SOUTH KOREA Law and Practice Contributed by: Jeena Kim, Kyunghwan Lee, Eunyoung Row and Bochan Kim, Bae, Kim & Lee LLC
is responsible for accounting tasks within the company – as specified in Article 401-2(1) of the Commercial Act (executives such as directors, chairpersons, presidents, etc) and Article 635(1) (auditors, audit committee members, business executives, etc), or anyone else in charge of the company’s accounting – violates the accounting standards set forth in Article 5 of the same Act by falsifying financial statements or disclosures, or by failing to include or falsifying the required information in the audit report that should be included by the auditor or a certified public accountant belonging to the auditing organisa - tion, they shall be punished with imprisonment for up to ten years or with a fine of not less than twice and not more than five times the profit obtained or the loss avoided through the viola - tion. Article 39(2) of the same Act states that if the total assets of the company amount to at least KRW1 trillion (ie, the total assets exceed KRW500 billion, which is 5% of total assets), and the falsified financial amounts that affect profit/ loss, equity capital, etc, exceed 10% of the total assets, the penalty will be life imprisonment or imprisonment for at least five years. If the falsi - fied amount exceeds 5% of the total assets, the penalty will be imprisonment for at least three years. 2.4 Public Officials Misappropriation of Public Funds by a Public Official Misappropriation of public funds is not governed by separate legal provisions but is punishable under the general provisions for embezzlement in the course of duty, as specified in Article 356 of the Criminal Act. The penalties include impris - onment for up to ten years or a fine of up to KRW30 million.
While there are no specific statutes targeting the misuse of public funds or by public officials, the fact that the crime involves public resources of public officials can be considered an aggravat - ing factor during sentencing. For cases involving substantial financial gains: • if the illicit gain is between KRW500 million and KRW5 billion, the punishment is impris - onment for at least three years; and • if the illicit gain exceeds KRW5 billion, the penalty is life imprisonment or imprisonment for at least five years, as stipulated by Article 3 of the Specific Economic Crimes Act. Unlawful Taking of Interest by a Public Official The receipt of any economic benefit, including monetary or non-monetary assets, by a public official is treated as bribery under Article 129 of the Criminal Act. The act is punishable according to the same provisions governing bribery-related crimes. Embezzlement of Public Funds by a Public Official When a public official embezzles public funds, it is prosecuted under the general embezzlement provisions of Article 356 of the Criminal Act, sim - ilar to the misappropriation of public funds. The penalties remain consistent with those outlined for misappropriation. Favouritism by a Public Official In cases of favouritism, such as irregularities in public sector hiring, the offence is considered an obstruction of official duties through decep - tion (fraudulent means) under Article 137 of the Criminal Act. This provision addresses interfer - ence with public officials’ duties and prescribes penalties of imprisonment for up to five years or a fine of up to KRW10 million.
381 CHAMBERS.COM
Powered by FlippingBook