2014Do12205 (A) Computer, etc. Fraud (Preliminary against Defendant A, B, and D)

Name of crime: Specific Economic Crimes Aggravated Punishment Act, etc. of Specific Economic Crimes

Violations (Fraud), Fraud, and Preliminary Crimes against Defendant C

name of the principal offense against fraud, Defendant E, or F:

Violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes

(b) Bidding interference;

1.(a)(b)

A

2.(a)(b)

B

3.(a)(b)

C

4.(a)(b)

D

5.(a)

E

6.(a)(b)

F

Prosecutor (Defendants)

Attorney AU (the national line for defendant A, B, and F)

Attorney AV (Defendant C, D, and C)

Seoul High Court Decision 2014No1722 Decided August 29, 2014

January 29, 2015

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. As to the fraud by using computers, etc. (main charges), the lower court, on the grounds stated in its reasoning, found the first instance judgment convicting the Defendant on the ground that each of the facts charged in the instant case does not constitute the elements of fraud by using computers, etc., and it is difficult to view that the specific construction company, as a direct result of the information processing as a successful bidder, obtained pecuniary benefits equivalent to the successful bidder's successful bidder's successful bidder's successful bidder's successful bidder's successful bidder's successful bidder's successful bidder's successful bidder'

Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower court’s aforementioned determination is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the

2. As to the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Fraud) and the charge of fraud (preliminary charge)

A. The deception as a requirement for fraud refers to any affirmative or passive act that widely assumes the duty of good faith and sincerity to each other in the transactional relationship. It is essential to make a false representation on the part of a juristic act. It is not necessary to make a false representation on the part. It is related to the facts that form the basis of judgment for an actor to make a disposition of property which the other party desires by omitting the other party into mistake. Whether a certain act constitutes a deception that causes a mistake on another person should be determined generally and objectively by taking into account the specific circumstances at the time of the act, such as the transaction, the other party’s knowledge, experience, occupation, etc. (see, e.g., Supreme Court Decision 2011Do48, Feb. 27, 2014).

In addition, fraud is established by deceiving another person to receive property or to acquire pecuniary benefits from the defective intent resulting from deception, and the essence of fraud is to acquire property or pecuniary benefits from deception, thereby infringing on the other party's property. Therefore, it does not require that the other party actually suffers pecuniary loss (see, e.g., Supreme Court Decision 2003Do4914, Dec. 12, 2003).

B. The summary of each of the facts charged in this part, which was added in the court below, is that the defendants installed a malicious program on the financial commissioner computer of the ordering office and the bidder computer of the local government or public institution, and identified whether they awarded a contract for each tender using it. Based on this, the financial commissioner of the ordering office, such as the local government, etc., notified certain bidders of the bid price possible for the bid, so that the financial commissioner of the ordering office, such as the local government, etc., may select the specific bidders as the successful bidder of each of the above projects, and acquired money from the ordering

In regard to this, the court below found the Defendants not guilty of each charges on the grounds as stated in its reasoning, on the ground that the Defendants' act of finding out the successful bidder by improper means is merely an act of preparing a bid to increase the possibility of successful tender by finding out the price information in advance and cannot be deemed a fraudulent act against the finance officer. The Defendants cannot be deemed to have notified the finance officer of the fact that the Defendants discovered the successful bidder's bid price in the process of the bidding by improper means, and whether the finance officer obtained the pertinent price information in the bidding process is not subject to examination, and the finance officer did not know of the above circumstances. The construction contractor, who is a successful bidder, needs to enter into a proper contract after the successful bidder's decision and perform construction in return for bilateral contract, which is a consideration for the successful bidder, and thus, it cannot be deemed that the immediate construction price has been acquired on the ground that there was a successful bidder's decision, and it is difficult to conclude that the successful bidder's decision causes economic damage as a decrease in the overall property and risks, as well as economic damage.

C. However, we cannot accept the above judgment of the court below as it is.

According to the reasoning of the lower judgment and the evidence duly admitted by the lower court, the following facts and circumstances are revealed.

1) The electronic tendering for each of the instant facilities construction in which the Defendants participated is subject to examination of qualifications. The electronic tendering for construction subject to examination of qualifications is conducted in the order of tender notice, preparation of preliminary price, bidding, opening, examination of qualifications, selection of successful bidders, and contract order. Specifically, the following are the following.

(1) The finance officer at the place of order shall first give a public notice of tender.

(2) From the server of the Public Procurement Service through the computer for financial commissioner certified before opening the opening, 【15 reserve prices shall be created within the limit of 【3% of the basic amount of the construction project, each reserve price and the corresponding lottery numbers shall be freely mixed with the financial commissioner’s certificates, and they shall be transmitted to and stored in the server of the Public Procurement Service.

(3) At the time of opening the bid, a bidder shall choose at will two of the 15 numbers of lottery tickets which do not indicate the reserve price after inputting the bid price by using a certified computer for bidders during the bidding period, and transmit and store the value to the server of the Public Procurement Service. (ii) At the time of opening the bid, the average expected price shall be calculated by averaging the reserve price corresponding to the highest four numbers of the reserve price lottery numbers chosen automatically by the bidder, and then by multiplying again the bid price by the bid rate.

(5) A financial commissioner shall determine as a successful tenderer a person who has at least a certain point in the order of bidders' participation in performing a contract, technical ability, financial status, credit delivery, etc. in a comprehensive examination in the order of bidders' bid price nearest to the lowest awarded price, as a successful tenderer.

2) However, the Defendants installed 15 preliminary prices and 4 draw numbers immediately before it was encrypted on the computers of local governments, etc., which are the place of ordering each of the facilities of this case, along with the name-based progs, etc., and selected 15 preliminary prices and 4 draw numbers by identifying the preliminary prices and winning numbers. On the bidder’s computer, two preliminary prices and 4 draw numbers selected at the time of inputting bid prices are installed in advance only among 4 draw numbers designated by the Defendants, so that the two preliminary winning numbers selected at the time of inputting bid prices are sent to the National Electronic Procurement System of the Public Procurement Service (one 'one Nabter server’), and eventually, four draw numbers designated by the Defendants were selected by the Defendants. Furthermore, the financial commissioner of the ordering office, who knows the circumstances, determined the expected amount and lower bid prices by the average of the winning prices corresponding to the 4 draw numbers.

3) Ultimately, the ordering office of each of the instant facilities construction orders only select 15 preliminary prices, and the bid price and the expected amount, which form the basis for the calculation thereof, shall be determined through a transparent procedure, such as the selection of the winning four winning numbers by bidders during the bidding process, and the final expected amount and the winning price cannot be known to the financial commissioner of the ordering office until the end of the bidding procedure. As such, the Defendants actively manipulated the financial commissioner of the ordering office to determine the final expected amount of construction and the winning price by the average expected amount according to the four winning numbers selected by the Defendants through the above unlawful act, and further, the Defendants believe that the final winning price is the normal winning price determined by normal procedure and that the final winning price is the price maintained and kept confidential is determined by the financial commissioner in the order of bidders who reflected the highest bid price close to the price, and the status of the successful bidder is examined.

4) In addition, even if a construction contractor is the most close to the successful bidder, it shall be determined as a successful bidder, without immediately determining as a successful bidder only by the fact that the bidder is a successful bidder but at least a certain point is determined as a successful bidder through a comprehensive examination of performance experience, technical ability, financial status, and credit delivery, etc. of documents submitted at the time of the tender, but in fact, when examining the process of qualification examination conducted by the finance commissioner, the performance evaluation shall be conducted by confirming whether the construction performance records submitted by the relevant association, etc. prior to the tender and the light evaluation data are abnormal. Therefore, among the tender participants falling under at least a certain number of items by the above materials, the successful bidder shall be determined by making a tender near the successful bidder. Accordingly, the successful bidder who is awarded the bid in each of the

Examining the facts and circumstances regarding the act detrimental to fair competition in the bidding process as above in light of the legal principles as seen earlier, the Defendants: (a) operated the expected price that forms the basis for the selection of successful bidders in each bidding in this case through malicious programs in advance and the bid price calculated accordingly; and (b) made the financial commissioner of the ordering office believe that the price is a timely and reasonable price determined without any unlawful act by the bidder; (c) notified the bidder of the price to the highest degree of price; and (d) made the financial commissioner of the ordering office failed to select the specified bidder as a successful bidder by conducting the procedure for selecting the successful bidder based on the price determined by the unlawful method as above if he knew of such circumstances; (d) as such, the Defendants actively distorted the process of determining the successful bidder's bid price; and (e) decided the bid price by the bidder based on such unlawful method; and (e) concluded the bid price with the financial commissioner of the ordering office or the financial commissioner of the construction project in this case; and (e) made it possible for the Defendants to enter into the contract with the specific bidder, including the act of deception and the bid.

Nevertheless, the lower court, contrary to its reasoning, acquitted each of the charges on the sole ground stated in its reasoning. In so determining, the lower court erred by misapprehending the legal doctrine on deception and causal relationship in fraud, thereby adversely affecting the conclusion of the judgment. The allegation contained in the grounds of appeal on this point

3. Scope of reversal

As seen earlier, as long as the part of acquittal of the lower judgment should be reversed by violating the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Fraud) and the part of fraud, which is the primary charge, should be reversed.

Furthermore, the judgment of the court below should be reversed on the ground that the crime of interference with bidding, which is the guilty part of the judgment of the court below, is recognized as being in a mutually competitive relationship with the above violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Fraud) and the

4. Conclusion

Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Jae-soo

Justices Kim Yong-deok

The Chief Justice Park Jae-young

Justices Kim Gin-young