"National Assembly's 6 Major Standing Committees Increase Corporate Punishment Bills: Imprisonment Up 6 Times, Fines Up 362 Times"

FedChamber's Comprehensive Survey on Bill Proposals by Standing Committees

[Asia Economy Reporter Dongwoo Lee] According to a comprehensive investigation conducted by the Federation of Korean Industries (FKI) on bills proposed in the six major standing committees (Legislation and Judiciary Committee, Political Affairs Committee, Strategy and Finance Committee, Industry Committee, Environment and Labor Committee, Land, Infrastructure and Transport Committee) of the 21st National Assembly, it was found that penalties for 117 companies (individuals) were newly established or strengthened across 54 laws.

On the 14th, FKI announced that among the corporate (individual) penalty bills proposed in the six major standing committees of the 21st National Assembly, 38 laws with 78 provisions were newly established, and 26 laws with 39 provisions were strengthened.

By committee, the Political Affairs Committee had the most related provisions with 41, followed by the Legislation and Judiciary Committee (22 provisions) and the Environment and Labor Committee (19 provisions).

Regarding imprisonment provisions, when divided into strengthened and newly established, the strengthened imprisonment terms increased from the current 17 years to 33 years, approximately 1.9 times. Newly established imprisonment terms reached 69 years, and assuming all strengthened and newly established bills pass, the maximum imprisonment term would be 102 years. This represents a sixfold increase compared to the current standard.

For increased fines, the current maximum of 570 million KRW rose to 1.18 billion KRW, about 2.1 times higher, while newly established fines reached approximately 205.44 billion KRW. If all bills pass, fines would total about 206.62 billion KRW, representing a 362-fold increase compared to the current level.

By committee jurisdiction, the Legislation and Judiciary Committee, which oversees many enactment bills such as corporate crime penalty bills, serious accident penalty bills, and public interest corporation activation bills, accounted for the largest share with an increase of 26 years in imprisonment and fines of 203.63 billion KRW.

Regarding surcharges, if all bills proposed in the six major standing committees pass, the combined surcharge cap based on corporate sales would increase from the current maximum of 35% to 87%, approximately 2.5 times higher. The Political Affairs Committee had the most newly established and strengthened surcharges with 15 cases, particularly influenced by the “Complete Revision of the Fair Trade Act,” which uniformly doubled surcharges.

Looking at the “Act on Punishment of Corporations and Responsible Persons for Serious Accidents” proposed in the 21st National Assembly, it specifies that in the event of a fatal accident at a company, the management responsible and the company itself shall be held criminally liable, with imprisonment of three years or more or fines between 50 million KRW and 1 billion KRW for death, and imprisonment of up to seven years or fines up to 100 million KRW for injury. The act defines “serious accidents” as industrial accidents involving death or severe injury or multiple victims, but this definition is vague, raising concerns about excessive punishment of companies (individuals).

The “Act on Punishment of Corporate Crimes” stipulates that if a decision-maker commits a corporate crime, not only the decision-maker but also the company shall be fined up to 10% of annual sales or up to 200 billion KRW. Since the scope of corporate crimes includes most areas such as foreign exchange, finance, taxation, securities, and unfair competition crimes, the scope is excessively broad and the standards vague, imposing a heavy burden on companies. The enormous fines of up to 10% of annual sales or 200 billion KRW are excessive enough to threaten the survival of companies.

Yoo Hwan-ik, Director of Corporate Policy at FKI, stated, “In a situation where the global economy is stagnating due to COVID-19, it is more important than ever to save companies,” adding, “Unreasonable and excessive penalties on companies (individuals) go against the current trend.”

This content was produced with the assistance of AI translation services.