Sternly punish the economic spies

Kim Won-bae

The author is an editorial writer of the JoongAng Ilbo.

Korea on Jan. 15 announced an ambitious project to invest 662 trillion won ($473 billion) to establish what would be the world’s largest chipmaking cluster in Gyeonggi through 2047, creating 3.46 million jobs. Korea’s two chip majors Samsung Electronics and SK hynix will provide the funding, while the government backs the infrastructure construction to uphold chip supremacy.

On the same day, the Seoul police requested an arrest warrant for a former researcher of Samsung Electronics for stealing chip fabrication technology to sell it to a Chinese company. Korea’s chip players cannot sustain the lead if their hard-won technology through heavy investment is leaked to competitors.

But the arrest warrant was rejected by the court which did not see a pretrial physical detention necessary, as the suspect did not have other criminal records and the police secured sufficient evidence against him through questioning. A former Samsung Electronics executive in June last year was arrested for stealing and selling blueprints for the chipmaking facility design and processing technology in a similar chip fab in China. He was released last November after the court granted bail.

According to People Power Party Rep. Kim Sung-won, only 12, or 10 percent of 114, were sentenced to a jail term on industrial espionage charge in their first trials from 2015 to 2022. Forty of them had their sentence suspended and 11 were able to walk free after paying fines. The other 34 got non-guilty sentence. Less than 20 percent had to serve prison term. Because of such soft penalties, industrial espionage continues to increase.

Of course, suspects have the right to go under investigation and trial in a free condition. But an arrest warrant should not be denied just because the suspect had no criminal record. The crime amounting to the theft of Korea’s future and jobs to smuggle them offshore must be addressed with a no-tolerance principle.

The fact that there is enough evidence means suspicions are grounded. In such case, prosecutors should have been allowed to detain the suspect to dig up further criminal counts and accomplices. The Sentencing Commission of the Supreme Court on Jan. 18 announced it would be toughening the sentencing guidelines for industrial spies. A bipartisan bill to amend the Industrial Technology Protection Act is also under review by the Legislation and Judiciary Committee of the National Assembly. It proposes to up the ceiling for fines and damages to five times the estimated loss from current three times.

But the measures are not enough to protect intellectual properties. Kim Min-bae, honorary professor at the Inha University Law School, said the court is usually conservative in assessing the claim by a company for industrial theft. “If the damage claims are not fully recognized, rulings on penalty and damage on industrial espionage won’t be grave” regardless of toughened regulations. Kim Dong-ho, chairman of Korean Academy of Industrial Security, comprising of corporate and industrial security experts, also points to the similar legal loophole. “Offshore smuggling of technology is regarded as a simple business crime. The crime persists because one can live comfortably overseas after serving just a year in prison or gaining bail. Korea is waving a yellow card to a crime that draws a red card immediately overseas,” he said.

A bill to revise the Criminal Act to regard industrial theft as general espionage was put forward to the legislature in June last year. Korea’s Penal Code punishes espionage activities for an enemy country. The United States and other countries do not restrict spy surveillance and punishment to enemy countries. The bill has been deadlocked in the Legislation and Judiciary Committee after the Office of Court Administration opposed the amendment. Spies are typically associated with North Korea, as the country is still at de facto war with the North. Some think punishing industrial espionage in treason’s context could be too severe.

But the times have changed. It is hard to differentiate friends and foes in the industrial field. Theft and sale of cutting-edge technologies can cause as serious a problem as leaking defense intelligence. Social consensus must be built on the crime as a grave threat to economic security and toughen punishment. Discussions are necessary to balance the espionage statutes of the Criminal Act with the Industrial Technology Protection Act. Korea must redefine economic spies in place of industrial spies to change the understanding of technology theft. Taiwanese competition with Korea in chips led to legal changes in 2022 to severely punish industrial espionage. The United States also severely punishes the crime under the Economic Espionage Act.

Korea is spending more than $400 billion on future chip technology. The investment would go to wastes if technology properties are not guarded. But the fortress is still weak and lax. Our defense line cannot be guaranteed without fortifications. The court must urgently change its perspective.