Fix the breach of trust articleKorean Air’s board of directors has approved of an emergency plan to provide 60 billion won ($54.3 million) to cash-strapped Hanjin Shipping, an affiliate of the same Hanjin Group. Korean Air took the step to help Hanjin’s container ships, which are stranded because of its inability to pay for unloading charges. Hanjin Group announced the rescue plan two weeks ago, but faced trouble after the board of directors was reluctant to offer the cash out of fears that it could lead to criminal punishment for a breach of trust when it rescues an affiliate without taking collateral.
The unprecedented shipping crisis of Hanjin, now under court receivership, not only caused serous problems for our exporter, but also damaged the international community’s trust in Korea. The snowballing damage desperately called for solutions. But the board of directors wasted precious time finding ways to avoid the breach of trust charges. The world’s 10th largest trading nation suddenly became a laughing stock for others due to the lack of money. We need to amend the breach of trust charges stipulated by our criminal law.
Breach of trust has long been a subject of contention. Though Article Two of Clause 355 in our criminal law defines it as an act which is in violation of duties, it has been considered one of the most ambiguous charges in the criminal law. The biggest problem is the absence of clear and concrete standards for punishing suspects, particularly in the corporate sector. In other words, what degree of violation of duties by business leaders really constitutes a breach of trust?
Currently, our criminal law provides that anyone who brought about damage to his or her company by taking financial benefits or allowing a third party to do so can be punished for breach of trust. As the charge is so broadly defined and abstract, our courts have historically even given different verdicts at first, second and third trials in cases involving the same charge.
Only Korea, Germany and Japan hold business leaders accountable for criminal charges — not to mention civil charges — for mismanagement of businesses. But Germany takes into account a need to respect managerial judgment and Japan punishes them only when intent is found.
It is time for our society to revise the article of breach of trust in our criminal law. We must define the scope and standards for the charge more clearly than before. The breach of trust charges must not serve as a means to constrain the vitality our corporate world has been proud of.
JoongAng Ilbo, Sept. 23, Page 34