Whether a crime of occupational embezzlement is committed against a company where a director, etc. of the company gives a bribe with the company’s funds held by him/her (affirmative), and whether the same legal principle applies to the case where a director, etc. gives an illegal solicitation with the company’s funds and gives a bribe in breach of trust (

Since a company should not be a means to commit a criminal offense in the course of its business activities, the provisions of the law prohibiting offering of a bribe must be observed when it conducts its business activities. Accordingly, if a director, etc. offered a bribe with funds held by a company in violation of his/her duties, such offering should be deemed to have been conducted for the purpose of seeking the benefit of the other party to the offering of a bribe or for any other purpose, rather than solely seeking the benefit of the company. Therefore, such a director, etc. shall not be exempted from liability for the crime of occupational embezzlement against the company. Unless there are special circumstances, such legal doctrine likewise applies to cases where a director, etc. of the

Articles 133, 355(1), 356, and 357(2) of the Criminal Act

Supreme Court Decision 2003Do5519 Decided May 26, 2005 (Gong2005Ha, 1081) Supreme Court Decision 2003Da69638 Decided October 28, 2005 (Gong2005Ha, 1847) Supreme Court Decision 2007Da58285 Decided December 10, 209

Defendant 1 and five others

Defendant 2 and one other and the prosecutor

Attorneys Park Il-il et al.

Seoul High Court Decision 2010No3069 decided July 1, 2011

The guilty portion of the judgment of the court below against Defendant 2 and the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement) are reversed, and this part of the case is remanded to the Seoul High Court. The prosecutor's appeal against Defendant 1, 3, 4, and 6, the remainder of the appeal against Defendant 2, and the appeal against Defendant 5 are dismissed.

The grounds of appeal are examined.

1. As to the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement)

A. If an operator or a manager of a corporation has no relation with a corporation, not for the purpose of corporate purpose, or separate funds have been created by reducing corporate funds for personal purpose, the creation act itself can be deemed as realizing the intent of unlawful acquisition. However, in a case where the creation of the funds is merely a kind of accounting for making it difficult for a third party, other than the owner of the funds concerned, to discover it, or where it is deemed as a means of raising funds necessary for corporate operation, it is difficult to recognize the intent of unlawful acquisition. Here, whether there was the purpose of withdrawing corporate funds from a corporation should be determined by comprehensively taking into account the nature of the corporation and all the circumstances such as the motive, method, size, and method of raising funds, method of safekeeping funds, method of storing funds, method of actually using funds (see Supreme Court Decision 2010Do1015, Dec. 9, 2010, etc.).

B. According to the reasoning of the judgment below, the court below found that the Busan branch office of the non-indicted 1 corporation (hereinafter "non-indicted 1 corporation") did not have sufficient business expenses permitted under the statutory management to cover the expenses for rebates to be paid to the ship company, the expenses for the operation of the business of the Busan branch office and the head office. The head office of the non-indicted 1 also was managed by means of receiving a notice on the creation and use of the Busan branch office's funds or setting the budget in advance, and most of the funds were disbursed for the above purpose. The most of the funds were used for the purpose, and the rebates paid to the shipping company et al. was provided for the act of giving property in breach of trust, which is punished under the Criminal Act. In light of the sales performance of the whole non-indicted 1 corporation and the Busan branch office of the non-indicted 1 corporation from 2001 to 207, it is difficult to view the defendant's non-indicted 1 corporation to have been found to have not been found to have been aware of the amount of the funds used by the defendant 1 corporation's account.

C. In light of the above legal principles and records, the court below's decision that found Defendant 2 guilty of the above charges of violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes not guilty of the remaining part of the crime of occupational embezzlement except for the part of the crime of occupational embezzlement due to the company's non-fund disbursement related to the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement) is just and acceptable. Contrary to the prosecutor's grounds of appeal, the court below did not err by exceeding the bounds of the principle of free evaluation of evidence against the logical and empirical rules,

D. However, as examined below, the judgment of the court below on the part of the occupational embezzlement due to the company's non-financing disbursement related to the defendant 2's giving of property in breach of trust, which was found guilty at the court below, is not acceptable for the following reasons.

In order to establish the crime of occupational embezzlement, a person who keeps another's property as his/her business violates his/her occupational duty with the intent of unlawful acquisition, and thus wrongfully obtained intent refers to an intention to dispose of another's property in fact or in law, such as where the person who keeps another's property owns his/her own property or a third party's own property with the intent of seeking the benefit of himself/herself or the third party (see, e.g., Supreme Court Decision 2001Do5439, Feb. 5, 2002). Since a company's corporate activity should not be a means of criminal offense in its corporate activity, the provision prohibiting offering of a bribe should be complied with in its corporate activity. Accordingly, if a director, etc. provided a bribe with funds of a company being kept in violation of his/her occupational duty, it is reasonable to view that the offering of a bribe was made for the purpose of seeking the benefit of the other party to the offering of a bribe or for any other purpose than for the purpose of seeking the benefit of the company. Thus, the above legal principle applies to the director, etc.

In light of the above legal principles, in a case where Defendant 2 offered 237,320,05 won to Defendant 5’s executive officers of Nonindicted Co. 2 (hereinafter “Nonindicted Co. 2”) with illegal solicitation and offering 237,320,005 won of the company’s non-indicted 3 Co. 3’s non-indicted 4’s non-indicted 3 Co. 3 (hereinafter “Nonindicted Co. 3”) under the occupational custody, Defendant 2 cannot be exempted from the liability for the crime of occupational embezzlement as to the non-indicted 2’s non-indicted 3’s non-indicted 3’s non-indicted 3’s non-indicted 3’s crime of embezzlement. However, the court below found Defendant 2 not guilty of this part of the facts charged on the ground of its stated reasoning, such as that it cannot be said that Defendant 2 had an intention of unlawful acquisition. The judgment below erred by misapprehending the legal principles on the intent of unlawful acquisition in the crime of embezzlement, which affected the conclusion of the judgment.

2. As to the receipt of property in breach of trust

A. As to Defendant 2 and 5’s grounds of appeal

In the crime of taking property in breach of trust or taking property in breach of trust under Article 357 of the Criminal Act, "illegal solicitation" means that solicitation goes against social norms and the principle of trust and good faith. In determining this, the contents of solicitation, the kinds, amounts and forms of assets or property gains acquired in relation thereto, the method and mode of providing property benefits, the integrity of transaction, which is the protected legal interest, shall be comprehensively considered. The solicitation is not necessarily required to be explicitly or implicitly made (see Supreme Court Decision 2010Do3399, May 27, 2010, etc.).

According to the reasoning of the lower judgment, the lower court determined as follows: (a) based on its adopted evidence, that Nonindicted Co. 2 act as a domestic agency of Nonindicted Co. 5 (hereinafter “Nonindicted Co. 5”) as an international shipping company established in the Republic of Korea; (b) Defendant 5 received a solicitation from Nonindicted Co. 2 as to the renewal, etc. of container operation contracts between Nonindicted Co. 1 and Nonindicted Co. 5, while handling Nonindicted Co. 2’s affairs as its executive officers; and (c) received convenience in relation to the renewal, etc. of container operation contracts between Nonindicted Co. 1 and Nonindicted Co. 5, Defendant 2’s offering KRW 78,550,223 among December 9, 2004 to August 17, 207; (d) Defendant 2 acquired KRW 237,320,05 out of the above amount, or paid KRW 237,3205 to Nonindicted Co. 6 Co. 3, an international shipping company established in the Republic of Korea; and (e) determined that it did not constitute an illegal solicitation between Nonindicted Co. 1416 months.

In light of the aforementioned legal principles and records, the above determination by the court below is just and acceptable. Contrary to the allegations in the grounds of appeal by the above Defendants, 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 legal principles on “illegal solicitation” in the crime of giving rise to breach of trust.

B. As to the remainder of the Prosecutor’s Grounds of Appeal

According to the reasoning of the judgment below, among the facts charged in this case, the court below found that among the non-indicted 7's charges in this case, the defendant 2 made an illegal solicitation that he would receive convenience in relation to the renewal, etc. of the container operation contract to the president of the non-indicted 7's domestic shipping company, and provided 438,901,690 won in total from November 24, 2006 to September 16, 2009; the non-indicted 3's Busan branch president of the non-indicted 3's Busan branch office's non-indicted 6's non-indicted 4, who received convenience in relation to the vessel's arrival time and alteration of the loading order of loading and unloading order from August 2005 to September 207, the court below found the defendant 4 not guilty of all of the above facts charged on the ground that there was no evidence to prove that there was a violation of the principles of trust and good faith between the above defendants.

In light of the above legal principles and records, the above measures of the court below are just and acceptable. Contrary to the prosecutor's 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 legal principles on "illegal solicitation" in the crime of giving rise to breach of trust.

On the other hand, the prosecutor appealed against the guilty portion of the judgment below, but there is no indication of the grounds for appeal in the petition of appeal and there is no statement of the grounds for appeal in the appellate brief.

3. Scope of reversal

Of the facts charged against Defendant 2, the lower court acquitted Defendant 2 on all the facts of the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement). As seen above, the part of the non-indicted 2’s act of spending funds of KRW 237,320,005 against Defendant 5 and the part of the non-indicted 4 against the president of the non-indicted 3’s non-indicted 4 should be reversed. Since the above reversed part of the judgment of the lower court is in relation to the remaining charges of violating the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement) against Defendant 2, the part of the judgment of the lower court on the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement) should be entirely reversed. Furthermore, the reversed part constitutes a concurrent relation between Defendant 2’s other criminal facts and the former part of Article 37 of the Criminal Act, and thus, it should be reversed in its entirety.

4. Conclusion

Therefore, the part of the judgment of the court below against Defendant 2 on the guilty and the part on the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement) shall be reversed, and this part of the case shall be remanded to the court below for further proceedings consistent with this Opinion. The prosecutor's appeal against Defendant 1, 3, 4, and 6, the remainder of the appeal against Defendant 2, and the appeal against Defendant 5 shall be dismissed. It is so decided as per

Justices Kim Shin (Presiding Justice)