Administrative institutional investors under the government launch investigations into companies. Administrative sanctions based on investigation results are also implemented according to government decisions. The authority to file criminal charges is also held by the government. From investigation to judgment and reporting, administrative institutional investors exist within a single framework known as 'judges.' Concerns are raised about the structure where administrative institutional investors not only investigate whether companies have violated laws and impose administrative sanctions but also decide whether to transfer cases to criminal proceedings in some instances.
A prime example is the Fair Trade Commission. According to the case processing procedures of the Korea Fair Trade Commission, the process of 'recognition → investigation → review → deliberation and decision → sanction → reporting' occurs entirely within a single institutional investor. The Korea Fair Trade Commission conducts investigations and reviews, makes deliberations and decisions, and based on those results, can issue corrective orders, impose fines, and even decide on criminal reports. This is why the Korea Fair Trade Commission is classified as a quasi-judicial institutional investor that also performs first-instance court functions.
Since early this year, it has begun publicly disclosing the fact of submitting review reports to the media. Review reports correspond to indictments filed by the Prosecution Service. Previously, the Korea Fair Trade Commission had adhered to the principle of non-disclosure, citing concerns about 'disclosing facts of crimes,' but it has now started informing the public about the submission of review reports. Companies are protesting, arguing that they are effectively receiving a 'guilty' verdict before even being investigated.
The same applies to financial regulatory authorities. The Financial Supervisory Service, funded by fees paid by financial companies and securities firms, conducts inspections and supervision over these entities and makes sanction decisions. The Financial Services Commission, which examines factual relationships through inspections conducted by the Financial Supervisory Service, determines massive fines and sanctions against institutional investors and employees. In this process, the judgment of administrative institutional investors holds power nearly equivalent to criminal punishment. Although labeled as administrative sanctions, the economic and social disadvantages experienced by the parties involved are increasingly reaching the level of 'punishment.'
Of course, neither the Korea Fair Trade Commission nor financial authorities completely replace the role of the courts. Decisions made by these institutional investors are administrative in nature, and parties can file objections or initiate administrative lawsuits in court. The Korea Fair Trade Commission also officially guarantees procedural rights to the accused, including the right to present opinions, access and copy documents, and request evidence investigations.
The problem lies in the structural risks created by the concentration of authority within a single institutional investor. An institutional investor that collects data during the investigation phase later uses that same data to determine whether laws were violated, decide on administrative sanctions such as fines, and even judge whether to file criminal charges depending on the case. This has led to controversy over 'self-judgment.' Similar examples include other regulatory and administrative institutional investors with comparable authority, such as the Personal Information Protection Commission.
Lee Hwang, a law professor at Korea University, stated, "The Korea Fair Trade Commission is an independent national institutional investor under the Constitution, a collegiate administrative institutional investor, and a quasi-judicial institutional investor performing first-instance court functions, but ultimately it remains a central administrative institutional investor." He added, "If excessive sanctions are imposed and the company loses in court, both the company will suffer damage and administrative power will be wasted."
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