Abolishing breach of trust may ease corporate burden but must not shield politics

The government and Democratic Party have begun an overhaul of economic criminal law. Out of more than 6,000 business-related offenses, they plan to revise 110 in the first stage and submit amendments during the current National Assembly session. The goal is to ease excessive criminal penalties that have discouraged business activity and weighed on the economy. On Sept. 7, President Lee Jae Myung directed the administration to reduce economic criminal statutes by 30 percent within a year.

The most notable step is abolishing the breach of trust provision in the Criminal Act. For years, it served as an all-purpose charge, its vague language and broad application exposing business leaders to constant risk of prosecution. Prosecutors often decided arbitrarily whether to indict, and court rulings varied widely. Executives joked that they lived “on the edge of the prison wall,” and critics called Korea a “republic of corporate punishment.” According to a report from last month by the Korea Enterprises Federation (KEF), formerly the Korea Employers Federation, only 14.8 percent of breach of trust complaints led to indictments, far below the overall criminal indictment rate of 39.1 percent. Acquittal rates were more than twice that of other crimes, underscoring the problem of frivolous complaints.

Reforming such statutes is welcome at a time when amendments to the Commercial Act — strengthening shareholder duties and the pro-labor “Yellow Envelope Bill” —  already weigh heavily on companies. Removing legal provisions that hinder normal business operations is a step toward a more predictable environment. The KEF said it hoped the initiative would become a foundation for broader regulatory reform and that business concerns would be reflected in the process.

Still, abolishing the breach of trust provision must not become a shield for politicians or unethical executives. The opposition argues that the change is, in effect, a law to “save President Lee Jae Myung,” who faces breach of trust charges in court. To prevent such suspicions, lawmakers must ensure replacement legislation clearly defines subjects and requirements, and close loopholes that could allow politicians to evade accountability.

The rationalization of economic criminal law is only a beginning. Old practices, such as calling business leaders as witnesses to humiliate them during audits, persist. The current revisions cover just 1.6 percent of all such statutes. To make Korea a safer destination for investment, the government must build a fair and predictable legal framework and accelerate regulatory reforms. What matters is not symbolic gestures but tangible results that restore confidence in the business environment.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.