The new anti-corruption law that was recently passed by the National Assembly which aims at increasing the scope of the previous anti-corruption laws and imposing more severe penalties for corruption is expected to bring significant changes to companies’ government relations practices. Companies should overhaul their government relations policies in compliance with the new law.
On March 3, 2015, the National Assembly passed the Act on the Prohibition of Illegal Solicitations and the Prevention of Conflicts of Interest of Public Officials (the “Act”), which is a more robust anti-corruption law commonly known as the Kim Young-Ran Act.The Act will become effective in September 2016 after a one and a half year grace period. The Act sets up stronger controls on activities of public officials that could result in conflicts of interest, and provides more severe sanctions against those offering or receiving bribes.
The Act prohibits anyone from illegally soliciting public officials (Articles 5 to 7, 22(2), and 23(1) to (5)); punishes public officials for receiving bribes (Articles 8, 22(1) and 23(5)); and provides protection for those whistleblowers that report a violation of the Act (Articles 13 to 15).
Illegal solicitation under the Act includes any solicitation that impedes the proper performance of public officials’ duties by having them violate laws or abuse their position or authority granted by laws.
Under the Act, public officials will be punished for receiving bribes even if the payment is not directly connected to their duties and even if there was no quid pro quo. Bribes covered by the Act include, not only monetary payments, but also provision of entertainment such as expensive meals and golf outings. Any payments offered under the pretense of a donation, sponsorship or gift will also be covered by the Act. Public officials who have received bribes worth more than KRW 1 million at one time or KRW 3 million per fiscal year would face imprisonment for up to three years and a fine of up to KRW 30 million. If a bribe received by a public official is worth KRW 1 million or less at one time, the public official may be fined up to five times of the value of the bribe received. A presidential decree is expected to carve out some exceptions for offering money and gifts of nominal value under limited circumstances.
The Act applies to a wide range of professions. In addition to public officials at the National Assembly, courts, central and local governments, government-owned institutions, offices of education and public schools, directors and teachers at private schools and journalists will also be covered by the Act since the nature of their work is considered “public.”
The Act is expected to bring radical changes in companies’ government relations practices. During the one and a half year grace period prior to the effective date of the Act in September 2016, companies should overhaul their government relations policies in compliance with the Act.