[Opinion] Turning Competent Entrepreneurs into Unemployed Workers

Choi Jun-seon, Honorary Professor at Sungkyunkwan University School of Law

According to Article 14, Paragraph 1 of the current 'Act on the Aggravated Punishment, etc. of Specific Economic Crimes,' a person convicted of crimes such as breach of trust or embezzlement is prohibited from being employed by a "company closely related to the criminal act for which they were convicted" for five years (two years in the case of a suspended sentence) without the approval of the Minister of Justice. The scope of companies "closely related" is defined in Article 10 of the Enforcement Decree. The Enforcement Decree, revised at the end of 2020, included companies that suffered "property damage" due to breach of trust as companies "closely related." This regulation, which appears to target companies in which the individual invested or worked, is unconstitutional. First, even if one commits breach of trust, it does not necessarily mean that their own company suffers damage, thus violating the constitutional principle of clarity. By blocking the return to management of a company in which one invested through a presidential decree rather than a court ruling, it infringes on the constitutional right to freedom of occupational choice guaranteed by Article 15 of the Constitution, violates the principle of prohibition of delegated legislation, and breaches the principle of proportionality. Furthermore, by preventing ex-convicts from obtaining employment, it risks depriving them of their right to livelihood, infringing on the basic right to livelihood under Article 34 of the Constitution, and violates Article 10 of the Constitution, which guarantees the pursuit of happiness.

There has been much public discussion about whether Lee Jae-yong, Vice Chairman of Samsung Electronics, who was released on parole, can return to management. The media wrote, "Lee Jae-yong, released, heads straight to Samsung Seocho office... effectively declaring a return to management." The Citizens' Coalition for Economic Justice (CCEJ) stated, "Vice Chairman Lee's actions violate employment restriction regulations, and we will discuss with civic groups to file a complaint." The Economic Reform Solidarity, after filing a complaint with the police against Vice Chairman Lee for violating employment restrictions, submitted additional opinions, asserting that "the violation of employment restrictions has become even clearer."

However, upon closer examination, the claim that Vice Chairman Lee "effectively declared a return to management" is factually incorrect. Since his term as an inside director expired on October 26, 2019, he has held no position. He is neither a registered executive nor an unregistered executive. He does not receive a salary from the company, nor is he in the approval line to stamp documents. Although others refer to him as "Vice Chairman," titles such as chairman or vice chairman are not legal titles and do not exist in the Commercial Act. Some companies may establish such positions in their articles of incorporation, but the 2016 revised articles of incorporation of Samsung Electronics Co., Ltd. do not include official positions titled "Chairman" or "Vice Chairman." Vice Chairman Lee's meetings with management were merely conversations with management in his capacity as a major shareholder. Minister of Justice Park Beom-gye also expressed a progressive opinion that if Vice Chairman Lee engages in management activities as an unpaid, non-full-time, unregistered executive, it cannot be considered a violation of employment restrictions.

There have been occasional cases where individuals returned to their companies with the approval of the Minister of Justice, but it seems unlikely that Vice Chairman Lee will awkwardly submit an application for approval to return to management. He must frequently attend court hearings. Therefore, it appears he will remain unemployed for the time being. However, there is much controversy over the very establishment of his crime, and regardless, this unconstitutional Enforcement Decree, which turns a perfectly capable entrepreneur who has served his sentence and been paroled into an unemployed person and obstructs his activities, must be amended. The effect of parole has been nullified. The Prime Minister also expressed support for Lee Jae-yong's prompt return to management in an interview with the UK's Financial Times (FT), stating, "A narrow approach is not acceptable." We hope this is not mere lip service.

Choi Jun-seon, Honorary Professor, School of Law, Sungkyunkwan University