Skip to content

Rarely Used Korean Foreign Bribery Statute Could See Increased Enforcement

FCPA & Global Anti-Corruption Background Decorative Image

Last week, SeungJoo Lee1 of the Korean Prosecution Service, who is currently a Secondee Investigator with the World Bank Integrity Vice Presidency, suggested that Korean prosecutors may bring more cases under the Act on Preventing Bribery of Foreign Public Officials in International Business Transactions (“FBPA”) — a departure from this statute’s rare use over the past two decades. The FBPA — South Korea’s equivalent of the U.S. FCPA — criminalizes bribing foreign officials to obtain an improper advantage in the conduct of international business transactions. Speaking at the ABA Criminal Justice Section’s Global Anti-Corruption Committee speaker series, Lee highlighted the divergence between U.S. and Korean foreign bribery enforcement, noting prosecutorial preferences and the inability of companies to negotiate criminal resolutions as potential causes for the FBPA’s scarce enforcement history. Lee expects this trend to change, and companies conducting business in Korea should take notice.

Lee cited Korea’s focus on combatting domestic, rather than foreign, corruption as the primary reason for the FBPA’s relatively low enforcement. Further, prosecutors prefer to use South Korea’s criminal code, which they are more familiar with, to prosecute foreign bribery cases rather than the FBPA. This prosecutorial preference has important implications for corporations — the criminal code has no provision creating vicarious corporate liability for bribery offenses, while the FBPA does. Under the FBPA, individual violators face the possibility of up to five years imprisonment and a roughly $18,000 fine. The act also imposes parent liability and subjects corporations or other legal persons to a roughly $885,000 fine. For both individuals and entities, the fine can alternatively increase to twice the total profits obtained through the bribery.

As a further roadblock to FBPA enforcement, Lee cited a lack of incentive for companies to self-report and cooperate with authorities. Lee highlighted relatively low fines (compared to the FCPA), and noted that there is no official mechanism for plea bargaining, deferred prosecution agreements, or non-prosecution agreements in South Korea, although fines may be reduced by the judge at sentencing to acknowledge cooperation. This set of circumstances introduces a level of uncertainty into negotiating cooperation with prosecutors and creates challenges for corporations seeking to disclose conduct.

Despite past challenges and lack of enforcement, the expectation of increased FBPA enforcement serves as a reminder that, as Korea and other countries begin to close the enforcement gap between the U.S. and the rest of the world, companies conducting international business transactions and operating within Korea should prepare for an increase in anti-corruption scrutiny.

Visit our website to learn more about V&E’s FCPA & Global Anti-Corruption practice. For more information, please contact Vinson & Elkins lawyers Lincoln Wesley or Pete Thomas.

1 Lee spoke on his own behalf, and the views he expressed were his own. However, Lee is knowledgeable about Korean anti-corruption enforcement due to his experience as a prosecutor.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.