South Korea should refine the legal elements of its breach-of-trust crime to encourage entrepreneurship and investment in advanced industries such as artificial intelligence, batteries and biotechnology, a business group said.
The Korea Federation of Korean Industries, known as FKI, said it held a seminar in Seoul on Monday at the FKI Tower conference center in Yeouido titled “Problems and Improvement Measures for the Breach-of-Trust Crime.”
In opening remarks, FKI Executive Vice Chairman Kim Chang Bum said large-scale investment is needed to secure “future growth engines” in areas including AI, batteries, bio and mobility, but executives are struggling to make bold decisions because of breach-of-trust risks.
“Reasonable improvements to the breach-of-trust system are needed to reduce management uncertainty and raise entrepreneurship, the source of innovation,” Kim said.
Ahn Tae Jun, a professor at Hanyang University Law School, said the current provision is vague, undermining the criminal law principle of clarity and predictability. He warned that a civil-law breach of duty based on good faith could be treated as a crime, making the scope of liability hard to foresee.
Ahn said managers often cannot know in advance whether their actions are criminally prohibited, and they can be punished based only on the “risk of loss” even without actual damage. That could turn failed business judgments into criminal cases and lead to the “criminalization of civil disputes,” weakening executives’ willingness to act, he said.
Ahn said South Korea’s approach differs from major countries. Germany does not punish attempted breach of trust and has no aggravated provisions for occupational or special breach of trust, he said. Japan requires a strict subjective element beyond intent, including a purpose of seeking benefit for oneself or a third party or causing loss to the principal. The United States and the United Kingdom have no breach-of-trust statute, and even similar provisions are narrowly applied, he said.
To reduce side effects, Ahn proposed creating a business judgment rule that treats reasonable decisions as not violating duty, or otherwise tightening the elements of the offense. Full repeal could also be an option, he said.
In a discussion session, speakers also called for limiting criminal intervention in business judgment. Hong Young Ki, deputy dean of Korea University Law School, said breach of trust is the only crime that deprives or infringes another person’s property interests, and called for detailed practical guidelines and strict case-by-case application.
Kang Won, a professor of business administration at Sejong University, said when executives are indicted for occupational breach of trust, they inevitably divert resources to self-defense until a final acquittal, which can weaken corporate competitiveness. He called for reforms that minimize criminal intervention in business judgment and clarify the presumption of innocence.
Ryu Hyuk Sun, a professor in KAIST’s Department of Industrial and Systems Engineering who holds doctorates in business administration and law, said the vagueness of the provision is expanding criminal liability after the fact. He urged South Korea to reset the boundary between criminal and civil liability, similar to Germany and Japan, where criminal punishment functions as a last resort to supplement civil controls.
* This article has been translated by AI.
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