New Anti-Corruption Law in Effect
On 28 September the new Korean anti-corruption law, called Kim Young-ran Act (Improper Solicitation and Grafts Act), entered into force. In addition to the present bribery offences on obtaining governmental decisions a new corruption offence is introduced. By this law the traditional gift culture will face severe changes and criminal risks for companies and their employees in Korea will considerably increase. In addition to this the criminal liability of corporations will be introduced.
Prohibition of gifts and entertainment
The new act for the first time sets thresholds for illegal gifts and entertainment to public officials. Invitations to meals and beverages with a value of more than KRW 30,000 (approx. 25 Euro), the granting of gifts with a value of more than KRW 50,000 (approx. 40 Euro) or cash donations on the occasions of weddings and funerals with a value of more than 100,000 (approx. 80 Euro) are prohibited.
In addition to this a new corruption offence is introduced. Criminally liable is who makes contributions to a public official in the value of more than KRW 1 mio. Euro (approx. 810 Euro) or in the cumulative value of more than KRW 3 mio. (approx. 2,400 Euro) through the same source in one year.
Extension of public officials
Public officials under the new anti-bribery rules are civil servants, court employees, employees of central or local administration, public entities and state controlled companies, but also journalists, reporters and teachers at private or public schools.
No proof of bribery necessary
According to the new law it is no longer necessary for the new corruption offence to demonstrate that there is a connection between a contribution and a rendered or expected performance of a public duty. Making the consideration suffices. Thus, the threshold for a criminal offence is reached at an early stage. Illegal contributions between KRW 1 and 3 mio. will be punished with a fine between two and five times of the contribution, contributions of more than KRW 1 mio. per single contribution or in the cumulative value of KRW 3 mio. per year with imprisonment of up to three years or a fine of up to KRW 30 mio.
Criminal Liability of corporations introduced
As of now companies can themselves be fined if employees commit bribery offences. The fine against companies is unlimited. Similar to the UK Bribery Act there is a strict liability of companies. The only defence available is that they have implemented efficient compliance systems preventing bribery.
All companies doing business in Korea have to adopt their anti-corruption guidelines to the new law and have to ensure that thresholds for admitted invitations and gifts are not exceeded, neither in every single case nor in sum. It will also be necessary to implement adequate supervision and control processes and to make sure that compliance requirements are really completely implemented in its national affiliates and are also adhered to.
Any questions? Please contact: Dr Christian Pelz
Practice Group: Litigation, Arbitration & ADR, Compliance & Investigation