〈Case in which the issue was whether the crime of violation of the Private School Act and the crime of occupational embezzlement are established where the president of a private university paid litigation costs and the like out of the school expense accounts〉

【Holding】

[1] The purport of the Private School Act's separation of the accounts of a school foundation, and in particular the purport of prohibiting the diversion of the ‘school expense accounts’ to other accounts / The standard for determining whether an expenditure constitutes an expenditure of the school expense accounts for which disbursement from revenue belonging to the school expense accounts is permitted

[2] Where revenue belonging to the school expense accounts of a private school is used for a purpose other than a purpose included in the lawful expenditures of the school expense accounts, i.e., a purpose directly necessary for the education of the school concerned, whether that in itself realizes the intent of unlawful acquisition so that the crime of embezzlement is established (affirmative)

【Summary of Decision】

[1] The Private School Act, with the purpose of promoting the sound development of private schools by securing their autonomy and enhancing their public character in light of the special characteristics of private schools (Article 1), divides the accounts of a school foundation into ‘accounts belonging to the schools’ it establishes and operates (hereinafter ‘school accounts’) and ‘accounts belonging to the affairs of the foundation’ (hereinafter ‘foundation accounts’) (Article 29(1)); provides that the school accounts may be divided into the school expense accounts and the affiliated hospital accounts (limited to cases where there is an affiliated hospital), that the school expense accounts are divided into the tuition accounts and the non-tuition accounts, and that matters concerning the revenues and expenditures of the accounts shall be prescribed by Presidential Decree, but that donations received by the school and tuition fees and other payments shall be revenue of the school expense accounts and shall be managed in a separate account (Article 29(2)); and provides that revenue or property belonging to the school expense accounts may not be transferred or lent to other accounts or improperly used for purposes other than its intended purposes (main text of Article 29(6)). Article 13(2) of the Enforcement Decree of the same Act, enacted under delegation by Article 29(2) of the Private School Act, limits the expenses constituting expenditures of the school expense accounts to personnel expenses and material expenses necessary for school operation (subparagraph 1), expenses for facilities and equipment directly necessary for school education (subparagraph 2), teachers' research expenses, students' scholarships, educational guidance expenses, and health and physical education expenses (subparagraph 3), repayment of principal and interest on borrowings to be appropriated for expenditures of the school expense accounts (subparagraph 4), and other expenses directly necessary for school education (subparagraph 5), thereby strictly restricting the purposes for which revenue belonging to the school expense accounts, which consists of admission fees, tuition fees, and the like collected by a private school from students, may be disbursed; and the main text of Article 15-2(1) of the ‘Financial and Accounting Rules for Private School Institutions’ provides that the classification of budget items for the foundation accounts and the school accounts shall follow [Attached Table 1] through [Attached Table 4], with [Attached Table 2] setting out in detail the expenditure budget items of the foundation accounts and [Attached Table 4] setting out in detail the expenditure budget items of the school accounts.

The reason the Private School Act thus separates the accounts is to ensure the public character and transparency of private school accounting by strictly distinguishing among accounts having different financial bases; and in particular, the reason for prohibiting the diversion of the ‘school expense accounts’ to other accounts is to ensure that the ‘revenue and property belonging to the school expense accounts’ of a private school are used for their original purposes, namely the school's academic research, education, and school operation, so that the private school can lay the financial foundation for providing quality education as an educational institution while at the same time safeguarding the public character of education.

Accordingly, whether an expenditure constitutes an expenditure of the school expense accounts for which disbursement from revenue belonging to the school expense accounts is permitted must be determined according to whether it is directly necessary for the education of the school concerned, by comprehensively examining all circumstances relating to the expenditure, such as the purpose, motive or intent, and circumstances of the disbursement of funds, the degree of closeness between the expenditure in question and school education, the procedure and scale of the expenditure, and the effects resulting from the expenditure.

[2] Where a person entrusted by another with funds whose purposes are strictly restricted uses the funds, in the course of executing them, for a purpose other than the restricted purposes, the act of use in itself realizes the intent of unlawful acquisition and the crime of embezzlement is established, not only where the use originated from personal motives but also where it has, in effect, some aspect of benefiting the principal who entrusted the funds. Consequently, if revenue belonging to the school expense accounts of a private school is used for a purpose other than a purpose included in the lawful expenditures of the school expense accounts, i.e., a purpose directly necessary for the education of the school concerned, the act of use in itself realizes the intent of unlawful acquisition, and criminal liability therefor cannot be avoided.

【Referenced Statutes】

[1] Article 1, Article 29(1), (2), and (6), and Article 73 of the Private School Act, Article 13(2) of the Enforcement Decree of the Private School Act [2] Articles 355(1) and 356 of the Criminal Act, Article 29(6) and Article 73 of the Private School Act, Article 13(2) of the Enforcement Decree of the Private School Act

【Referenced Precedents】

[1] Constitutional Court Decision 2021Hun-Ba180, August 31, 2023 (Full Bench) (Hun-Gong 323, 1345)
[2] Supreme Court Decision 2007Do9755, February 29, 2008 (Gong 2008Sang, 491)
Supreme Court Decision 2011Do12408, May 10, 2012 (Gong 2012Sang, 1046)

(Source : Supreme Court Decision 2023Do12436, March 13, 2025 | Judicial Information Disclosure Portal, Precedents)