Y, who served as a site manager at Company W, was indicted on charges including violations of the Act on the Aggravated Punishment of Specific Economic Crimes (Breach of Trust), the Act on Real Name Financial Transactions and Confidentiality, and the Act on Regulation and Punishment of Criminal Proceeds Concealment. The charges stemmed from allegations that Y conspired with foreign workers assigned to the construction project to inflate labor costs, causing financial losses to the company, and concealed the resulting criminal proceeds.

In response, D&A, representing Y (the Defendant), argued that the funds received by Y did not constitute “falsified labor costs,” but rather were pre-agreed “performance-based bonuses.” Specifically, the defense emphasized that Y had entered into an agreement with the company to receive bonuses upon achieving certain construction performance targets, and that the payments were merely processed under the formal category of labor costs.

Furthermore, by specifically demonstrating that Y had entered into a separate agreement with the foreign workers regarding the distribution of performance bonuses, and that the workers received their share of funds paid under the guise of labor costs before transferring the remainder to Y, the defense emphasized that the arrangement was substantively different from the “false labor cost claim” structure alleged by the prosecution. Accordingly, the defense argued that the crime of breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes could not be established, and that violations of the Act on Real Name Financial Transactions and Confidentiality and the Act on Regulation and Punishment of Criminal Proceeds Concealment—both premised on the existence of criminal proceeds—could not be established either. 

The court accepted D&A’s arguments, determining that the funds received by Y constituted part of a performance bonus settlement rather than falsified labor costs, and thus found no basis for breach of trust. Consequently, the court acquitted Y of all charges, including violations of the Act on Real Name Financial Transactions and Confidentiality and the Act on Regulation and Punishment of Criminal Proceeds Concealment. The judgment was upheld on appeal, and the acquittal was ultimately confirmed.

This case is significant in that, although the structure initially appeared to involve inflated labor costs and a potential money laundering scheme, the court carefully examined and recognized the underlying performance-based compensation arrangement and the substantive legal relationship. The decision provides an important benchmark for similar disputes and criminal cases involving construction-site labor costs and performance-based compensation structures.