Simple Administrative Errors and Minor Livelihood Offenses to be Converted to Administrative Fines

The government will comprehensively overhaul outdated criminal penalty regulations that have constrained corporate economic activities. The policy paradigm will completely shift to monetary sanctions that recover illegal profits or impose punitive-level surcharges, while principally abolishing the customary application of criminal punishment for serious illegal activities such as unfair trade practices by companies. Simultaneously, criminal penalties for simple administrative duty violations or minor violations by small business owners for livelihood purposes will be converted to administrative fines to prevent the mass production of criminal records and ease the burden on the livelihood economy.

The government and the Democratic Party of Korea held a government-party consultation at the National Assembly on Dec. 30 and finalized and announced the 2nd Economic Penalty Rationalization Plan with such contents as its core. This plan is a follow-up measure to the 1st plan (organizing 110 regulations) announced last September, and is the largest-scale regulatory innovation plan in history, with related ministries including the Ministry of Strategy and Finance, Ministry of Justice, and Fair Trade Commission jointly organizing a total of 331 economic penalty regulations.

The core of the day’s announcement is a shift from criminal punishment to financial sanctions. While Korea’s legal system has maintained the practice of immediately imposing criminal punishment for corporate illegal activities, there have been continuous criticisms that investigations and trials take a long time, limiting prompt correction of illegal activities. Accordingly, the government established three major principles — strengthening financial responsibility, mitigating business owner criminal risks, and alleviating livelihood economy burdens — and began organizing the legal system.

The most notable change is the shift in sanctions for serious corporate illegal activities. The government decided to abolish provisions that immediately imposed penalties when violating fair trade-related laws such as the Subcontract Act, Large-scale Distribution Business Act, and Franchise Business Act. Instead, corrective orders will be issued first, and penalties will be imposed only when these are not complied with.

The void left by criminal punishment will be filled with strong financial sanctions. To deprive economic benefits gained through illegal activities and prevent recurrence, surcharge caps have been significantly increased by up to 10 times or more compared to existing levels.

For example, exclusive dealing coercion by large discount stores or department stores that interfere with suppliers’ transactions with other companies previously carried imprisonment of up to 2 years, but going forward, immediate penalty provisions upon violation will be abolished. Instead, the fixed surcharge limit imposed along with corrective orders will increase 10-fold from the existing 500 million won to 5 billion won. Cases where construction companies receive advance payments from clients but fail to pay subcontractors previously carried fines of up to twice the subcontract payment, but going forward, imprisonment will be abolished and the fixed surcharge cap will be raised from 2 billion won to 5 billion won.

Sanctions for personal information protection duty violations will also change to a monetary penalty approach. When telecommunications companies neglect efforts to prevent location information leaks, they previously faced 1 year of imprisonment, but going forward, penalties will be abolished while surcharges will be strengthened 5-fold from 400 million won to 2 billion won.

The practice of uniformly imposing criminal punishment for simple administrative errors or minor duty violations that frequently occur during corporate activities will also disappear. This aims to eliminate the side effect of mass-producing criminal records and allow business operators to focus on management without excessive criminal risks. The government will organize 182 regulations including the Clean Air Conservation Act with such contents.

Specifically, when automobile manufacturers fail to submit documents confirming compliance with greenhouse gas emission standards within the deadline, they previously faced fines of up to 3 million won, leaving criminal records. However, going forward, this will be converted to administrative fines of the same amount. However, penalties will be maintained for cases with clear intent such as submitting false documents.

This plan also includes extensive content to reduce excessive criminal penalty burdens faced by small business owners and ordinary citizens in daily life. A total of 120 regulations will be organized to alleviate livelihood economy burdens. Regarding camping car tuning, which has increased with the recent growth in leisure population, the 1 million won fine imposed on car owners who received tuning approval but did not get inspected will be converted to a 1 million won administrative fine. This is to prevent unfair cases where people become criminals simply for not being aware of inspection procedures.

The provision for 1 year imprisonment applied when apartment management office employees mistakenly destroyed management fee collection records or failed to keep them for 5 years will also change to a 10 million won administrative fine.

This 2nd Economic Penalty Rationalization Plan reflects the current government’s strong will to establish sanctions that conform to global standards and remove uncertainties that block corporate investment. President Lee Jae Myung emphasized at the Ministry of Strategy and Finance briefing on Dec. 11, saying “We need to speed up economic penalty rationalization” and “We need to practically suppress illegal activities through economic sanctions rather than criminal penalties.”

The government expects that this measure will reduce judicial risks for companies and revive private investment and employment that had been dampened by excessive penalties. The government and ruling party plan to submit legislative amendment bills for organizing the 331 regulations announced today in a batch during the first quarter of next year. They also decided to begin preparing the 3rd Economic Penalty Rationalization Plan during the first quarter of next year to maintain momentum for regulatory innovation.

A Ministry of Strategy and Finance official stated, “This is not simple deregulation, but implementing the principle of proportionate rewards and punishments in economic laws by imposing heavier economic responsibility for serious crimes and showing tolerance for minor mistakes,” adding “We will continue to discover improvement tasks that can be immediately felt at the field level.”

출처 : Businesskorea(https://www.businesskorea.co.kr)