Former LG New Zealand Staff Plead Guilty To Criminal Charges After Messages Were Deleted

The previous Country Manager of LG New Zealand, Dowan Kim, and two staff members pleaded guilty to criminal charges after material requested by the Commission was destroyed during an investigation into potential anti-competitive conduct. Following assessments of their individual circumstances, all were discharged without conviction.

Speaking about the matter, Commission Chair Dr John Small said the conduct showed a blatant disregard for the Commission’s processes and the law. “The Commission has statutory powers to require the production of information and documents in our investigations. We take the use of those powers seriously and we expect parties under investigation to comply with statutory notices. As this case demonstrates, we will take action against parties who attempt to obstruct our investigations. In this particular case, given the conduct occurred after a direction from the most senior New Zealand manager of a large global electronics supplier, we considered the conduct to be sufficiently serious for the charges to be filed under the Crimes Act.”

The lifting of name suppression orders comes after the District Court and the High Court both denied permanent name suppression. It means the conduct, which dates back to 2020, can only be reported on now.

The Commission filed criminal charges after evidence showed Mr Kim instructed former LG Key Account Manager, Nicholas Clarke, and another staff member, who has permanent name suppression, to delete any messages that might be considered an “issue”. Mr Kim gave this instruction following a call from an offshore senior manager at LG made after the Commission had sent LG a letter querying the failure to include instant messages in response to a previous compulsory notice under the Commerce Act. Mr Kim maintained in the proceedings that he merely passed on the instruction to delete messages from the offshore senior manager. LG denies this.

As a result of Mr Kim’s direction, two staff members deleted various WhatsApp messages with customers.

Mr Kim pleaded guilty to a charge under the Crimes Act of wilfully attempting to obstruct the course of justice. Mr Kim was discharged without conviction, following an assessment of his individual circumstances. Mr Clarke and the other staff member pleaded guilty to offences of failing to comply with a statutory notice, in breach of the Commerce Act. Following assessments of the individual circumstances of Mr Clarke and the other staff member, both were granted discharges without conviction.

The Commission’s investigation into potential anti-competitive conduct in the supply of televisions concluded with the Commission issuing a compliance letter to LG and a warning to Panasonic.

Background

In 2020, the Commission opened an investigation into potential resale price maintenance in the supply of televisions in New Zealand. As part of the investigation the Commission issued a statutory notice under section 98 of the Commerce Act requiring LG to provide it with documents recording communications between various persons. LG’s response omitted instant messages, such as those sent via WhatsApp. The Commission queried that omission and compelled LG to provide instant messages relevant to the notice.

In January 2021, the Commission received whistleblower information that Mr Kim had instructed the deletion of material the day after LG received the Commission’s letter.

Some, but not all, of the deleted messages were recovered in 2020. Those recovered did not disclose breaches of the Commerce Act.

Charges were filed in September 2021. Interim name suppression orders, which all defendants and LG sought, have been in place since that time and only recently lapsed following unsuccessful appeals on name suppression.

Sections 98 and 103 of the Commerce Act 1986:
Section 98 of the Commerce Act empowers the Commission to require a person, by notice in writing, to provide information and/or produce documents to the Commission, or to give evidence before the Commission, where the Commission considers it necessary or desirable for the purpose of carrying out its functions and exercising its powers under the Act. Section 103 of the Act makes it a criminal offence, punishable by a fine, to fail without reasonable excuse to comply with a section 98 notice.

The other legislation enforced by the Commission contains similar information-gathering powers and penalties for non-compliance.

Section 117(e) of the Crimes Act 1961:
Section 117(e) of the Crimes Act makes it a criminal offence, punishable by a term of imprisonment of up to 7 years, to wilfully attempt to obstruct, prevent, pervert, or defeat the course of justice in New Zealand. It is open to the Commission, in particularly serious cases of wilful non-compliance with its statutory notices, to consider charges under the Crimes Act.

© Scoop Media