[Exclusive] CEO Criminal Punishment Gains Momentum... Ruling Party Proposes 'Disaster Corporate Punishment Act'

Preparation by Assemblyman Park Jumin of the National Assembly Life Safety Forum
Criminal Liability and Punishment Measures for Management Officers and Companies

[Image source=Yonhap News]

[Asia Economy Reporters Park Cheol-eung and Sung Ki-ho] Early next month, the Democratic Party of Korea will propose the Serious Accidents Corporate Punishment Act. This law holds corporate executives and companies criminally responsible when safety obligations are violated, resulting in fatalities. The Justice Party has already introduced a similar bill and is actively promoting it. Once the Democratic Party submits its bill, discussions in the regular National Assembly session are expected to accelerate. The business community strongly opposes this bill, along with the "Economic 3 Laws," arguing that punishments exceeding the scope of responsibility and duties are unfair.

According to political circles on the 19th, the Democratic Party members, as part of the "National Assembly Life and Safety Forum," which includes many lawmakers, have decided to push forward the Serious Accidents Corporate Punishment Act. Representative Park Joo-min of the Democratic Party is preparing the specific contents of the bill. The forum, established in early July, is chaired by Representative Woo Won-shik, with fellow party members Oh Young-hwan and Lee Tan-hee serving as research leads. Other members include Democratic Party lawmakers Lee Jae-jung, Lee Jung-moon, Lee Hae-sik, Lim Ho-sun, Jin Sung-jun, Choi Hye-young, Justice Party lawmaker Kang Eun-mi, and People Power Party lawmaker Kim Ki-hyun.

Representative Park is gathering opinions from organizations such as the Korean Confederation of Trade Unions and the Federation of Korean Trade Unions. The bill is being refined through consultations not only within the forum but also with the Democratic Party Policy Committee. This means the bill reflects the intentions of the Democratic Party leadership rather than just Park personally. A staff member from Park’s office stated, "We are continuously communicating with the party to adjust the level of content to be included in the bill," adding, "We aim to propose the bill early next month after the National Assembly audit."

The Serious Accidents Corporate Punishment Act proposed by Justice Party lawmaker Kang Eun-mi in June imposes risk prevention obligations on companies. If a fatal accident occurs due to violation, the business owner and management are subject to imprisonment for more than three years or fines ranging from 50 million to 1 billion KRW. For injury accidents, penalties include imprisonment for up to seven years or fines up to 100 million KRW. The bill also holds business owners, corporations, or institutions liable for punitive damages amounting to three to ten times the damage.

Democratic Party leader Lee Nak-yeon stated in his parliamentary negotiation group leader speech on the 7th of last month, "Every year, about 2,000 workers lose their lives at industrial sites," adding, "We must now prevent such tragedies. The enactment of the Basic Life and Safety Act and the Serious Accidents Corporate Punishment Act is the beginning." The Basic Life and Safety Act, which specifies citizens' safety rights and includes provisions for disaster victims' rights and support, is being prepared by Representative Woo Won-shik.

Some have criticized the Democratic Party for being lukewarm about the Serious Accidents Corporate Punishment Act, but once the bill is proposed early next month, discussions are expected to intensify. Representative Woo told Asia Economy in a phone interview, "There will be some differences from the Justice Party’s Serious Accidents Corporate Punishment Act. I believe the bill the party is promoting is feasible."

Regarding the Justice Party’s bill, there are criticisms that it constitutes excessive legislation and that the scope of punishment is too broad. Heo Byung-jo, a specialist at the National Assembly Legislation and Judiciary Committee, noted in a review report, "The obligations are comprehensive and abstract, such as ensuring that workers or users do not suffer harm to life, body safety, or health and hygiene," adding, "It is difficult to predict the scope of obligations, which may violate the principle of clarity." Representative Park Joo-min appears to be adjusting the details to clarify the targets more precisely, considering these points.

The business community opposes raising the level of punishment for companies and businesspeople beyond their respective responsibilities and duties. Economic organizations plan to jointly respond to the Serious Accidents Corporate Punishment Act along with the government and ruling party’s "Economic 3 Laws."

A representative from the Korea Chamber of Commerce and Industry pointed out, "The Serious Accidents Corporate Punishment Act has a broad and unclear scope of responsibility for CEOs," warning, "There is a possibility of a 'litigation storm' as civic groups and labor unions may file lawsuits solely based on accidents." They emphasized, "Punishing CEOs harshly just because they oversee corporate management and imposing fines on corporations based on annual sales volume violates the constitutional principle of prohibition of excessive punishment."