Company Cars, Personal Use of Corporate Cards, Embezzlement and Breach of Trust

Using a corporate card for personal purposes is a criminal offense.

This is because the card is issued in the name of the corporation, that is, the company, and is being used for private ends, which makes the user liable to punishment regardless of their rank. And if a large amount, rather than a trivial one, is charged to a corporate card, an actual prison sentence may even be handed down.

The difference between embezzlement and breach of trust

Many people mistakenly believe that using a corporate card for personal purposes amounts to embezzlement. In reality, however, using a corporate card privately constitutes breach of trust.

Both embezzlement and breach of trust cause damage to property and can be understood as acts that betray a position of trust. The two, however, are defined with different subjects and objects. In embezzlement the object is property (a physical thing), whereas in breach of trust the object is a financial benefit. Embezzlement applies where a person entrusted with another's property embezzles it or refuses to return it. Breach of trust, on the other hand, is established where a person who handles another's affairs acts in violation of their duties so as to obtain a financial benefit, or transfers that benefit to a third party, thereby causing loss to the principal.

Accordingly, siphoning off public funds amounts to embezzlement, while using a corporate card for personal purposes amounts to breach of trust.

The penalty for occupational breach of trust

Using a corporate card for personal purposes constitutes occupational breach of trust (업무상 배임죄). This is strictly defined under the Korean Criminal Act, so if the charge is established the legal punishment can be quite severe. Ordinary breach of trust is punishable by imprisonment of up to 5 years or a criminal fine of up to KRW 15 million, whereas occupational breach of trust can carry imprisonment of up to 10 years or a criminal fine of up to KRW 30 million. This means the sentence is heavier than for ordinary breach of trust, and it may be harder to obtain leniency. In addition, while the statute of limitations for breach of trust is 7 years, for occupational breach of trust it is set at a longer 10 years.

Elements of occupational breach of trust

Occupational breach of trust is established where a person holds a position handling another's affairs, obtains a financial benefit or causes loss to another, and acts intentionally with the aim of obtaining an unlawful gain.

Personal use of company vehicles

Just like corporate cards, the personal use of a company car is also problematic. To prevent the private use of company vehicles, a system of light-green license plates has even been introduced. Because company vehicles can receive tax-reduction benefits, expensive cars are often registered as company vehicles and then used personally. As a result, if a company vehicle is used for personal purposes, this charge may apply. Cases that fall under this include where a member of the business owner's family, such as a spouse or child, uses the company vehicle, or where no driving log is kept.

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