1. Overview of the case
Around 2021, the client, who was the CEO and major shareholder of a listed company, issued convertible bonds worth KRW 15 billion at the request of the buyers in the process of selling the company. The board of directors resolved to establish a pledge to a third party by the fifth business day after financial due diligence in order to temporary restrict the use of the payment for the convertible bonds.
Afterwards, the client, who judged that there was a problem, stopped establishing the pledge. The company's employees made an incident report with a financial institution to prevent withdrawing and using KRW 15 billion, and granted withdrawal authority to Mr. A, as requested by the buyers.
A, who became the CEO after the client left the company, pledged the money in his own name, then withdrew the money and used it for personal use.
Some of the buyers filed a complaint against Mr. A for violation of the Act on the Aggravated Punishment, etc. of Specific Economic (embezzlement) (the “Act”). During the investigation by the police, the prosecutor in charge of this case ordered the police to send the client, who was the CEO at the time relevant to the case, and one outside director to the prosecution on charges of breach of trust worth KRW 15 billion.
2. Decision
Non-indictment
3. Our argument and role
We thoroughly analyzed and organized factual information in an easy-to-understand chronological order, and provided it to the prosecution. And through face-to-face advocacy activities, we emphasized the following facts: (i) the client and the outside director had left the company and were completely unaware of Mr. A’s pledge and withdrawal; (ii) the client and the outside director resolved to establish a pledge at the board of directors meeting, but did not engage in execution of the resolution; (iii) the memorandum of understanding that included the establishment of pledge lost effect due to the cancellation of the agreement; (iv) the actual sale and purchase agreement does not contain any provisions regarding the establishment of a pledge; (v) the employees committed the same act as establishing a pledge by registering an accident, but it was not reported to the client, and the vice president, the client's son, instructed them to correct it, but the employees refused to following the instruction; (vi) the client cannot acknowledge intentional breach of trust as he has no personal relationship with the buyers and executed the sale and purchase agreement in compliance with due process, finding a buyer who can take responsibility for the perpetuation of the company and the livelihood of the employees; and (vii) the client was not sued and no one wanted criminal punishment against him.
Even in a situation where the chief prosecutor and the senior chief prosecutor in charge of this case were replaced due to personnel changes, we persuasively conveyed the client's injustice to the prosecution through faithful face-to-face arguments and submission of a clear opinion.
4. Meaning of the decision
Given the complexity of the case, the client was likely to be indicted because the case was sent to the prosecution with the opinion of indictment for violation of the Act (breach of duty) under the direction of the prosecutor who thought that only the client had profited from the sale of shares.
By choosing Barun Law, which is well-versed in corporate crime matters, the client was able to avoid the risk of having to face an unfair trial by being cleared of charges by the prosecution even when the main criminals were indicted.
□ Attorneys in charge: Kim Jai-hyup, Cho Jae-bin, Lee Seo-in, Choi Young-su
