Deals & Cases

Corporate 2019-10-04
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DR & AJU Advises a Netherlands-Based Company in Connection With Irregular Acts of Korean Officers and Employees

The Korean subsidiary (“Local Subsidiary”) of a Netherlands-based company (“Company”) was in the business of importing the Company’s products to Korea and selling them to wholesalers and end users in Korea. An internal director and the head of the Local Subsidiary (“Director”) embezzled the company’s funds for personal use by selling the Company’s products as accounts receivable, which were not collected by the Local Subsidiary. The Company was looking for a one-stop legal services provider in Korea that could directly assist the Company with investigating the matter and provide advice from a Korean law perspective.

DR & AJU not only provided a legal review and advisory services, but also provided advice considering the management’s perspectives. The Company had no other connection with Korea apart from the Local Subsidiary, so DR & AJU assisted the Company with procuring evidence and interviewing the officers and employees who were involved in the scheme.  

Specifically, DR & AJU provided the following services while closely cooperating with the Company: (i) Procuring relevant evidentiary materials and securing the Local Subsidiary office; (ii) Interviewing the Local Subsidiary’s officers and employees and persuading them to cooperate; (iii) Reviewing various approaches that could be taken by the Company, in order to keep the Local Subsidiary’s business running; (iv) Reviewing the legality of the dismissal and retirement of some of the officers and employees and directly handling the employment-related processes; and (v) Drafting the necessary documentation, including settlement agreements with the relevant officers and employees including the Director.

Many companies handle issues related to employees’ irregular acts internally, rather than engaging outside legal counsel. Furthermore, even if legal counsel is engaged in such a matter, the counsel’s services often focus on representing the client in criminal actions. This case was significant in that DR & AJU managed the entire process and assisted the client with executing repayment agreements and restructuring the Local Subsidiary’s workforce after reviewing various approaches that could be taken by the Company to best serve its needs. The Company still has a business presence in Korea, and DR & AJU continues to advise the Company on corporate governance matters.

This case was remarkable in that DR & AJU provided one-stop services to a foreign client on a matter involving the irregular acts of the employees and officers of the client’s Korean subsidiary. This demonstrated that law firms can provide an extensive range of services to meet their clients’ needs.