Industry in Turmoil: "Judicial Risks Have Increased"

Concerns Over Overlapping Investigations by Police, Serious Crimes Investigation Agency, and Other Investigative Bodies

On the 4th, in front of the Seoul Central District Prosecutors' Office in Seocho-gu, Seoul, a banner criticizing the National Assembly for passing the bill was hung on a truck set up by a civic group opposing the so-called 'Geomsu Wanbak (Complete Removal of Prosecutorial Investigation Rights).'

Regarding the significant adjustment of prosecutorial investigative authority due to the amendment of the Prosecutors' Office Act, frontline companies are clearly showing a cautious atmosphere, saying "uncertainty has increased." Although the scope in which prosecutors can initiate investigations has been limited to 'corruption and economic crimes,' there is room for further expansion through presidential decrees, and concerns remain about overlapping investigations by various investigative agencies such as the police and the soon-to-be-established Serious Crime Investigation Office (Jungsucheong).

On the 4th, Lee Taegyu, Senior Research Fellow at the Korea Economic Research Institute, said in a phone interview with Asia Economy regarding the so-called ‘Geomsu Wanbak (complete removal of prosecutorial investigative authority)’ that "regardless of positive or negative aspects, it is still a law opposed by the majority, and it is uncertain how well it can be established," adding, "From the perspective that companies and business owners are most anxious about uncertainty, there is clearly a risk."

A representative from Company A said, "There is great uncertainty about changes in the investigative authority in the field of fair trade previously held by the prosecution, and whether the scope or subjects of investigation will expand when the authority is transferred to the police," adding, "It is still difficult to make a judgment, but we have no choice but to respond according to the situation."

A representative example of confusion caused by uncertainty in wording or expressions during the introduction or change of a system is the Serious Accident Punishment Act (Jungdaejaecheobbeop). Companies see that even as the 100-day mark (May 6) approaches since its enforcement, many parts remain ambiguous regarding the scope of responsibility and safety obligations.

The recently promulgated amendment to the Prosecutors' Office Act is no different. Although it passed the National Assembly after twists and turns and received presidential approval, a protracted negotiation process is expected over how specifically to define the scope of investigation initiation. Under the current presidential decree, major crimes such as bribery, solicitation of bribes, illegal political funds, embezzlement, breach of trust, technology leakage, and the Fair Trade Act are considered special investigation areas for the prosecution.

The amended law allows major crimes to be defined by presidential decree, and there is speculation that the new government will revise it again. Presidential decrees can be amended without going through the National Assembly. Both President-elect Yoon Seok-yeol and Minister of Justice nominee Han Dong-hoon have extensive experience investigating businesspeople in the special investigation division during their time as prosecutors.

There are also voices expressing skepticism about police investigations in areas requiring expertise such as the Fair Trade Act. An executive from Company B said, "There is doubt and skepticism about whether investigations by the police into cases reported by the Fair Trade Commission, which were previously handled by the prosecution, can be properly conducted." Senior Research Fellow Lee Taegyu also added, "Recently, issues like industrial espionage and intellectual property (IP) infringement have been challenging for companies, and due to confusion over investigative authorities, companies face the risk that those who steal secrets may not be properly punished."

Since corporate investigations are likely to attract internal and external attention, concerns about a ‘sa-jeong drive’ (intensive crackdown) have also been raised after the laws are revised. Choi Junseon, Professor Emeritus at Sungkyunkwan University, predicted, "For now, the prosecution will retain temporary direct investigative authority over corruption and economic crimes, but this may create an environment where the prosecution exercises this retained authority strongly, causing companies to become more constrained," adding, "The biggest victims will be the companies."

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