KGCCI law update with Yulchon LLC

Transcription

1 KGCCI law update with Yulchon LLC Topic : Preventing and Policing White-Collar Crime March 27, 2018 Yulchon LLC Eun Jae Park In Seon Choi Moritz Winkler Copyright 2018 Yulchon LLC.

2 If you or your company is at risk of incurring criminal liability, what should you do first? 2

3 Finding a good criminal defense lawyer 3

4 Oh, My, Everything is a crime in Korea 4

5 Oh, My, Everything is a crime in Korea Labor The failure to pay an employee s salary Making an employee work overtime for more than 12hrs a week Antitrust In every area of antitrust (Monopoly, Cartel, M&A, Unfair Trade), criminal punishment is possible What seems to be a only administrative matter can cause criminal liability A holding company having too much debt or having insufficient stock in its subsidiary shall be punished Unlike in other jurisdictions, unfair trade as such is criminally punishable in Korea 5

6 Oh, My, Everything is a crime in Korea Taxation Failure to issue a VAT invoice Finance Making certain types of checks bounce Health care Issues to rebates If economic benefit is given to a HCP for the purpose of increasing the sales of a pharmaceutical company, it may not matter if the HCP does something sufficiently valuable in return of the benefit in regard to constituting a rebate 6

7 Oh, My, Everything is a crime in Korea Breach of Fiduciary Duty (Misappropriation) Korean prosecutors aggressive indictment The current position of the court: business judgement rule Still high possibility of being found guilty for breach of fiduciary duty Kim Young Ran Act (Anti-Graft Act) No need of Give and Take If the money or benefit is over 1million KRW, it won t matter whether it was provided in return for any favor of the public officer or not 7

8 How Criminal Liability Is Different From Civil or Administrative or Liability 1 Individuals may end up in jail 2 In principle, one is liable only for an intentional violation 3 Individuals should pay their fines with their own money 4 Individuals should pay their attorney s fees with their own money 5 Criminal records can put a stigma on individuals and companies 6 Effect of fact-finding in a conviction (judgement of guilty) 7 More public or media attention 8

9 Who Is Liable For Criminal Activities Individual Principal subject Company Secondary subject under two conditions Immunity from liability Which level of seniority matters? When a C-level person is liable? Instructing or participating in planning a crime Just getting to know about a crime in advance or in course of being committed 9

10 How To Predict Criminal Risks When your company is investigated administratively When a company of the same or similar business is investigated criminally When the media reports Alleged violation of your company or companies of the same or similar business Customary or structural problems with the business which your company is involved in When a whistleblower makes a call When governmental agencies announce polices of strengthening the execution of law in their jurisdictions 10

11 What You Should Be Careful of When Investigated by Special Police Officers 1 What are special police officers? 2 Generally speaking, they seldom draw a line as to whether the suspect acted intentionally or negligently 3 They tend to summon C level persons regardless of whether or not he or she is really involved 11

12 Things You Must Remember When Your Company Is Dawn-Raided Don t take more than the warrant allows If you fail, the scope of the investigation is likely to be enlarged The Criminal Procedure Act stipulates a special procedure for the dispute related with search and seizure Confirm what the investigators take exactly and concretely The criminal investigation is not a public and equal procedure like a court trial It is very important, yet difficult to know what information or materials the investigators have seized during the investigation Digital Information Reviewing process is very important 12

13 Thank You Eun-Jae Park Tel: Textile Center 12F, 518 Teheran-ro, Daechi-dong, Gangnam-gu, Seoul, Korea Tel: Fax: Web Site:

14 KFTC Dawn Raids

15 KFTC Dawn Raids Scope and Extent of KFTC s Investigative Powers : MRFTA* Article 50(1) Demand the appearance and testimony of the party under investigation, interested parties and others Demand that the company or its employees report on costs and its business situation Order submission of other data and items that KFTC deems necessary for the investigation Take custody of submitted data and seized items * Monopoly Regulation and Fair Trade Act 15

16 KFTC Dawn Raids Unannounced On-Site Investigations (Dawn Raids) Administrative investigation without a warrant, seeking voluntary cooperation However, for all practical purposes and intents, compulsory investigation Obstruction of Investigation Non-Submission or false submission of materials requested by the KFTC Refusal, obstruction, or evasion of the KFTC s on-site investigation by means of, for example, concealing, destroying, falsifying, and/or denying access to information or materials. Physical and/or verbal assault on KFTC investigators Failure to appear at the KFTC without reasonable reasons 16

17 KFTC Dawn Raids Consequences of Obstruction of Investigation Criminal sanctions Obstruction of Investigations For Non-Submission or false submission of materials For Refusal, obstruction, or evasion of the investigation by means of, for example, concealing, destroying, falsifying, and/or denying access to information or materials. For physical and/or verbal assault Criminal Sanctions up to 2 years in prison or; up to KRW 150,000,000 up to 2 years in prison or; up to KRW 150,000,000 up to 3 years in prison or; up to KRW 200,000,000 Administrative fines For Failure to appear at the KFTC without reasonable reasons Company: up to KRW 100,000,000 Executives, employees or interested persons: up to KRW 10,000,000 17

18 How to respond to Dawn Raids 1 You may request the examiner to present his/her identification and the investigation notice before agreeing to allow entry. 2 Immediately contact your outside legal (antitrust) counsel so that they can be dispatched to the site promptly. 3 Be cooperative, but you can reject requests that are not within the scope of the investigation notice. 4 When you receive an information-submission order, request the KFTC to clearly specify the scope of documents subject to the order. 18

19 How to respond to Dawn Raids 5 If you are interviewed, provide answers solely based on your actual knowledge. Do not guess. 6 For electronic data, blanket investigation is not permitted. Investigators should specify the scope and nature of data or the documents, and have them submitted by the examinee. 7 Never hide, modify, fabricate, or destroy documents. 8 After the dawn raid, keep track of the documents seized by investigators, interview memos, and other relevant records. Analyze and start to 19

20 Thank You Choi, In Seon Tel: Parnas Tower, 38F, 521 Teheran-ro, Gangnam-gu, Seoul 06164, Korea Tel: Fax: Web Site:

21 Yulchon LLC Parnas Tower, 38F, 521 Teheran-ro, Gangnam-gu, Seoul 06164, Korea Tel: Fax: Ho Chi Minh City, Vietnam Unit 03, 4th Floor, MPlaza Saigon, 39 Le Duan St., Ben Nghe Ward, Dist.1, Ho Chi Minh City, Vietnam Tel: Fax: Hanoi, Vietnam 27th floor, East Wing, Lotte Center Hanoi, no. 54 Lieu Giai street, Cong Vi ward, Ba Dinh district, Hanoi. Tel: Fax: Shanghai, China 031,30F,No.1000,Lu Jia Zui Huan Lu Pu Dong Xin District Shanghai, , P.R.China Tel: Yangon, Myanmar Unit 6, 7F, Tower 1, HAGL Myanmar Centre Tower, 192, Kabar Aye Pagoda Road, Bahan Township, Yangon, Myanmar Tel: Fax: Moscow, Russia 12th Fl. White Gardens Business Center, 7 Ulitsa Lesnaya, Moscow, Russian Federation, Tel: Fax: moscow@yulchon.com Jakarta, Indonesia (Associated firm) The Energy, 32nd Floor, SCBD Lot 11A, Jalan Jenderal Sudirman, Kav , Jakarta 12190, Indonesia Tel : Fax : jakarta@yulchon.com