Legislative Bill for Act on Prevention of Conflict of Interest in Activities of Public Officials Passed Cabinet Meeting

- The legislative bill introduced eight codes of conduct for any public officials, including members of the Assembly and Courts, such as reporting of persons with whom they have personal relationships and private transactions with duty-related parties, etc. -

- ACRC, “the passage of the legislative bill in the Cabinet meeting will serve as momentum to enhance impartiality in the performance of public duties” -

January 7, 2020

Anti-Corruption and Civil Rights Commission

The Republic of Korea

The legislative bill for the Act on the Prevention of Conflict of Interest in Public Office (hereinafter referred to as “the Bill”) passed the Cabinet meeting on January 7, which sets forth specific codes of conduct that public officials should abide by in conflicts-of-interest situations when performing public duties.

The Anti-Corruption and Civil Rights Commission (ACRC, Chairperson Pak Un Jong) has been collecting various opinions through government legislation process, including consultation with related ministries and agencies and evaluation of regulation/legislation, following the preliminary announcement on legislation of the Bill in July last year.

The Bill that passed the Cabinet meeting this time is evaluated to have provided an institutional turning point to eliminate activities of public officials seeking illegitimate private gains in the course of performance of their public duties.

The Bill was initially a part of the government bill for the enactment of the Improper Solicitation and Graft Act, but it was scuttled during the deliberation process at the National Assembly. Therefore the passage of the Bill is meaningful in that an Act aimed at preventing conflicts between private interests and official duties of public servants will be legislated separately from the Improper Solicitation and Graft Act.

Earlier the ACRC amended the Code of Conduct for Public Officials, a Presidential decree, in January 2018 to preemptively introduce and implement provisions to prevent conflicts of interests in activities of public officials in the executive branch. On top of this, the ACRC has also encouraged constitutional institutions and public service-related organizations such as the National Assembly, Courts and Constitutional Court, etc. to introduce relevant provisions at their discretion.

However, as people constantly put forth opinions that the regulatory force of the rules aimed at preventing conflicts of interest should be more strengthened, along with the growing need for a unified code of conduct to be applied throughout the public sector, the ACRC has been pushing for the enactment of the Act on the Prevention of the Conflict of Interest in Activities of Public Officials.

The Bill provides for specific codes of conduct that public officials, including members of the National Assembly, Courts, central administrative agency and local governments, and executives/employees of public service-related organizations should adhere to with a view to improving the impartiality in the exercise of their public offices.

More specifically, public officials who performs duties, such as permission, license, approval, interrogation, inspection, budgeting, funding, investigation, trial, employment, promotion, and audit, etc., should disclose the fact that he/she has private interests with a duty-related party to the head of his/her agency within five days after he/she came to know such fact and should request that he/she be excluded from performing the duty concerned.

In addition, where a public official himself/herself or his/her spouse, etc. is involved in transactions of money, marketable securities and immovable property, etc. with duty-related parties, he/she should disclose it to the head of his/her agency in order to prohibit illegitimate transactions between public officials and duty-related parties.

Moreover, the Bill also includes a provision to prevent public officials from facing conflict-of-interest situations preemptively by prohibiting them from conducting outside activities that may impede their fair performance of duties, such as an act of privately giving advice to duty-related parities for a quid pro quo.

If public officials do not report in advance their private interests or private transactions of money, etc. with their duty-related parties to their institutions, or perform outside activities related to their public offices that are prohibited, a penalty of up to KRW 20 million will be imposed.

The Bill also includes a provision aimed at prohibiting public officials from using goods, vehicles, land and facilities, etc. of public agencies for private gain.

If public officials use goods, etc. that belong to public agencies for private gain, or let a third person use such goods, etc. for private gain, not only will a penalty of up to KRW 20 million be meted out but also the profits derived will be entirely restituted.

On top of this, public officials will be strictly prohibited from divulging or misappropriating any secret that may have come to his/her knowledge in the performance of his/her duty for private gains, or banned from letting a third person use such secret.

The Bill includes provisions for the confiscation of, or the collection in addition to, the total amount of profits derived by public officials from using such secret, along with the punishment with imprisonment of not more than seven years or a fine not exceeding KRW 70 million. The punishment for divulgence or misappropriation of any secret which may have come to the public officials’ knowledge has been more reinforced. For instance, imprisonment of not more than three years or a fine not exceeding KRW 30 million will be imposed even where profits had not been actually generated.

This Bill particularly stipulates that much stricter preventive rules would apply to high-ranking officials and those in charge of duties especially vulnerable to corruption, including personnel management and contracting, etc.

High-ranking officials, including public officials of the vice-minister or higher level, members of the National Assembly, heads of the local governments, and heads of public service-related organizations and public institutions, will have to submit detailed statements of their private sector activities they performed for the past three years preceding the date of their appointment to, or commencement of, their office to the head of the agency to which they are affiliated.

The head of the agency to which such high-ranking officials are affiliated may disclose the statements to the extent that such disclosure does not breach other laws and regulations. If high-ranking officials do not submit such statements, he/she will be charged a fine not exceeding KRW 10 million.

Furthermore, public institutions will be prohibited from employing family members of high-ranking public officials belonging to the institutions or family members of those in charge of personnel affairs in the institutions, except the case where job candidates go through competitive hiring procedures, such as merit-based systems of recruitment carried out through open competition or screening of the candidate’s existing professional experience. If high-ranking public officials or those in charge of recruitment order or induce their subordinates to hire, or acquiesce in hiring, their family members in the public institutions to which they are affiliated without competitive recruitment procedures, they will be charged a fine not exceeding KRW 30 million.

The Chairperson of the ACRC Pak Un Jong said, “Enacting the Act on the Prevention of Conflict of Interest in Activities of Public Official will be able to lead to the improvement in the public trust in the officialdom through prohibiting public officials from exercising their public offices and authorities to seek illegitimate private gains,” adding that “as there are high public expectations for the Act, we will actively cooperate in expediting the examination of the legislative bill at the National AssemblAttachment

□ Purpose of Enactment

○ To prevent public officials from seeking illicit private gains and ensure impartiality in the performance of their official duties, it is necessary to appropriately manage and control conflict-of-interest situations, including through eliminating the likelihood in advance that their private interests would improperly influence their work responsibilities that may lead to corruption.

□ Public Institutions and Officials Subject to the Act

○ (Public Institutions) Any public institutions, including the National Assembly, Court, central administrative agency, local governments, Office of Education, public service-related organization, and national /public school of various levels

○ (Public Officials) Public officials, executives and employees of public-service related organizations and public institutions, school principals and teachers

□ Major Contents

○ Reporting of private interests, avoidance of, or recusal (withdrawal) from performing duties when persons with whom public officials have personal relationships are involved, and other measures (Articles 5 and 6)

- When public officials performing duties of 16 types (including private persons performing public duties) become aware that their duty-related parties (including agents) are persons with whom they have personal relationships that would give rise to conflicts of interests, they should report it to the heads of the institutions to which they belong.

※ Public officials may request for avoidance of or recusal from participation in the work where they have conflicts of interests while other measures, including temporary suspension of work and designation of a substitute for the duty concerned can be taken, however, public officials may be allowed to continue performing their duties where unavoidable.

○ Submitting details of activities in the private sector by high-ranking public officials (Article 7)

- High-ranking officials are required to submit detailed statements of their activities in the private sector for the last three years preceding the date of the commencement of their term of office to the head of their institutions, and the head may disclose such statements to the public.

※ high-ranking officials: public officials of vice-minister level or higher, lawmakers, heads of local governments, heads of public service-related organizations and public institutions, and other public officials prescribed by Presidential Decree, the Assembly Regulations, and Supreme Court Regulations, etc.

○ Reporting transactions with duty-related parties (Article 8)

- Where Public officials, their spouse or lineal ascendants/descendants living together with the public officials engage in any private monetary or real-estate transactions with duty-related parties, they should report it to the head of their institutions.

○ Restriction on duty-related outside activities (Article 9)

- Any sorts of outside activities performed related to duties of public officials that would give rise to conflicts of interests, thereby harming the impartiality in performing duties shall be fundamentally prohibited.

※ Four types of outside activities, including private provision of service, advice or consultation, etc. to duty-related parties for a quid pro quo, and taking up other posts related to duties.

○ Restriction on employment of family members (Article 10)

- Public institutions shall be prohibited from employing family members of high-ranking officials and public officials responsible for human resource affairs (however, employment through open competition or merit-based systems of recruitment is allowed).

○ Restriction on entering into private contracts (Article 11)

- Public Institutions shall be prohibited from entering into private contracts with high-ranking officials, public officials responsible for contracting, their spouse or their lineal ascendants/descendants living together (however, exception is allowed if there is any unavoidable reason, such as the case where there is only one producer)

○ Prohibition on private use of goods belonging to public institutions and making profits from such use (Article 12)

- Public officials shall be prohibited from using goods, vehicles, buildings, land and facilities, etc. owned or rented by their institutions for private gain or letting a third party do so.

○ Prohibition on using confidential information obtained in the course of carrying out public duties for personal gain (Article 13)

- Public officials shall be prohibited from using confidential information obtained in the course of carrying out their public duties for personal profits or letting a third person do so (paragraph 1).

※ Even if there had not been any profits made, using the confidential information obtained during the course of performing duties for private gain or letting a third person do so shall be punished likewise (paragraph 2).

□ Punishment for Breach of the Act

○ Breach of provision of prohibition on using information obtained in the course of performing public duties: imprisonment of not more than seven years or penalties of up to KRW 70 million (breach of paragraph 1); imprisonment of not more than three years or penalties of up to KRW 30 million (breach of paragraph 2)

○ Breach of other provisions of the Act: in accordance with the nature of the breach, administrative fines of up to KRW 10 million ~ 30 million shall be imposed differentially.