Combating bribery

Combating bribery (뇌물방지/賂物防止) is everyone's task for fair play at home and abroad. Bribery does not only spoil the relevant public officials but also hampers justice in the course of administration and business.

So it is noteworthy for Korea to implement the Act on Preventing Bribery of Foreign Public Officials in International Business Transactions (the "Foreign Bribery Prevention Act" or "FBPA", 국제상거래에 있어서 외국공무원에 대한 뇌물방지법) of global standards. As a member of OECD, Korea is required to implement the Convention of the same name.

The OECD Anti-Bribery Convention establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective. It is the first and only international anti-corruption instrument focused on the ‘supply side’ of the bribery transaction. The 34 OECD member countries and four non-member countries - Argentina, Brazil, Bulgaria, and South Africa - have adopted this Convention.

Key words
OECD Convention, FBPA, bribery, public official, international business transactions

OECD Convention
Derived from the OECD Convention, the FBPA was enacted on December 28, 1998. However, the Act was reportedly hard to understand. So the Act was partially amended on March 24, 2010, by Act No.10178.

In particular, the definition of "foreign public official" almost same as that of the OECD Convention has been more often than not at issue. It encompasses not only government officials but also individuals performing a public function such as employees of government-controlled companies or state-owned enterprises.

Korean court case
In May 2011, Incheon Prosecutors Office indicted the Chinese head of the the Korean subsidiary of China Eastern Airlines (the "Company") who had received five billion won of bribery from a local forwarder. The prosecution sought to prove that the CEO is a foreign public official for purposes of the FBPA by arguing that the Chinese government exercises de facto control over the Company on the grounds that (i) a company wholly owned by the Chinese government owns more than 50 percent of the Company’s capital and (ii) the Chinese government appoints and dismisses the CEO of the Company. The prosecution also presented facts to show that the Company does not conduct business on a competitive basis with private-sector companies.

In February 2013, the Seoul High Court affirmed the lower court’s decision, finding two individuals who had bribed the Chinese CEO of the "Company" not guilty in Korea’s first-ever trial under the FBPA. This case reveals an interesting parallel between the FBPA and the U.S. Foreign Corrupt Practices Act (FCPA), which defines “foreign official” to include, inter alia, “any officer or employee of a foreign government or any department, agency, or instrumentality thereof ...”

This case is noteworthy for addressing the scope of foreign public official for purposes of the FBPA. It should be noted that the courts in the China Eastern Airlines case ruled against the prosecution not because the CEO does not constitute a “foreign public official” but because the prosecution had not met its evidentiary burden of proof.

Furthermore, as the courts acknowledged that “there is some evidence that the Company might be an enterprise within the meaning of the FBPA,” it remains to be seen how the Supreme Court of Korea will decide on this issue.