The perils of Singapore anti-bribery laws on Asian businesses

October 2012

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Singapore’s reputation as one of the least corrupt jurisdictions in the world is envied by many. Consistently ranked top five in Transparency International’s Corruption Perceptions Index (CPI) over the past few years, the island-state lost its crown in 2011 and slid from no. 1 to no. 5, but did not see much cause for concern on the basis that the reduction in its underlying score was statistically insignificant. The country’s feared anti-graft agency, the Corrupt Practices Investigations Bureau (CPIB) celebrates its 60th anniversary this year, and has recently brought to light a slew of prominent corruption cases that have dominated headlines in the local media. The Economic Crimes and Governance Division (EGD) of the Attorney-General’s Chambers (AGC) set up in 2011 to, among other things, combat corruption offences, has a sterling prosecution track record of an impressive 96 per cent - 98 per cent conviction rate1 for bribery cases which went to trial in court in 2011.

While the rest of the anti-corruption world underwent seismic changes against the backdrop of the aggressive enforcement of the US Foreign Corrupt Practices Act (FCPA) and the introduction of the broader and even more far-reaching UK Bribery Act in 2010, Singapore was undergoing an uncharacteristic change of its own.

In late 2011, the former Director of the Central Narcotics Bureau (CNB) Ng Boon Gay was arrested and later faced charges of corruptly obtaining sexual gratification from a female sales executive for allegedly “furthering the business interests" of the IT companies she was working for. In early 2012, the ex-Commissioner of the Civil Defence Force (SCDF) Peter Benedict Lim was arrested and subsequently charged with corruptly obtaining sexual gratification from various women in the IT industry in exchange for favouring the companies they were working for. A few months later, in the middle of 2012, law professor Tey Tsun Hang was prosecuted in a sex-for-grades case involving a law student who allegedly slept with him and gave him various gifts in exchange for better grades.

The population of a country usually perceived as disciplined, law-abiding, sometimes even boring was suddenly assaulted with lurid details of alleged sexual misconduct and potentially illegal acts by senior civil servants - to the extent of being branded by a certain media source as “Scandalous Singapore”.

However, that was not all. The purchase of 26 foldable Brompton bikes by the National Parks Board (NParks) at approximately US$1,770 each for its officers to use on patrols came under intense scrutiny in July 2012 for procurement irregularities and was ultimately reported to the CPIB by the Ministry of National Development (MND). A report released by the Auditor-General’s Office (AGO) in August 2012 on audits conducted for the financial year 2011/2012 in respect of various government departments revealed material lapses in procurement procedures. Even the AGC and SPRING Singapore, a trade development agency, have had to defend their decisions and stand by the propriety of their purchase of hundreds of Herman Miller ergonomic designer chairs at around US$482 each.

Against this background, the writer spoke on 23 August 2012 at a Singapore Academy of Law seminar on anti-corruption issues. Speaking alongside him was Mr Tan Kiat Pheng, Singapore Deputy Public Prosecutor and Senior State Counsel, who is also the Senior Director currently in charge of the EGD’s Corruption Directorate which handles prosecution of corruption cases investigated by the CPIB. The topic of the seminar was “Bribery Trends and Challenges: Singapore and Global Anti-Corruption Laws”.

Although it was the domestic cases of public sector impropriety that hogged the media spotlight, it was Singapore’s anti-corruption laws and, in particular, their extraterritorial effect which came under the microscope at the seminar. By way of background, Singapore’s main anti-corruption statutes - the Prevention of Corruption Act (PCA) and the Penal Code - cover both private and public bribery, and target both givers and recipients of bribes. Gratification is defined broadly to cover both financial and other benefits and, so long as the mental element of “corruptly” can be established beyond reasonable doubt, an offence would potentially be made out. The twin test of corrupt intent (objective) and corrupt knowledge (subjective) would only be satisfied if the prosecution could prove that the acts of the perpetrator would be considered corrupt by a reasonable third party, and that the perpetrator himself knew that his acts were corrupt.

The key provision in the PCA giving extraterritorial effect to the corruption offences is section 37, which provides that a Singapore citizen paying a bribe overseas will be treated as if the bribe had been paid in Singapore. More alarmingly, section 29 of the PCA when read with sections 108A and 108B of the Penal Code - which deals with the abetment of corruption offences - can attach criminal liability to a person who, from Singapore, instigates the commission of a bribery offence overseas in relation to the affairs or on behalf of a principal residing in Singapore; or who, if based abroad, instigates the commission of a bribery offence in Singapore. The derivative abetment offence therefore significantly enlarges the extraterritorial jurisdiction of Singapore anti-corruption laws. The qualifications to such broad jurisdiction is that the prosecution is likely to pursue cases which have a material impact on Singapore as the resources of the enforcement agencies are limited, and there are inherent difficulties in obtaining evidence from abroad - discretionary factors which would be unwise for any person doing business in Singapore and the Asian region to overly rely on to avoid legal liability.

The reach of Singapore’s anti-corruption legislation is further broadened by the presumptions in sections 8 and 9 of the PCA. Section 8 of the PCA provides, in any case where gratification is given to or received by a public official, such gratification shall be deemed to have been given or received corruptly (as an inducement or reward) unless the contrary is proved. Section 9 of the PCA (which applies to both givers and receivers of gratification) states that, in relation to transactions with agents, an offence is committed once it is proved that gratification is either given or received (as the case may be) - even if the agent did not ultimately do or refrain from doing the act in question, or had in fact had no authority to so act.

Another topic discussed was the divergent enforcement approaches which range from the prosecution of individuals to a clear policy shift in some jurisdictions such as the UK and US which seek to impose corporate criminal liability by placing the burden on corporations to take adequate steps to prevent bribery and corruption by employees and associated third parties. Singapore’s anti-corruption laws are broad enough to cover both natural and legal persons. However, enforcement action has historically focused on the prosecution of individuals, not corporations, due partly to the evidential challenges in proving the directing mind and will of a corporation.

Given the potential for the imposition of corporate criminal liability in the US and UK, the prosecution in these jurisdictions use, or are intending to introduce, Deferred Prosecution Agreements (DPAs) as a tool at their disposal in their arsenal of prosecutorial options. Under DPAs, corporate offenders are given the chance to institute corporate reforms, implement compliance systems and cooperate in investigations in exchange for a temporary pardon against the charges or a full acquittal. The AGC is studying the merits of introducing DPAs in Singapore and, if so, this will likely have significant implications for the imposing of corporate criminal liability in Singapore since DPAs, by their very nature, are targeted at corporations. As mentioned above, it is in the interest of prosecutors to allocate their resources in the most efficient way possible; in this regard, DPAs have a clear role as an effective way of trial settlement in appropriate cases.

Internationally, there is increasing coordination between law enforcement agencies in different jurisdictions in the fight against cross-border corruption. The CPIB and prosecutors in Singapore have a good working relationship with their counterparts in Malaysia, Hong Kong and Indonesia and are constantly networking and building new links with other jurisdictions. Through the forging of such strong ties, the sharing of information and mutual legal assistance can only be further enhanced in a world where anti-corruption legislation is becoming increasingly extra-territorial in nature. One of the concerns pertaining to this area which was raised is the issue of “double jeopardy” (i.e. the risk that the same person may tried twice for the same offence) and what ought to be done to address this issue. In Singapore, section 37(2) of the PCA addresses this situation by stating that, once proceedings in respect of an act committed outside of Singapore have been commenced in Singapore, an application for extradition of that person for the same offence shall not lie.

Companies which do business in Asia using Singapore as their regional headquarters should take heed of both the local laws as well as the international laws which apply to their operations. Although the prosecution of bribery offences had historically focused on natural persons, the Singapore laws clearly apply to corporate bodies as well. If senior management is based in Singapore and business decisions are also made here in respect of action taken in the Asian region, it may be evidentially less challenging to identify the directing mind and will of a company. Given the extraterritorial effect of Singapore corruption laws, the broadened scope for criminal liability through derivative abetment offences, the presumptions at sections 8 and 9 of the PCA and the potential introduction of DPAs in the future, it would be wise for companies to assess the bribery risks that they face and take steps to mitigate such risks through implementing adequate compliance frameworks which are designed to prevent and detect corrupt activities in business transactions, and effectively respond to bribery incidents as and when they occur. The next wave of anti-corruption developments in Singapore may go well beyond both salacious and prosaic headlines involving sex, chairs and bicycles. It would be prudent to be well prepared.

This article first appeared in Commercial Dispute Resolution under the title “Toys for the boys”.


Footnotes
  1. Corrupt Practices Investigation Bureau Report 2011, p 8, accessed 7 September 2012.