What is occupational breach of trust?
Breach of trust is a crime in which a person who handles another's affairs acts in violation of that duty to obtain a financial benefit for themselves or for a third party, thereby causing loss to the other person—that is, the "principal." In particular, where this crime is connected to occupational duties—that is, where a person who handles another's affairs commits breach of trust by violating an occupational duty—it is subject to aggravated punishment as occupational breach of trust. In such cases, where the amount of gain from occupational breach of trust is KRW 500 million or more, aggravated punishment applies under the Act on the Aggravated Punishment of Specific Economic Crimes (특정경제범죄가중처벌 등에 관한 법률).
Occupational breach of trust: relevant statutes
Article 355 (Embezzlement, Breach of Trust)
(1) A person who, having custody of another's property, embezzles such property or refuses to return it shall be punished by imprisonment for not more than five years or a criminal fine not exceeding KRW 15 million.
(2) The same punishment as in the preceding paragraph shall apply to a person who handles another's affairs and, by violating that duty, obtains a financial benefit or causes a third party to obtain such benefit, thereby causing loss to the principal.
Article 356 (Occupational Embezzlement and Breach of Trust)
A person who commits an offense under Article 355 in violation of an occupational duty shall be punished by imprisonment for not more than ten years or a criminal fine not exceeding KRW 30 million.
Elements of breach of trust
Breach of trust refers to a situation where a person who handles another's affairs acts in violation of the entrusted duty, obtains a financial benefit, and thereby causes loss to the company. Breach of trust is established only when the person is handling another's affairs. Accordingly, if someone violates a duty while handling their own affairs rather than another's, breach of trust is not established. This means it does not apply to one's own affairs, such as a sole proprietorship, but rather to an employee who improperly handles work within a company or corporation. The elements of breach of trust are as follows.
- A person who handles another's affairs
- An act that violates that duty in the course of employment
- The wrongful gain of a financial benefit by the actor or a third party
- Causing financial loss to the principal
- The existence of intent
Elements of occupational breach of trust
For occupational breach of trust, there must be an act of breach of trust, the acquisition of a financial benefit, and the existence of financial loss to the company, and there must be intent. If there is no intent, breach of trust is not established. Negligence alone does not constitute breach of trust; however, even without a purpose to cause loss to the company, intent is recognized as long as there is willful blindness (dolus eventualis).
Distinguishing breach of trust from embezzlement
Breach of trust and embezzlement are both crimes that betray another's trust, and in this respect they are similar in nature. However, the main differences between the two lie in the object of the crime and the elements required for it to be established.
Embezzlement is a crime related to specific property and is established by acts such as arbitrarily using that property or refusing to return it. Breach of trust, on the other hand, is established by an act of obtaining a financial benefit or causing a third party to obtain such benefit. Accordingly, embezzlement is classified as a "property crime," while breach of trust is classified as a "benefit crime."
There is also a difference in who can commit each crime. The subject of embezzlement is a person who holds or has custody of specific property, whereas the subject of breach of trust is a person who handles another's affairs. This is determined differently depending on the nature and scope of each crime.
Penalties for breach of trust
Breach of trust takes various forms, and the level of punishment varies depending on the elements that make up each one.
In the case of simple breach of trust, under Article 355(2) of the Korean Criminal Act, it is punishable by imprisonment for not more than five years or a criminal fine not exceeding KRW 15 million.
Occupational breach of trust occurs when an act of breach of trust is committed in violation of an occupational duty, and under Article 356 of the Korean Criminal Act it is punishable by imprisonment for not more than ten years or a criminal fine not exceeding KRW 30 million. The difference is that occupational breach of trust is punished more severely than simple breach of trust because the offender simultaneously holds the status of a person who handles another's affairs and the status of an occupational actor.
In addition, under Article 359 of the Korean Criminal Act, an attempted offense may also be punished. This means that even if no actual loss has occurred, a person may be punished for the offense if the elements of breach of trust are satisfied in a situation where such loss is foreseeable.
Where the financial benefit gained through breach of trust is KRW 500 million or more, aggravated punishment applies under the Act on the Aggravated Punishment of Specific Economic Crimes. If the amount of gain is KRW 500 million or more but less than KRW 5 billion, the offender is subject to imprisonment for a fixed term of not less than three years. By contrast, if the amount of gain is KRW 5 billion or more, the offender is subject to imprisonment for life or for not less than five years.
