Posted November. 12, 2012 05:38,
The business community is criticizing the court custody for Hanwha Group Chairman Kim Seung-youn for causing billions of dollars in losses for his conglomerate. The community blasted embezzlement law over its vagueness and broadness in scope since it adversely affect even regular business activities.
Chairman Kim was put under court custody though he supported affiliates based on business strategies while neither benefiting personally nor causing any harm to the affiliates, said one business pundit in a seminar hosted by the Korea Economic Law Society at Hanyang University in Seoul Friday.
Other specialists urged that the law needs to be amended to ensure more efficient management activities.
Punishing a businessman for misappropriation is excessive intervention in business activities and can deal a huge blow to the national economy by restricting business freedom and creativity, said Choi Joon-seon, a professor at Sungkyunkwan University`s School of Law.
The U.S. has no law on breach of trust but has one on mail fraud that serves a similar function. Germany and Japan have misappropriation laws but the laws rarely get to apply compared to Korea. In Japan, for example, apparent intent to harm a company needs to be verified before applying the law but in Korea, any risk of loss can constitute breach of trust though no intent to harm is involved, Choi said.
In Germany, the law limits an investigation to those entrusted by the law or authorities or those who did juristic acts or had close relations. The Korean law, however, broadly implicates anyone who handles the affairs of others.
Choi suggested that Korea enact a business judgment rule, a U.S. principle in case law, in commercial law to protect company directors or officers from being punished for business decisions that caused losses to the company if the decision had been made reasonably based on ample information.