FKI warns criminal penalties for businesses remain excessive

The government and the ruling party are pushing to ease corporate regulations, including abolishing the breach of trust offense this year, but a new review shows excessive criminal penalties for business leaders remain widespread.

On Nov. 10, the Federation of Korean Industries reported that a comprehensive review of criminal provisions in economic laws found 8,403 violations subject to criminal penalties across 346 statutes overseen by 21 ministries. Among them, 7,698 violations, or 91.6 percent, fall under dual-liability rules that punish both individual offenders and the corporations involved. The average prison term for these offenses is 4.1 years, and the average fine is 63.73 million won.

The share of violations subject to overlapping penalties was also high. A total of 2,850 violations, or 33.9 percent, carry two or more possible sanctions, including imprisonment, administrative fines, surcharges and punitive damages. In cases of collusion, offenders may face up to three years in prison, fines of up to 200 million won, surcharges and punitive damages simultaneously, prompting criticism that companies are effectively subject to quadruple punishment.

Industry groups argue that as the government and ruling party move to ease corporate regulations, the system must be revised so that minor administrative errors or routine staff mistakes do not trigger criminal prosecution.

The Federation of Korean Industries noted that most member countries of the Organisation for Economic Co-operation and Development impose criminal penalties only for serious offenses such as collusion or abuse of market dominance. The organization added that as the government continues efforts to rationalize criminal provisions in economic law, businesses hope for reforms substantial enough to make a tangible difference in daily corporate operations.


이동훈 기자 dhlee@donga.com