-2 (see current Article 39(4)6) of the former Mutual Savings Banks Act (Amended by Act No. 10175, Mar. 22, 2010) / [2] Articles 40, 355(2), and 356 of the Criminal Act; Articles 12(1) and 39(3)4-2 (see current Article 39(4)6) of the former Mutual Savings Banks Act (Amended by Act No. 10175, Mar. 22, 2010) / [3] Article 40 of the Criminal Act; Articles 298 and 327 subparag. 3 of the Criminal Procedure Act

[1] Supreme Court Decision 2001Do2189 Decided June 29, 2001 (Gong2001Ha, 1810), Supreme Court Decision 2001Do3531 Decided November 13, 2001 (Gong2002Sang, 122), Supreme Court Decision 2005Da38492 Decided February 24, 2006 (Gong2006Sang, 506) / [2] Supreme Court Decision 2010Do13801 Decided February 24, 201 (Gong201Sang, 681) / [3] Supreme Court Decision 96Do1698 (Gong196, 3370) Decided October 11, 196

Defendant 1 and nine others

Defendant 1 and seven others and the Prosecutor

Attorneys Kim Jong-woo et al. and 12 others

Gwangju High Court ( Jeju) Decision 2011No69, 85 decided January 18, 2012

All appeals are dismissed.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. As to Defendant 1’s ground of appeal

A. As to the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation) (hereinafter “Special Economic Crimes Act”) on November 10, 2003 and November 17, 2003

In accordance with the evidence of the judgment below, the court below acknowledged the following facts: (a) Defendant 1’s 3,519,579 shares of the non-indicted 2 savings bank (hereinafter “non-indicted 2 savings bank”) purchased from the non-indicted 1 (hereinafter “non-indicted 2 savings bank”; and (b) sold 3,519,579 shares of the non-indicted 3 to the non-indicted 3; and (c) the non-indicted 3 ordered the officers and employees of the non-indicted 2 savings bank, including the defendant 2, to execute the loans in order to return the already paid share purchase price to the non-indicted 3; and (d)

Examining the reasoning of the judgment below in light of the evidence admitted by the court below, the above judgment below is just and there is no violation of law of free evaluation of evidence against logical and empirical rules, contrary to what is alleged in the grounds of appeal.

In addition, as long as Defendant 1 ordered the above loan to perform the obligation to return the purchase and sale price of his own shares, and the loan constitutes an insolvent loan that was made without securing any collateral as stated in the judgment below, Defendant 1 bears the responsibility for the crime of occupational breach of trust against the total amount of the loan. Thus, the lower court cannot be deemed to have violated the principle of liability on the ground that the lower court acknowledged the crime of occupational breach of trust against the total amount of the loan, not limited to KRW 2 billion used for the return of the purchase and sale price of shares to Nonindicted 3, among the total sum of the above loans,

The ground of appeal on this part is without merit.

B. As to the violation of the Mutual Savings Banks Act

Realistically, a repayment of the so-called repayment of an existing obligation by providing a new loan only formally without receiving funds constitutes a separate loan, except in extenuating circumstances, but is merely an extension of the maturity of the existing obligation and thus merely constitutes a “credit extension exceeding the limit to an individual borrower” which is subject to prohibition and punishment in the Mutual Savings Banks Act, but is not a “credit extension exceeding the limit to an individual borrower” (see Supreme Court Decision 2001Do2189, Jun. 29, 2001, etc.). However, the same shall not apply where any other loan actually moves funds due to the foregoing.

In full view of the evidence written by Defendant 1’s letter of undertaking as of December 29, 2008, the lower court acknowledged the fact that Defendant 1, a major shareholder and actual manager of Nonindicted Bank 2 savings bank, ordered the executives and employees of Nonindicted Bank 2 to implement each part of the loans in order to raise the BS ratio of Nonindicted Bank 2 savings bank (equity capital ratio), and determined that each of the above loans was used in repayment of the existing principal and interest of the loan, but the actual transfer was made, and that Defendant 1’s intent to lend a loan exceeding the limit of the same person is also recognized.

In light of the above legal principles and records, the above judgment of the court below is just and acceptable. Contrary to the allegations in the grounds of appeal, there were no errors of misapprehending the legal principles as to the Mutual Savings Banks Act, or exceeding the bounds of free evaluation of evidence

2. As to Defendant 2 and 3’s grounds of appeal

A. As to the dismissal of prosecution of the first instance court

(1) In a case where both the crime of violating the Mutual Savings Banks Act and the crime of occupational breach of trust are established by causing damage to the mutual savings bank due to the excess loans extended to the same person, the above two crimes are in a commercial concurrent relationship as prescribed in Article 40 of the Criminal Act (see Supreme Court Decision 2010Do13801, Feb. 24, 201).

In addition, in a case where part of the facts charged in the ordinary concurrent relation is first prosecuted and the facts charged are revealed to be in the ordinary concurrent relation, the purport of applying for the punishment of all the facts charged before and after the addition of the facts charged can be deemed to have been included, and there is no difference in the substance of the amendment of the indictment, such as adding the facts charged. Therefore, in a case where it is evident that the court supplement the additional indictment by the public prosecutor’s order to clarify the true purport of the additional indictment by the public prosecutor’s explanation of the facts charged, which was omitted in the first indictment among the acts in the ordinary concurrent relation, it is obvious that the additional indictment was not filed in duplicate, it is not necessary to judge the whole facts charged before and after the addition of the indictment, and there is no need to render a judgment dismissing the prosecution against the additional indictment (see, e.g., Supreme Court Decision 9Do1698, Oct. 11, 196, 196).

(2) According to the records, the prosecutor first brought a prosecution against the defendant 2 and 3 on the charge of violating the Mutual Savings Banks Act due to the excess loans extended to the same person (2010Dahap677), and then submitted the indictment containing the same loans and the charges of occupational breach of trust (2010Dahap84), and submitted the indictment to the first instance court. The first instance court decided to conduct a consolidated trial of the above two cases, and requested the prosecutor to clarify whether the above two charges overlap during the sixth trial, but the first instance court did not take any particular measures. The first instance court dismissed the prosecution by deeming that the above charges of occupational breach of trust were the same loans as those of the charges of violation of the Mutual Savings Banks Act (2010Gahap677) and the charges of occupational breach of trust. The purport of the first instance court’s written opinion to the effect that the prosecutor added a combined trial of the charges to the effect that “a genuine concurrent prosecution is added” as to the charges of occupational breach of trust as stated in the grounds of appeal and amendments to the indictment.

Based on the above facts, the court below held that the first instance court's decision cannot be maintained, and it was remanded to the first instance court after it reversed the part of the dismissal of the prosecution and the whole guilty part of the concurrent crimes under the former part of Article 37 of the Criminal Act, or reversed the first instance court, even though the first instance court required the prosecutor to clarify the purport of the modification of the indictment, and it was not sufficient deliberation to dismiss the prosecution by concluding that the above additional indictment was made as a double indictment. Even if the first instance court's request for explanation was appropriate, the first instance court's decision cannot be maintained, since the prosecutor stated that the above additional indictment was the purport of the modification of the indictment. In light of the above legal principles and records, the above judgment of the court below is just, and there is no error in the misapprehension of legal principles as to double indictment, etc.

B. As to the part related to the substitution

In the crime of occupational breach of trust, the term "when a financial institution causes property damage" includes not only a case where a real loss is incurred but also a case where a risk of actual damage to property has been caused. In order to appropriate the principal and interest of a loan of a customer, a financial institution only arranged a document as if it provides a new loan to the customer, but it does not actually provide a new loan to the customer, and if it does not provide a new loan to the customer, it does not cause a new loss to the financial institution. Therefore, the crime of occupational breach of trust is not established. However, if a financial institution actually provides a new loan to the customer, even if a new loan is agreed to be repaid to the principal and interest of an existing loan, it shall be deemed that the risk of damage has already occurred at the same time as the loan is established (see Supreme Court Decision 2003Do3516, Oct. 10, 2003, etc.).

The court below found Defendant 2 and 3 guilty of this part of the facts charged on the ground that, in light of the following circumstances: (a) as to each loan alleged by Defendant 2 and 3 as the so-called exchange, the crime of occupational breach of trust or the crime of violation of the Mutual Savings Banks Act was not established; (b) although some of these loans were used to repay the interest of the existing loan, it cannot be found that there was a difference between the existing loan and the existing loan in terms of the name of the loan holder, the name of the loan, and the principal of the loan; and (c) once Nonindicted 2 Savings Bank deposited the new loan into the account of the name of the loan holder and paid the interest of the existing loan obligations, it did not constitute a exchange

In light of the above legal principles and records, the above judgment of the court below is just and acceptable, and contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles as to substitution, or in violation of the principle of free evaluation of evidence against logic

3. As to Defendant 4’s ground of appeal

According to the records, Defendant 4 asserted only unfair sentencing as the grounds for appeal. Thus, in the case where the court of final appeal rendered a sentence of imprisonment for less than 10 years to Defendant 4 as the grounds for final appeal, it is not allowed to file a new appeal for misapprehension of legal principles, etc., and the grounds for unjust sentencing cannot be a legitimate ground for final appeal.

4. As to the remaining grounds of appeal except for Defendant 5’s assertion of unreasonable sentencing

A. As to the assertion that the crime of occupational breach of trust cannot be viewed as a co-principal

Defendant 5 did not take this part of the grounds for appeal at the lower court, and further, according to the evidence admitted by the lower court, Defendant 5 was a member of the 2 Savings Bank Management Committee, who reviewed and decided high-amount loans, and was in charge of conducting loans together with Defendant 2, even after the loan examination was transferred to the Credit Review Committee, and was still involved in loans such as making a public inspection of the contents of the resolution of the Credit Review Committee as a standing auditor and granting approval for the credit approval, and actively seeking a loan holder to avoid the application of the provisions on excess loans to the same person, so it is sufficient to recognize Defendant 5 as a co-principal of the crime of occupational breach of trust due to the pertinent bad loans.

This part of the grounds of appeal is without merit.

B. As to the assertion that the crime of occupational breach of trust is not established, since property gains were not acquired.

Since the crime of breach of trust requires an actor to acquire property benefits by himself/herself or to have a third party acquire property benefits due to an act of breach of trust in addition to incurring property damage on the principal, even if the actor or the third party has suffered property benefits, the crime of breach of trust cannot be established unless the actor or the third party has acquired property benefits (see Supreme Court Decision 2008Do3792, Jun. 25, 2009, etc.).

The court below found Defendant 5 guilty of this part of the facts charged, on the ground that each of the loans in the name of Nonindicted Co. 4, Nonindicted Co. 5, and Nonindicted Co. 6 constitutes a substantial acquirer of the loan, and that each of the loans in the name of Defendant 1 or Nonindicted Co. 3 constitutes a loan in order to return the purchase price of stocks against Nonindicted Co. 3, and that each of the loans in the name of Nonindicted Co. 7, 8, and 9 constitutes a substantial acquirer of the loan, and that each of the loans in the name of Nonindicted Co. 7, and Nonindicted Co. 8, and 9 is a loan in title trust with a real estate owned by Nonindicted Co. 2’s savings bank, or that each of the loans in the name of Nonindicted Co. 4, Nonindicted Co. 5, and Nonindicted Co. 6 is a loan in order to pay the successful bid price after requesting a successful bid to a third party over the real market price of the real estate for which Nonindicted Co. 2 applied for auction.

In light of the above legal principles and records, the above judgment of the court below is just, and there is no error in the misapprehension of legal principles as to false representation or occupational breach of trust, contrary to what is alleged in the grounds of appeal.

5. As to Defendant 5’s grounds of appeal on unreasonable sentencing and Defendant 6’s grounds of appeal

In this case where Defendant 5 and 6 were sentenced to imprisonment for less than 10 years, the reason that the amount of punishment is unreasonable cannot be a legitimate ground for appeal.

6. As to Defendant 8’s ground of appeal

A. As to the assertion that the crime of occupational breach of trust cannot be viewed as a co-principal

Defendant 8 did not take this part of the grounds for appeal at the lower court. Furthermore, according to the evidence admitted by the lower court, Defendant 8 was in charge of the management of Nonindicted Co. 10 and Nonindicted Co. 11 according to Defendant 2’s recommendation, and these companies were aware of the fact that there was little possibility of rehabilitation as the status of lending KRW 100 million, and they received KRW 00,000 from Defendant 8 without providing any security. During the loan process, Defendant 8 filed an application for the loan by establishing a so-called Puercom for only the purpose of lending on the ground of the same person in order to avoid the application of the provision on the restriction on excess loans to the extent that Defendant 2 et al. were in collusion with Defendant 2. This part of the grounds for appeal cannot be accepted.

B. As to the assertion that the crime of occupational breach of trust is not established, since property gains were not acquired.

The lower court found the Defendant guilty of the crime of occupational breach of trust on the ground that each of the loans was made on the ground of a nominal borrower, but it cannot be deemed that the same constitutes a conspiracy, even if there was a false conspiracy, so long as the loan itself is not a substitution but a substitution, the risk of property damage occurred, and that the actual borrower cannot be deemed as having no property profit to Nonindicted Incorporated Company 10.

In light of the above legal principles and records, the above judgment of the court below is just and acceptable, and contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles as to occupational breach of trust and false conspiracy, or omission of judgment.

7. As to Defendant 9’s ground of appeal

The court below found Defendant 9 as a co-principal in the crime of occupational breach of trust in full view of the circumstances in its holding, including the fact that Defendant 9 actively carried out each of the above loans to a nominal borrower, Defendant 9 was aware that Defendant 2 or Nonindicted 2 savings bank used the loans on a route that is not normal, and Defendant 9 was in charge of the construction of a new construction project for “○○○○○○○○○○○○○○○○” loan with a considerable portion of the above loans, and Defendant 9 was in charge of the construction of the said loans and could have been paid the said loans.

Examining the reasoning of the judgment below in light of the evidence admitted by the court below, the above determination by the court below is just and acceptable, and contrary to the allegations in the grounds of appeal, there were no errors of misapprehending the legal principles as to joint principal offense of occupational breach of trust, or exceeding the bounds of

8. As to the Prosecutor’s Grounds of Appeal

A. As to Defendant 1’s violation of the Special Economic Crimes Act (Misappropriation of trust) on June 16, 2003

The court below held that even based on the evidence submitted by the prosecutor, such as Defendant 5’s statement, it is difficult to recognize that Defendant 1 instructed or participated in this part of the loan execution. Upon examining the reasoning of the judgment below in light of the records, the above judgment of the court below is just and acceptable, and there is no violation of law of free evaluation of evidence against logical and empirical rules, contrary

B. As to Defendant 7 and 10’s violation of each special law (Misappropriation) and occupational breach of trust

(1) In order to recognize a beneficiary who benefits from the commission of the crime of occupational breach of trust or a third party closely related thereto as a co-principal with the perpetrator of the crime of occupational breach of trust, it is not sufficient to acquire profits by taking advantage of the perpetrator’s act of breach of trust passively even though he knows that the act constitutes the act of breach of trust against the victim himself. It is necessary to actively participate in the act of breach of trust by inducing the perpetrator to commit the act of breach of trust or by participating in the whole process of the act of breach of trust (see Supreme Court Decision 2003Do4382, Oct. 30, 2003).

(2) The lower court determined that Defendant 7 and 10 cannot be deemed as having actively participated in Defendant 2, etc.’s breach of trust, taking into account the following circumstances: (a) Defendant 7 and 10 had a business plan that could have been feasible at the time of receiving each of the loans and provided certain collateral; (b) Defendant 7 and 10 had intentionally concealed the business status or ability to repay; or (c) there was no evidence to deem that Defendant 2 and 10 had intentionally concealed the business status or ability to repay; or (d) offered an illegal solicitation or money or valuables to the employees

In light of the above legal principles and records, the above judgment of the court below is just and acceptable, and contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of the legal principles as to joint principal offense of occupational breach of trust, or in violation of the principle of free evaluation

The Supreme Court precedents cited as the grounds of final appeal are inappropriate to be invoked in the instant case due to a different case.

9. Conclusion

Therefore, all appeals are dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee In-bok (Presiding Justice)