Skipping Criminal Trial with a Deferred Prosecution Agreement
Korea Institute of Geoscience and Mineral Resources Doctor Also Involved
The United Kingdom's Serious Fraud Office (SFO) has recently brought domestic company Guralp Systems Limited (GSL) to trial on charges of violating the conditions of a Deferred Prosecution Agreement (DPA). This marks the first case in the UK where a company has been prosecuted for failing to comply with a DPA since the system was introduced in 2014. The case is drawing renewed attention in South Korea as it involves a corruption scandal linked to a Korean national. The DPA is a system that allows companies to resolve corruption or fraud cases without criminal prosecution, provided they meet certain conditions such as admitting guilt, surrendering criminal proceeds, and improving internal controls. If these conditions are inadequately fulfilled or delayed, prosecution can proceed at any time.
This case dates back to the early 2000s. Ji Heoncheol, who served as director of the Earthquake Research Center at the Korea Institute of Geoscience and Mineral Resources, received approximately $1 million from GSL between 2002 and 2015 under the pretense of "consulting fees." Most of these funds were transferred to accounts in his name in the United States, while some were delivered in cash directly in the United Kingdom, according to investigations. The Korea Institute of Geoscience and Mineral Resources, established in 1976, is a government-funded research institute under the National Research Council of Science and Technology, and most research staff working there are considered "public officials."
The SFO determined that GSL had provided bribes to secure supply contracts in Korea by leveraging Dr. Ji's influence. As a result, GSL faced charges of violating the Foreign Corrupt Practices Act and the UK Bribery Act. In 2019, the SFO entered into a DPA with GSL, deferring prosecution on the condition that the company meet several key requirements: surrendering approximately 2.06 million pounds (about 3.6 billion won) in illicit gains, improving internal control systems, and fulfilling regular reporting obligations. GSL voluntarily reported the corruption and dismissed the employees involved. Taking into account GSL's financial situation, the agreement required only the surrender of illicit gains, with no additional fines imposed.
However, GSL failed to fulfill its major obligations under the DPA. The company neglected its regular reporting duties and delayed payment of the illicit gains. In November 2024, the SFO prosecuted GSL at Southwark Crown Court in London. This action was based on the principle that failure to comply with DPA conditions can lead to prosecution.
Dr. Ji was also prosecuted in the United States on charges of money laundering. In October 2017, he was sentenced by the US District Court in Los Angeles to 14 months in prison, a $15,000 fine, and one year of probation. The Korea Institute of Geoscience and Mineral Resources dismissed Dr. Ji immediately after his indictment.
This case is seen as a decisive move by UK authorities to enhance the effectiveness of the DPA system. It also symbolically demonstrates the rising global standards for corporate compliance systems. Kim Insu, a UK-based attorney, commented, "This case shows that if a company fails to fulfill the terms of a DPA, it can face formal prosecution. In the past, only companies were punished while board members and other responsible individuals were often exempt, but recently there have been criminal prosecutions against individuals as well." He added, "The UK government and courts have made it clear that they are willing to hold responsible individuals accountable depending on whether companies fulfill their social responsibilities."
Song Yujin, a UK attorney at Jium Law Firm, also stated, "This case sets a precedent showing that the SFO is actively monitoring DPA compliance, and that a DPA is not a simple exemption but the starting point of ongoing legal oversight." He continued, "For Korean companies, the effectiveness of internal controls and evidence of their implementation are key. Even after entering into a DPA, it is important to maintain regular reporting and transparent communication within the organization. Rather than resorting to formal reporting, transparently addressing and reporting issues when they arise can actually help reduce risk."
Lee Jinyoung, Law Times Reporter
※This article is based on content supplied by Law Times.
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