The defendant, along with co-defendant Mr. A, decided to proceed with an urban development project in a region, using the private sector-led collective replotting method. Then, he secured the right to preferential purchase of the land used for apartment complexes. In order to proceed with the project, he was registered as a director of a urban development project association (who will be constructively deemed as a public official when criminal penalties are applied for crimes, such as bribery, under the Urban Development Act) and carried out the urban development project. In the meantime, the defendant negotiated with the representative of an agency, who had a plan to purchase the above-mentioned residential land and carry out a local housing association project, and agreed to transfer the right to conduct a collective residence construction project, including the right to preferential purchase of the land to the promotion committee of the local housing association for KRW17.92 billion. The defendant was paid KRW 7.02 billion (which was an amount received as part of the price for the transfer of the business right with co-defendant A) from the local housing association.

In this situation, the prosecution accused the defendant of specific economic crimes on the charge that the defendant, as a director of an urban development project association, accepted a bribe of KRW 7.02 billion with co-defendant A and caused that much property damage to the local housing association. He was indicted for violation of the Act on the Aggravated Punishment, etc. of Specific Economic (bribery and the breach of duty) and the Act on Regulation and Punishment of Concealment of Criminal Proceeds. The court of first instance found the defendant guilty on all counts and sentenced the defendant to five years in prison and a fine of KRW 7.1 billion and an additional fine of KRW 3.28 billion.

In defending the defendant on appeal, we elaborated on the nature of the private urban development project and the need to secure reserved land in order to proceed with the apartment construction project, pointing out that the defendant was listed as a director of the urban development association only as a formality for the project, and that the defendant did not perform his duties as a director of the urban development association; the money received by the defendant was for the transfer of business rights and services, and not for any unfair or illegal benefit in exchange for his duties as a director of the urban development association; there is no provision in the Urban Development Act or other relevant regulations that prohibits or punishes the transfer of business rights held by private parties, and that such transactions are actually taking place; and the local housing association suffered no loss because it became able to promote the local housing association project only after it was transferred the business rights from the defendant. We sufficiently articulated the error of the trial court in convicting the defendant.

The appellate court largely accepted our arguments, ruling that (1) the money received by the defendant was received in exchange for the transfer of his position and the provision of services, and could not be considered a bribe in the sense of “unjust or unlawful benefit in exchange for a public official’s duties”. The court also ruled that the crime of bribery could not be established unless the money was considered a bribe, that the crime of breach of duty, which was premised that the local housing association suffered losses by paying the bribe, could not be established, and that the crime of concealment of criminal proceeds could not be established because the money was not criminal proceeds as long as the above money was not a bribe. The court reversed the first trial decision, which found the defendant guilty of all charges, and acquitted the defendant of all charges, and accordingly, the co-defendants A and B, who were charged with the defendant, were also acquitted of all charges, unlike the first trial decision.

This case is significant in that it clarifies that the transfer of substantive business rights is permissible in urban development projects based on a sufficient understanding of the characteristics and overall progress of privately led collective exchange-based urban development projects as well as local housing association projects. This case is also meaningful in that it clarifies the meaning of job-relatedness and quid pro quo necessary to establish the crime of bribery, and the meaning of breach of duty and property damage necessary to establish the breach of duty.