Getting the Deal Through – Anti-Corruption Regulation in Singapore 2016

To which international anti-corruption conventions is your country a signatory?

Singapore became a signatory to the United Nations Convention against Corruption (UNCAC) on 11 November 2005 (ratification on 6 November 2009) and to the United Nations Convention against Transnational Organized Crime on 13 December 2000 (ratification on 28 August 2007).

Singapore has been a member of the Financial Action Task Force since 1992, was one of the founding members of the Asia-Pacific Group on Money-Laundering in 1997 and was admitted as a member of the Egmont Group of Financial Intelligence Units in 2002. Singapore is also a member of the ADB/OECD Anti-Corruption Initiative for Asia and the Pacific, which it endorsed on 30 December 2001.

Identify and describe your national laws and regulations prohibiting bribery of foreign public officials (foreign bribery laws) and domestic public officials (domestic bribery laws).

Sections 5 and 6 of the PCA prohibit bribery in general. Section 5 makes active and passive bribery by individuals and companies in the public and private sectors an offence. Section 6 makes it an offence when an agent is corruptly offered or corruptly accepts gratification in relation to the performance of the principal’s affairs or for the purpose of misleading the principal. The term ‘gratification’ is interpreted broadly (see question 5).

Sections 11 and 12 of the PCA prohibit bribery of domestic public officials. An official is defined as a ‘member, officer or servant of a public body’. A ‘public body’ is defined as ‘any corporation, board, council, commissioners or other body which has power to act under and for the purposes of any written law relating to public health or to undertakings or public utility or otherwise to administer money levied or raised by rates or charges in pursuance of any written law’. The Singapore Interpretation Act defines the term ‘public officer’ as ‘the holder of any office of emolument in the service of the [Singapore] Government’. The PCA does not specifically target bribery of foreign public officials, but such bribery could fall under the ambit of the general prohibitions, namely section 6 on corrupt transactions with agents.

The Penal Code also contains provisions that relate to the bribery of public officials (sections 161 to 165). Public officials are referred to in the Penal Code as ‘public servants’, which have been defined in the Penal Code to include mainly domestic public officials. Sections 161 to 165 describe the following scenarios as constituting bribery:

• a public servant taking a gratification, other than legal remuneration, in respect of an official act;
• a person taking a gratification in order to influence a public servant by corrupt or illegal means;
• a person taking a gratification for exercising personal influence over a public servant;
• abetment by a public servant of the above offences; and
• a public servant obtaining anything of value, without consideration or with consideration the public servant knows to be inadequate, from a person concerned in any proceedings or business conducted by such public servant.

Foreign bribery

Describe the elements of the law prohibiting bribery of a foreign public official.

As mentioned in question 2, there are no provisions in the PCA or the Penal Code which specifically prohibit bribery of a foreign public official. However, the general prohibition against bribery in the PCA, in particular on corrupt transactions with agents, read together with section 37 of the PCA, prohibits, in effect, the bribery of a foreign public official outside Singapore by a Singapore citizen. Section 37 of the PCA gives the anticorruption legislation extraterritorial effect because if the act of bribery takes place outside Singapore and the bribe is carried out by a Singapore citizen, section 37 of the PCA states that the offender would be dealt with as if the bribe had taken place in Singapore.

Under section 5 of the PCA, it is an offence for a person (whether by himself or herself, or in conjunction with any other person) to:

• corruptly solicit, receive, or agree to receive for himself or for any other person; or
• corruptly give, promise, or offer to any person, whether for the benefit of that person or of another person any gratification as an inducement to or reward for or otherwise on account of:
• any person doing or forbearing to do anything in respect of any matter or transaction whatsoever, actual or proposed; or
• any member, officer or servant of a public body doing or forbearing to do anything in respect of any matter or transaction whatsoever, actual or proposed, in which such public body is concerned.

It is also an offence under section 6 of the PCA for:

• an agent to corruptly accept or obtain any gratification as an inducement or reward for doing or forbearing to do any act in relation to his or her principal’s affairs;
• a person to corruptly give or offer any gratification to an agent as an inducement or reward for doing or forbearing to do any act in relation to his or her principal’s affairs; or
• a person to knowingly give to an agent a false or erroneous or defective statement, or an agent to knowingly use such statement, to deceive his principal.

Section 4 of the Penal Code also creates extraterritorial obligations for all Singapore public servants and states that any act or omission committed by a public servant outside of Singapore in the course of his or her employment that would constitute an offence in Singapore will be deemed to have been committed in Singapore. Accordingly, if the public servant accepted a bribe overseas, he or she would be liable under Singapore law.

The extraterritorial effects of the PCA and Penal Code are limited in the respect that they only apply to Singapore citizens and Singapore public servants respectively. In Public Prosecutor v Taw Cheng Kong [1998] 2 SLR 410, a case involving a constitutional challenge to the extraterritoriality of section 37 of the PCA, the court upheld the provision and concluded that it was ‘rational to draw the line at citizenship and leave out non-citizens so as to observe international comity and the sovereignty of other nations’. The court further observed that the language of the provision was wide and ‘capable of capturing all corrupt acts by Singapore citizens outside Singapore, irrespective of whether such corrupt acts have consequences within the borders of Singapore or not’. As regards non-citizens committing corruption outside Singapore that could cause harm in Singapore, the court opined that section 29 of the PCA, which deals with the abetment of a corrupt act abroad, could be wide enough to address that scenario.

The Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA), which deals with the prevention of laundering of the proceeds of corruption and other crimes, also has extraterritorial application. Section 47 of the CDSA provides that any person who knows or has reasonable ground to believe that any property represents another person’s benefits from criminal conduct is guilty of an offence if he or she conceals, disguises, converts, transfers or removes that property from the jurisdiction for the purposes of assisting any person to avoid prosecution.

How does your law define a foreign public official?

As the PCA and the Penal Code do not specifically deal with the bribery of a ‘foreign public official’, the statutes do not define this term.

To what extent do your anti-bribery laws restrict providing foreign officials with gifts, travel expenses, meals or entertainment?

There are no express restrictions in the PCA or Penal Code on providing foreign officials with gifts, travel expenses, meals or entertainment. However, any gift, travel expense, meal or entertainment provided with the requisite corrupt intent will fall foul of the general prohibition under the PCA, and would constitute an offence.

As noted in question 3, the PCA prohibits (among other things), the offer or provision of any ‘gratification’ if accompanied with the requisite corrupt intent. The term ‘gratification’ is broadly defined under the PCA to include money, gifts, loans, fees, rewards, commissions, valuable security, property, interest in property, employment contract or services or any part or full payment, release from or discharge of any obligation or other liability; and any other service, favour or advantage of any description whatsoever (see Public Prosecutor v Teo Chu Ha [2014] SGCA 45).

Under the Penal Code, the term ‘gratification’ is used but not expressly defined. The explanatory notes to the relevant section stipulate that the term is not restricted to pecuniary gratifications or those with monetary value. The Singapore courts have also held that questionable payments made pursuant to industry norms or business customs will not constitute a defence to any prosecution brought under the PCA (see Public Prosecutor v Soh Cham Hong [2012] SGDC 42) and any evidence pertaining to such customs will be inadmissible in any criminal or civil proceedings under section 23 of the PCA (see Chan Wing Seng v Public Prosecutor [1997] 1 SLR(R) 721).

Do the laws and regulations permit facilitating or ‘grease’ payments?

Neither the PCA nor the Penal Code expressly permits facilitating or ‘grease’ payments. Such payments would technically constitute an act of bribery under the general prohibitions of both the PCA and the Penal Code. Notably, section 12(a)(ii) of the PCA prohibits the offer of any gratification to any member of a public body as an inducement or reward for the member’s ‘expediting’ of any official act, among other prohibited acts.

In what circumstances do the laws prohibit payments through intermediaries or third parties to foreign public officials?

Corrupt payments through intermediaries or third parties, whether such payments are made to foreign public officials or to other persons, are prohibited. Section 5 of the PCA expressly provides that a person can commit the offence of bribery either ‘by himself or by or in conjunction with any other person’.

Can both individuals and companies be held liable for bribery of a foreign official?

Both individuals and companies can be held liable for bribery offences, including bribery of a foreign official. The various provisions in the PCA and Penal Code set out certain offences that may be committed by a ‘person’ if such person were to engage in certain corrupt behaviour. The term ‘person’ has been defined in the Singapore Interpretation Act to include ‘any company or association of body of persons, corporate or unincorporated’.

In addition, Singapore case law indicates that corporate liability can be imposed on companies for crimes committed by their employees, agents, etc (see Tom Reck Security Services Pte Ltd v PP [2001] 2 SLR 70). A test for establishing corporate liability is whether the individual who committed the crime can be regarded as the ‘embodiment of the company’, or whose acts ‘are within the scope of the function of management properly delegated to him’. This test, known as the identification doctrine, was derived from English case law (see Tesco Supermarkets Ltd v Natrass [1971] 2 All ER 127). The identification doctrine was subsequently broadened in the Privy Council case of Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500, which held that the test for attributing mental intent should depend on the purpose of the provision creating the relevant offence. This broader approach has been affirmed in Singapore (see The Dolphina [2012] 1 SLR 992) in a case involving shipping and conspiracy but not in the context of bribery offences. However, the test for corporate liability is different in relation to money laundering offences. Section 52 of the CDSA introduces a lower threshold of proof for corporate liability. It provides that where it is necessary to establish the state of mind of a body corporate in respect of conduct engaged by the body corporate it shall be sufficient to show that a director, employee or agent of the body corporate acting within the scope of his or her actual or apparent authority, had that state of mind. Likewise, any conduct engaged in or on behalf of a body corporate by a director, employee or agent of the body corporate acting within the scope of his or her actual or apparent authority, or by any other person at the direction or with the consent or agreement of the above, shall be deemed, for the purposes of the CDSA, to have been engaged in by the body corporate.

Generally, individual directors and officers of a company will not be held strictly liable for offences found to have been committed by the company if they were not personally responsible for, or otherwise involved in, that particular offence. However, section 59 of the CDSA provides that where an offence under the CDSA committed by a body corporate is proved to have been committed with the consent or connivance of an officer or to be attributable to any neglect on his or her part, the officer as well as the body corporate shall be guilty of the offence. It is also possible that an individual such as a director or officer of a company, although not personally guilty of committing a corrupt act, may be held liable for consequential offences including money-laundering or failure to report a suspicion that certain property or the transfer of assets was connected to criminal conduct.

Can a successor entity be held liable for bribery of foreign officials by the target entity that occurred prior to the merger or acquisition?

In a situation where the acquiring entity purchases shares in the target entity, the acquiring entity is not legally liable for bribery of foreign officials by the target entity that occurred prior to the acquisition. This is because of the common law doctrine of separate legal personality. Likewise, there is no change to the legal liability or otherwise of the target entity following the change of identity of its shareholder or shareholders.

Subsequent to the acquisition, the commercial value of the acquiring entity may be adversely affected in the event that the target entity is investigated, prosecuted or ultimately held liable for bribery of foreign officials occurring prior to the acquisition. The target entity may be liable for investigation costs, suffer business disruptions and loss of revenue and may have to bear financial penalties or debarment consequences. These may adversely impact the value of the shares in the target entity, which are in turn owned by the acquiring entity.

Is there civil and criminal enforcement of your country’s foreign bribery laws?

Yes, criminal enforcement against corrupt activities is provided for in both the PCA and the Penal Code. In particular, if the court rules that there has been a violation of the general prohibitions on bribery in the PCA, a penalty of a fine, imprisonment, or both will be imposed on the offender. The offender may also have to pay the quantum of the bribe received.

With regard to civil enforcement, a victim of corruption will be able to bring a civil action to recover the property of which it has been deprived. Section 14 of the PCA expressly provides that, where gratification has been given to an agent, the principal may recover, as a civil debt, the amount or the money value thereof either from the agent or the person paying the bribe. This provision is without prejudice to any other right and remedy that the principal may have to recover from his agent any money or property. The objective of imposing this additional penalty is to disgorge the offender’s proceeds from the corrupt transaction.

The case Ho Kang Peng v Scintronix Corp Ltd (formerly known as TTL Holdings Ltd) [2014] SGCA 22 provides an example of a company successfully bringing a civil claim against its former CEO and director, Ho Kang Peng, for engaging in corrupt activities. The Court of Appeal dismissed Ho’s appeal from the High Court, holding that he had breached his fiduciary duties owed to the company by making and concealing unauthorised payments in the name of the company. The Court of Appeal found that although the payments were for the purpose of securing business for the company, Ho could not be said to be acting in the bona fide interests of the company because the payments were, in effect, gratuities and thereby ran the unjustified risk of subjecting the company to possible criminal liability.

What government agencies enforce the foreign bribery laws and regulations?

The main government agency that enforces bribery laws in Singapore is the Corrupt Practices Investigation Bureau (CPIB). The CPIB derives its powers from the PCA and is responsible for investigating and preventing corruption in Singapore, focusing on corruption-related offences arising under the PCA and the Penal Code.

Under the PCA, the CPIB has extensive powers of investigation, which include powers to require the attendance of witnesses for interview, to investigate a suspect’s financial and other records and the power to investigate any other seizable offence disclosed in the course of a corruption investigation. Special investigative powers can be granted by the public prosecutor, such as the power to investigate any bank account, share account, purchase account, expense account or any other form of account or safe deposit box and to require the disclosure of all information, documents or articles required by the officers.

The CPIB carries out investigations into complaints of corruption but does not prosecute cases itself. It refers the cases, where appropriate, to the public prosecutor for prosecution. The PCA provides that no prosecution under the PCA shall be instituted except by or with the consent of the public prosecutor.

The Commercial Affairs Department (CAD) is the principal whitecollar crime investigation agency in Singapore that investigates complex fraud, white-collar crime, money-laundering and terrorism financing. The CAD’s Financial Investigation Division is specially empowered to combat money-laundering, terrorism financing and fraud involving employees of financial institutions in Singapore and works closely with financial institutions, government agencies and its foreign counterparts.

The Financial and Technology Crime Division (FTCD) was established within the Attorney-General’s Chambers (AGC) in November 2014, as part of a re-designation of the Economic Crimes and Governance Division (EGD) to bring cybercrimes under the division’s purview. The EGD had been responsible for the enforcement, prosecution and all related appeals in respect of financial crimes and corruption cases within and outside of Singapore. The reorganised division focuses on financial crimes ranging from securities fraud and money laundering to corruption and criminal breach of trust, as well as a broad range of cybercrimes. It is one of two divisions in AGC’s crime cluster, with the Criminal Justice Division being the other.

The Monetary Authority of Singapore (MAS) is responsible for issuing guidelines on money-laundering and terrorist financing to financial institutions. The MAS does not carry out investigations relating to moneylaundering and terrorist-financing activities; it will refer investigations of such activities to the CAD.

Is there a mechanism for companies to disclose violations in exchange for lesser penalties?

The PCA and the Penal Code do not expressly provide for a formal mechanism for companies to disclose violations of bribery laws in exchange for leniency. While there are no formal legislative mechanisms in place, a plea bargaining process with the public prosecutor is available. An accused can submit letters of representation to the public prosecutor to negotiate the possible withdrawal, amendment or reduction of the charges, highlighting any merits of the case that may warrant the exercise of the public prosecutor’s discretion to do so. The public prosecutor retains the sole discretion to accede to the requests in the letters of representation. The Singapore courts introduced a voluntary Criminal Case Resolution programme in 10 October 2011 where a district judge functions as a neutral mediator between the prosecution and defence with a view to parties reaching an agreement. If the mediation is unsuccessful, the judge will not hear the case. Once proceedings have been initiated, the accused may, having reviewed the evidence in the prosecution’s case, choose to plead guilty and enter a plea mitigation to avoid a public trial.

In October 2010 there was a court ruling involving the CEO of AEMEvertech, a Singapore-listed company, who exposed corrupt practices by the company’s top management, including himself (see Public Prosecutor v Ang Seng Thor [2010] SGDC 454 – the AEM-Evertech case). In sentencing the CEO, the district judge took into consideration the fact that his whistleblowing helped to secure the conviction of other members of the company’s management and consequently did not impose a prison sentence. However, in May 2011, the prosecution successfully appealed against this decision. It was held by the Court of Appeal that the judge in the first instance, had, on the facts, incorrectly found that the CEO’s role in the matter demonstrated a low level of culpability (see Public Prosecutor v Ang Seng Thor [2011] 4 SLR 217). It also found that the CEO was not an archetypal whistle-blower, owing to the fact that he only admitted personal wrongdoing when placed under investigation by the CPIB in May 2007 and had failed to approach the authorities directly with evidence of unauthorised activities. The sentence imposed at first instance was therefore set aside and substituted with a sentence of six weeks’ imprisonment and a fine of S$25,000 on each of the two charges, with each prison sentence to run consecutively. Although the Court of Appeal overruled the first instance decision, the case confirms that a genuine whistle-blower would potentially be treated with a degree of leniency during sentencing. The exercise of judicial discretion will depend, in part, on the motivation of the whistle-blower and the degree of cooperation during the investigation.

Can enforcement matters be resolved through plea agreements, settlement agreements, prosecutorial discretion or similar means without a trial?

The public prosecutor has discretion to initiate, conduct or discontinue any criminal proceedings. It may be possible for a person under investigation to convince the public prosecutor not to initiate criminal proceedings against him or, as described in question 12, if criminal proceedings have already been initiated, an accused person may submit letters of representation (on a ‘without prejudice’ basis) to the public prosecutor to negotiate the possible withdrawal, amendment, or reduction of charges. The public prosecutor has sole discretion whether to accede to such letters of representation. It may also be possible for an accused person to plead guilty to certain charges, in return for which the public prosecutor will withdraw or reduce certain other charges. The accused may also plead guilty to the charges brought against him so as to resolve a particular matter without a trial, and then enter a mitigation plea.

In March 2013, the AGC and the Law Society issued the Code of Practice for the Conduct of Criminal Proceedings by the Prosecution and Defence, which is a joint code of practice that sets out the duties of prosecutors and lawyers during criminal trials and deals with various matters including plea bargaining.

Describe any recent shifts in the patterns of enforcement of the foreign bribery rules.

Significantly, in January 2015 the Singapore Prime Minister announced that the capabilities and manpower of the CPIB will be strengthened by more than 20 per cent as corruption cases have become more complex, some with international links. This announcement follows the establishment and reorganisation of the EGD to the FTCD (see question 11) signalled an intent by the AGC to actively enforce and prosecute complex bribery offences, including cybercrime, committed outside Singapore that may involve foreign companies and foreign public officials.

The Mutual Assistance in Criminal Matters Act was revised in July 2014 to improve Singapore’s ability to provide mutual legal assistance to other countries and demonstrates a commitment to cross-border cooperation. The amendments primarily ease requirements that foreign countries would need to satisfy to make requests for legal assistance and widen the scope of mutual legal assistance that Singapore can provide.

Public sector complaints and prosecutions remain consistently low due, in part, to the aggressive enforcement stance taken by the CPIB, as well as to the high wages paid to public servants that reduce the financial benefit of taking bribes as compared to the risk of getting caught. The majority of the CPIB’s investigations relate to the private sector, which for 2014 made up 85 per cent of its investigations registered for action (a 1 per cent increase from the previous year).

In what circumstances can foreign companies be prosecuted for foreign bribery?

Under the general offences of the PCA, foreign companies can be prosecuted for the bribery of a foreign public official if the acts of bribery are committed in Singapore (see question 2). In addition, section 29 of the PCA read together with section 108A of the Penal Code allows foreign companies to be prosecuted for bribery that was substantively carried out overseas, if the aiding and abetment of such bribery took place in Singapore.

What are the sanctions for individuals and companies violating the foreign bribery rules?

The PCA provides for a fine, a custodial sentence, or both for the contravention of the general anti-corruption provisions under sections 5 and 6 (which include the bribery of foreign public officials in Singapore, and the bribery of foreign public officials overseas by a Singapore citizen when read with section 37). The guilty individual or company may be liable to a fine not exceeding S$100,000 or imprisonment for a term not exceeding five years, if appropriate. Where the offence involves a government contract or bribery of a member of parliament, the maximum custodial sentence has been extended to seven years (see question 30). There are also civil remedies and penalties for the restitution of property pursuant to the PCA (see question 10). A person convicted of an offence of bribery under the Penal Code may be sentenced to a fine and a custodial sentence of up to three years.

There are other statutes imposing sanctions on the guilty individuals or companies. For example, under the CDSA, where a defendant is convicted of a ‘serious offence’ (which includes bribery), the court has the power, under section 4, to make a confiscation order against the defendant in respect of benefits derived by him from criminal conduct. Under the Singapore Companies Act, a director convicted of bribery offences may be disqualified from acting as a director.

Identify and summarise recent landmark decisions or investigations involving foreign bribery.

It has been reported that two Singapore-based companies in the shipbuilding industry and their affiliates may be implicated in relation to transactions entered into with Brazilian national oil company Petróleo Brasileiro SA (Petrobras) and rig builder Sete Brasil Participações SA. These issues arise from a wider investigation by Brazilian authorities – called Lava Jato or ‘carwash’ – following allegations by a former engineering manager at Petrobras that bribes were paid to executives of the two Brazilian companies by certain persons to obtain work.

In another case involving foreign bribery, a Singapore-based businessman who is a Malaysian national and owner of a multinational firm known as Glenn Defense Marine Asia was arrested in San Diego, US, while on a business trip in September 2013, for allegedly bribing US naval officers to reveal confidential information about the movement of US Navy ships and defrauding the US Navy through numerous contracts relating to support services for US naval vessels in Asia. The owner of Glenn Defense Marine Asia and one of the top executives, along with several US Navy officers, were charged in October 2013 in US courts with conspiracy in a bribery scheme that cost the US Navy more than US$10 million. The owner of the firm and some of the other defendants have pleaded guilty to various charges involving bribery. The US government has barred Glenn Defense Marine Asia from any new contracts and terminated nine contracts worth US$205 million that it had with the US Navy. In February 2015, a former US Navy contracting official who was arrested in Haymarket, Virginia was reportedly the ninth person charged in a wide-ranging corruption investigation in relation to this matter. Andrew Traver, a director of the Naval Criminal Investigative Service was quoted as saying that ‘The [Glenn Defense Marine Asia] investigation is far from over’. In December 2015, a former US Navy employee, who was the lead contract specialist at the material time, was reportedly charged in court in Singapore with (among others) seven counts of corruptly receiving cash and paid accommodation. The allegation was that she had received a total of S$130,278 in the form of cash and paid accommodation in luxury hotels from Glenn Defense Marine Asia as a reward for the provision of non-public US Navy information.

Financial record keeping

What legal rules require accurate corporate books and records, effective internal company controls, periodic financial statements or external auditing?

The Singapore Companies Act is the main statute that regulates the conduct of Singapore-incorporated companies. Among other things, the Companies Act requires the keeping of proper corporate books and records as will sufficiently explain the transactions and financial position of the company and enable true and fair profit and loss accounts and balance sheets for a period of at least five years, the appointment of external auditors, and filing of annual returns. It was amended in October 2014 to reduce the regulatory burden on companies, provide for greater business flexibility and improve corporate governance. Amendments include revised requirements for audit exemptions, inclusion of a requirement that CEOs disclose conflicts of interest and the removal of the requirement that private companies keep a register of members.

Singapore-listed companies are also subject to stringent disclosure, auditing and compliance requirements as provided by the Securities and Futures Act, the SGX Listing Rules, the Code of Corporate Governance and other relevant rules. The SGX Listing Rules state that a company’s board ‘must provide an opinion on the adequacy of internal controls’. The Code of Corporate Governance provides that the board ‘must comment on the adequacy and effectiveness of risk management and internal control system’. Companies that do not comply with the laws and regulations may be investigated by the CAD, the Accounting and Regulatory Authority of Singapore or other regulatory bodies.

To what extent must companies disclose violations of anti-bribery laws or associated accounting irregularities?

The CDSA, through section 39, imposes reporting obligations on persons who know or have reasonable grounds to suspect that there is property that represents the proceeds of, or that was used or intended to be used in connection with, criminal conduct. Criminal conduct includes acts of bribery (which potentially extends to acts of bribery overseas). A breach of these reporting obligations attracts a fine of up to S$20,000. Section 424 of the Criminal Procedure Code (CPC) also imposes reporting obligations on every person aware of the commission of or the intention of any other person to commit most of the corruption crimes (relating to bribery of domestic public officials) set out in the Penal Code. Section 69 of the CPC allows the police to conduct a formal criminal discovery exercise during the course of corruption investigations, empowering them to search for documents and access computer records.

Apart from these express reporting and disclosure obligations under the CDSA and the CPC, the requirements imposed by the Companies Act, Securities and Futures Act, Listing Rules, regulations and guidelines issued by the MAS may also impose obligations on a company or financial institution to disclose corrupt activities and associated accounting irregularities.

On 2 May 2012, MAS issued a revised Code of Corporate Governance, which, in conjunction with the Listing Rules, sets out a number of obligations that listed companies are expected to observe. The revised Code has introduced more stringent requirements relating to the role and composition of the Board of Directors (Principles 1 and 2), risk management and internal controls (Principle 11) and the need to have an adequate whistleblowing policy in place (Principle 12). The Listing Rules require listed companies to disclose, in their annual reports, board commentary assessing the companies’ internal control and risk management systems. On 10 May 2012, MAS issued Risk Governance Guidance for Listed Boards to provide practical guidance for board members on managing risk.

Are such laws used to prosecute domestic or foreign bribery?

No. The laws primarily used to prosecute domestic or foreign bribery are the PCA and the Penal Code.

What are the sanctions for violations of the accounting rules associated with the payment of bribes?

There are no specific accounting rules associated with the payment of bribes in Singapore. Sanctions for violations of the laws and regulations relating to proper account-keeping, auditing, etc, include fines and terms of imprisonment. The amount of any fine and length of imprisonment will depend on the specific violation in question. Liability may be imposed on the company, directors of the company and other officers of the company.

Do your country’s tax laws prohibit the deductibility of domestic or foreign bribes?

Tax deduction for bribes (whether domestic or foreign bribes) is not permitted. Bribing is an offence under the PCA and the Penal Code.

Domestic bribery

Describe the individual elements of the law prohibiting bribery of a domestic public official.

The general prohibition on bribery in the PCA (see question 2) specifically states, at section 5, that it is illegal to bribe a domestic public official. Where it can be proved that gratification has been paid or given to a domestic public official, section 8 provides for a rebuttable presumption that such gratification was paid or given corruptly as an inducement or reward. The burden of proof in rebutting the presumption lies with the accused on a balance of probability. In Public Prosecutor v Ng Boon Gay [2013] SGDC 132 (Ng Boon Gay case), the prosecution argued that the threshold to establish the presumption was very low and ultimately any ‘gratification’ given to a public official by someone intending to deal with the official or government would be enough to create the rebuttable presumption. On the facts of the case, however, the defence succeeded in rebutting the presumption. Prohibition of the bribery of a domestic public official is also set out in sections 11 and 12 of the PCA as outlined below. Section 11 relates to the bribery of a member of parliament. It is an offence for any person to offer any gratification to a member of parliament as an inducement or reward for such member’s doing or forbearing to do any act in his capacity as a member of parliament. It will also be an offence for a member of parliament to solicit or accept the above gratification. Section 12 relates to the bribery of a ‘member of a public body’. For the definition of ‘public body’, see questions 2 and 25. It is an offence for a person to offer any gratification to a member of such a public body as an inducement or reward for:

• the member’s voting or abstaining from voting at any meeting of the public body in favour of or against any measure, resolution or question submitted to that public body;
• the member’s performing, or abstaining from performing, or aid in procuring, expediting, delaying, hindering or preventing the performance of, any official act; or
• the member’s aid in procuring or preventing the passing of any vote or the granting of any contract or advantage in favour of any person.

It will, correspondingly, be an offence for a member of a public body to solicit or accept such gratification described above.

The Penal Code also sets out a number of offences relating to domestic public officials (termed ‘public servant’). The prohibited scenarios are outlined in question 2. The Singapore government also issues the Singapore Government Instruction Manual (Instruction Manual) to all public officials. The Instruction Manual contains stringent guidelines regulating the conduct of public officials.

Does the law prohibit both the paying and receiving of a bribe?

Yes. Singapore law prohibits both the paying and receiving of a bribe. In particular, sections 5, 11 and 12 of the PCA prohibit both the paying of a bribe to, and receiving of a bribe by, a domestic public official.

How does your law define a public official and does that definition include employees of state-owned or state-controlled companies?

A public official is referred to as a ‘member, officer or servant of a public body’ under the PCA. There are also specific provisions at section 11 of the PCA in respect of members of parliament. ‘Public body’ has been defined in section 2 of the PCA to mean any ‘corporation, board, council, commissioners or other body which has power to act under and for the purposes of any written law (ie, Singapore legislation) relating to public health or to undertakings or public utility or otherwise administer money levied or raised by rates or charges in pursuance of any written law’.

In the Ng Boon Gay case and Public Prosecutor v Peter Benedict Lim Sin Pang DAC 2106-115/2012 (Peter Lim case) (in which the former Singapore Civil Defence Force Chief was found guilty and sentenced to six months jail for corruptly obtaining sexual favours in exchange for the awarding of contracts), both the Central Narcotics Bureau (CNB) and the Singapore Civil Defence Force (SCDF) were unsurprisingly held by the courts to be public bodies. In Public Prosecutor v Tey Tsun Hang [2013] SGDC 164 (Tey Tsun Hang case) (where the former law professor at National University of Singapore was convicted for obtaining sex and gifts from one of his students but was later acquitted on appeal), despite the arguments of defence counsel, the National University of Singapore (NUS) was also found to be a public body, being a ‘corporation which has the power to act […] relating to […] public utility or otherwise to administer money levied or raised by rates or charges’, since ‘public utility’ included the provision of public tertiary education. The receipt by NUS of funds from the government and its function as an instrument of implementing the government’s tertiary education policy further supported the finding that NUS was a ‘public body’.

The provisions in the Penal Code pertaining to domestic public officials use the term ‘public servant’. This has been defined in section 21 to include an officer in the Singapore Armed Forces, a judge, an officer of a court of justice, an assessor assisting a court of justice or public servant, an arbitrator, an office-holder empowered to confine any person, an officer of the Singapore government, an officer acting on behalf of the Singapore government and a member of the Public Service Commission (PSC) or Legal Service Commission.

It would appear from the above definitions under the PCA and the Penal Code that an employee of a state-owned or state-controlled company may not necessarily be a domestic public official. Such employees of state-owned or state-controlled companies may be considered domestic public officials if they fall within the definitions set out in the PCA and the Penal Code. It should also be noted that the Singapore Interpretation Act defines the term ‘public officer’ as ‘the holder of any office of emolument in the service of the [Singapore] Government’.

Can a public official participate in commercial activities while serving as a public official?

The Instruction Manual, which applies to all Singapore public officials, is a comprehensive set of rules that govern how public officials should behave in order to avoid corruption. The Instruction Manual allows public officials to participate in commercial activities but sets out certain restrictions, such as public officials not being allowed to profit from their public position. The Instruction Manual details how public officials can prevent conflicts of interest from arising and when consent must be obtained. Consent is required for various investment activities such as holding shares in private companies, property investments and entering into financial indebtedness.

The CPIB also advises domestic public officials not to undertake any paid part-time employment or commercial enterprise without the written approval of the appropriate authorities. Subject to such safeguards and approvals, a public official is allowed to participate in commercial activities while in service.

Describe any restrictions on providing domestic officials with gifts, travel expenses, meals or entertainment. Do the restrictions apply to both the providing and receiving of such benefits?

The analysis in question 5 will apply to both the giving and receiving of such benefits to and by domestic officials. It should also be noted that domestic public officials are not permitted to receive any money or gifts from people who have official dealings with them, nor are they permitted to accept any entertainment, etc, that will place them under any real or apparent obligation.

Are certain types of gifts and gratuities permissible under your domestic bribery laws and, if so, what types?

There are no specific types of gifts and gratuities that are considered permissible under the PCA and the Penal Code. Any gift or gratuity is potentially caught by the PCA and Penal Code if it meets the elements required by the statutes and is accompanied with the requisite corrupt intent.

Domestic public officials are also subject to the requirements of the Instruction Manual, which details the circumstances in which gifts and entertainment can be accepted and when they must be declared. As a matter of practice, all gifts need to be approved by a permanent secretary and only gifts under S$50 can be accepted. Any gift valued at more than S$50 can only be kept by the public official if it is donated to a governmental department or independently valued and purchased from the government by the public official. By comparison, in the Tey Tsun Hang case, the court heard that the NUS Policy on Acceptance of Gifts by Staff requires consent to be sought for all gifts over S$100.

Does your country also prohibit private commercial bribery?

Yes. The PCA contains provisions that prohibit bribery in general, and these prohibitions extend to both private commercial bribery as well as bribery involving public officials.

What are the sanctions for individuals and companies violating the domestic bribery rules?

The sanctions for individuals and companies violating the domestic bribery rules are similar to those set out in question 16, apart from the following.

The penalties for bribery of domestic public officials under the PCA are more severe than those for general corruption offences. While the general bribery offences under sections 5 and 6 are punishable by a fine not exceeding S$100,000, imprisonment not exceeding five years, or both, the bribery of a member of parliament or a member of a public body under sections 11 and 12 respectively may result in a fine not exceeding S$100,000, imprisonment for a term not exceeding seven years, or both.

In addition, the domestic public official involved in corruption would be exposed to departmental disciplinary action, which could result in punishment such as dismissal from service, reduction in rank, stoppage or deferment of salary increment, fine or reprimand and/or involuntary retirement.

Furthermore, the Instruction Manual debars companies that are guilty of corruption involving public officials from public contract tenders. Other measures include the termination of an awarded contract and the recovery of damages from such termination.

Have the domestic bribery laws been enforced with respect to facilitating or ‘grease’ payments?

As stated in question 6, facilitating or ‘grease’ payments are technically not exempt under Singapore law. In particular, as regards domestic public officials, section 12 of the PCA prohibits the offering of any gratification to such officials as an inducement or reward for the official’s ‘performing, or … expediting … the performance’ of any official act. Accordingly, it is also an offence under section 12 of the PCA for the domestic public official to accept any gratification intended for the purposes above.

Identify and summarise recent landmark decisions and investigations involving domestic bribery laws, including any investigations or decisions involving foreign companies.

In Public Prosecutor v Syed Mostafa Romel [2015] 3 SLR 1166, the Singapore High Court made clear that private sector bribery was as abhorrent as public sector bribery, tripling the jail term (from two to six months) of a marine surveyor convicted on corruption charges relating to the receipt of bribes to omit safety breaches in his reports. The case is significant for the guidance it gives on sentencing of corruption charges. More importantly, it dispels any perceived distinction between corruption in the private and public sectors.

A Singapore shipyard providing shipbuilding, conversion and repair services worldwide was embroiled in a corruption scandal in which former senior executives were implicated in conspiracies to bribe agents of customers in return for contracts. Between December 2014 and June 2015, seven senior executives, including three presidents, a senior vice-president, a chief operating officer and two group financial controllers were charged with corruption for conspiring to pay bribes in return for favours, such as ship repair contracts, and for conspiring to defraud the company through the falsification of accounts and the making of petty cash claims for bogus entertainment expenses.

A Singapore electronics company was implicated in another corruption case in which a former business director, Mark Edward Tjong, was convicted of receiving gratification of some S$87,386 in 2006 in exchange for appointing Mujibur Rahman, the managing director of a Bangladeshi firm called Kings Shipping and Trading Co, to assist that electronics company in a bid for a project involving the Bangladesh Police Department.

In Public Prosecutor v Leng Kah Poh [2014] SGCA 51 (the IKEA case), the Court of Appeal clarified that inducement by a third party was not necessary to establish a corruption charge under the PCA. In doing so, the Court of Appeal overturned an acquittal by the High Court of Leng Kah Poh, the former IKEA food and beverage manager in Singapore, who had originally been sentenced to 98 weeks of jail for 80 corruption charges. Leng had reportedly received a S$2.4 million kickback for giving preference to a particular product supplier. The High Court had overruled the conviction of the trial court and acquitted Leng, holding that the conduct did not amount to corruption because he had not been induced by a third party to carry out the corrupt acts. The High Court held that an action for corruption would only succeed when there are at least three parties: a principal incurring loss; an agent evincing corrupt intent; and a third party inducing the agent to act dishonestly or unfaithfully. The High Court held that in this case no third party existed and therefore the conduct alleged was not considered to amount to corruption under the PCA. However, in overturning the decision of the High Court, the Court of Appeal noted that if inducement by a third party were necessary, it would lead to absurd outcomes and undermine the entire object of the PCA.

In Teo Chu Ha v Public Prosecutor [2014] SGCA 45, a former director at Seagate Technology International (Seagate) received shares in a trucking company and subsequently assisted that company to secure contracts to provide trucking services for Seagate. The High Court held that the conduct did not amount to corruption as the rewards were not given for the ‘purpose’ or ‘reason’ of inducement because they were not causally related to the assistance Teo had rendered. Furthermore, Teo had paid consideration for the shares. The Court of Appeal overruled the High Court decision, finding that a charge of corruption could still be made out when consideration was paid and it was not necessary to prove that consideration was inadequate or that the transaction was a sham. The Court of Appeal noted in particular that the purpose of the PCA would be undermined if it were interpreted to have such a narrow scope that could be circumvented by sophisticated schemes such as the one in the present case.

In a high-profile case involving six leaders of a mega-church in Singapore, City Harvest Church, church founder Kong Hee and five leaders were found guilty by the Singapore state courts of conspiring to misuse millions of dollars of church funds to further the music career of singer Sun Ho, who is also Kong’s wife. The six had misused some S$50 million in church building funds earmarked for building-related expenses or investments. Five of the six, including Kong, were found guilty of misusing S$24 million towards funding Ho’s music career by funnelling church funds into sham investments in a company controlled by Kong. Four of the six were found guilty of misappropriating a further S$26 million of church funds by falsifying accounts to cover up the first sum and defrauding the church’s auditors. They were sentenced to jail terms ranging from 21 months to eight years. Both the prosecution and the respective accuseds have appealed against the judgment.

In a development that will have a significant impact on the anticorruption landscape in Singapore, the Prime Minister announced in January 2015 that steps will be taken to boost the manpower of the CPIB by more than 20 per cent, establish a central reporting centre for complaints to be lodged and review and amend the PCA. Although it remains to be seen which aspects of the law will be revamped, there are some key areas that may be the subject of legal reform. These could be the lowering of the evidential threshold for the establishment of corporate liability, the introduction of a compliance defence, the broadening of the extraterritorial effect of the PCA and the enactment of whistle-blower protection and incentivisation laws. Further details on the review of the PCA are to be announced.

Endnote

Accreditation:

“Reproduced with permission from Law Business Research Ltd. This article was first published in Getting the Deal Through: Anti-Corruption Regulation 2016, (published in March 2016; contributing editor: Homer E Moyer Jr, Miller & Chevalier Chartered). For further information please visit www.gettingthedealthrough.com.”