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Recent developments in financial crimes in Singapore

The latest white-collar crime developments in Singapore have sparked off public reactions with several high-profile money-laundering and graft cases involving Singapore government-linked entities and individuals. Notwithstanding, Singapore has inched up one position to rank 6th in a corruption perceptions index by corruption watchdog, Transparency International. This attests to the overall low level of corruption in Singapore and the long-held zero tolerance for bribery by the Singapore law-enforcement authorities. This also shows that the authorities will not cover up but will still relentlessly charge those who partake in illegal activities irrespective of their position.

We discuss the key cases in recent developments, as well as the proposed adoption of the Deferred Prosecution Agreements ("DPA") framework announced by the Law and Home Affairs Minister, K. Shanmugam in January 2018 against the backdrop of these high-profile cases.

Petrobras corruption case

In December 2017, Keppel O&M entered into a DPA with the United States' Justice Department and reached resolution with Brazilian and Singapore authorities in relation to corrupt payments made by an agent in Brazil to win contracts from Petrobras, Brazil's state- run oil company. According to US court documents, from 2001 to 2014 Keppel O&M paid $55 million to Petrobras and the then ruling political party. The payments were made to secure 13 contracts with Petrobras and Sete Brasil Participacoes SA, a Brazilian company which commissioned a fleet of rigs for Petrobras' use. Keppel O&M reportedly earned a total of $351.8 million as a result of its wrongdoing.

Keppel O&M agreed to pay US$422 million under the DPA., a former senior in house lawyer of Keppel O&M, pleaded guilty in the US around August 2017 for conspiring to violate the Foreign Corrupt Practices Act, by drafting contracts used to make payments in relation to the above.

In Brazil, Keppel Fels Brasil reached a leniency agreement with the Public Prosecutor's Office. In Singapore, the anti-corruption bureau, Corrupt Practices Investigation Bureau ("CPIB"), issued a conditional warning to Keppel O&M in lieu of prosecution.

Keppel is listed on the mainboard of Singapore Exchange, and state investment firm, Temasek Holdings, holds a 20.42 per cent stake in Keppel (as of 15 August 2017). Amid public concern over the perceived actions against Keppel O&M for such a large-scale misconduct that affected Singapore's reputation, Senior Minister of State for Finance and Law Indranee Rajah pointed out in Parliament that individuals were being investigated: "Nobody has got off- or not got off, as the case may be." Several former top executives of Keppel Corporation were subsequently arrested by the CPIB in connection with the criminal probe.

1MDB related prosecutions

A number of individuals have been prosecuted in Singapore in relation to Malaysian sovereign wealth fund 1Malaysia Development Berhad ("1MDB").

In May 2017, Kelvin Ang Wee Keng, a former remisier, was fined S$9,000 after pleading guilty to corruptly giving S$3,000 to a research analyst from NRA Capital to expedite the preparation of a favourable valuation report. Singapore prosecutors told the court that Ang had extensive dealings over two years with former BSI banker Yeo Jiawei, who worked for Low Taek Jho (better known as "Jho Low") and was a "central figure in the investigations" related to 1MDB.

Yeo was the first Singaporean charged in the 1MDB investigation and was sentenced to 30 months' imprisonment for attempting to pervert the course of justice in December 2016, and 4.5 years' imprisonment for money laundering and cheating in July 2017. The money laundering and cheating arose from aspects of the transactions that took place within Singapore and does not depend on any aspect of the case emanating from Malaysia.

Two other BSI bankers, Yak Yew Chee and Yvonne Seah Yew Foong were also convicted and sentenced in December 2016 to 18 months' imprisonment and 2 weeks' imprisonment respectively, for forgery of documents and failing to lodge suspicious transaction reports relating to suspicious transactions from the money flow.

In addition, in January 2017, a 28-week imprisonment term and S$128,000 fine was imposed on Swiss national Jens Fred Sturzenegger, former branch manager of Falcon Private Bank's Singapore office. He was convicted on six charges including two for failing to disclose suspicious transactions involving billions of dollars linked to 1MDB and four for lying to the authorities in order to protect the interests of Jho Low. Another 10 charges were taken into account for the purposes of sentencing. Notably, unlike the three BSI bankers who benefitted in the form of millions in bonuses or personal incentives, Sturzenegger made no financial gain from his offences.

Singapore Technologies ("ST") Marine senior executives' cases

Seven former ST Marine senior executives were prosecuted for payments of more than S$24.9 million made between 2000 and 2011, through thousands of false entries in petty cash vouchers claimed as entertainment expenses. These payments were made to ST Marine's customers in return for ship repair contracts.

The ST Marine senior executives were prosecuted under offences of falsifying accounts and/or corruption. Sentences ranged from the lightest imposed on former president Chang Cheow Teck, for breach of director's duties and who received a short detention order of 14 days (which does not leave him with a criminal record) to the heaviest on former chief executive officer and president See Leong Teck, for corruption and who received 10 months' jail and S$100,000 fine. Two former group financial controllers, Patrick Lee Swee Ching and Ong Teck Liam, were sentenced to pay fines of S$210,000 in July 2015 and S$300,000 in June 2017 respectively in respect of their roles for facilitating the false entries in the accounting system that allowed for the corruption payments to go unnoticed by the auditors.

Proposed DPA regime offers a new enforcement tool in Singapore

Following such major cases of corporate malfeasance and the prominent global resolution of the Petrobras related case with a DPA in the United States, an announcement was made by Minister K. Shanmugam on a proposal on amendments to Singapore's Criminal Procedure Code and Evidence Act, including implementing the DPA framework in Singapore. This announcement was made on 15 January this year at the "Modernising Criminal Justice: New Developments in Criminal Procedure" dialogue organised by the Law Society of Singapore.

Currently at the first reading stage, the Criminal Justice Reform Bill, if passed, provides a new legal tool to deal with certain corporate offences. Under a DPA, prosecutors agree to defer prosecution of criminal charges against the errant corporate entity on specific terms, which may include, inter alia, financial penalties, the errant corporation's efforts to enhance internal controls and compliance policies, disgorgement of profits and compensation made to victims of the alleged offence. Terms may also include the errant corporation's cooperation with the law enforcement agencies' prosecution of key individuals and the appointment of a representative to assess and monitor the corporation's internal controls. In the event that the errant corporation fails to comply with the terms of the DPA, prosecutors may proceed with the charges that were deferred.

In making the announcement, the Minister for Law and Home Affairs pointed out that it was "about time" that Singapore introduced this DPA regime, which has long been utilised in other jurisdictions such as the United States and the United Kingdom. Singapore's adoption of the DPA procedure is likely to follow the UK model, which requires the supervision of the Courts. In the United States, judicial oversight is not required for the implementation of a DPA. In Singapore, as set out in the Criminal Justice Reform Bill, the application of a DPA requires the approval of the High Court. The prosecutor must apply to the High Court for a declaration that the DPA is in the interests of justice and that the terms of the DPA are fair, reasonable and proportionate.

It is likely that the DPA regime, if adopted in Singapore, would be used to resolve complex cross-border investigations involving investigations by authorities in other jurisdictions. Should the relevant investigations reveal further information, one may expect that some corporations embroiled in the 1MDB probe may enter into a DPA under the appropriate circumstances.

Continued crackdown on white collar crimes

The Law and Home Affairs Minister's recent announcement signals the law enforcement authorities' intention to become even more active in battling white collar crime and foiling the acts of such criminals. For instance, the Commercial Affairs Department, the financial crime-fighting arm of the Singapore Police Force declared in January this year that it seeks to target ill-gotten gains "more proactively", especially those funds from overseas. In late February this year, Mr K. Shanmugam praised the police for doing "exceptionally well" in preventing former City Harvest Church leader Chew Eng Han from attempting to flee Singapore illegally on a motorised sampan. Chew was arrested a day before starting his jail sentence for misuse of church funds, in connection to a widely-publicised criminal breach of trust case involving key leaders of a mega church.

In the past few years, the Commercial Affairs Department, together with the Monetary Authority of Singapore, has been investigating the largest case of market manipulation in Singapore's history. The Prosecution alleges John Soh Chee Wen and Quah Su Ling of perpetrating a complex and elaborate securities fraud with numerous accomplices, using 180 trading accounts to place half a million trade orders. Trial is slated to take place at the end of the year.

With the advent of fintech innovations, fraud risk is likely to increase. Singapore remains committed to tackle financial crimes by staying relevant with regular reviews of its legal framework to have in place robust and effective laws to counter those who wish to contravene Singapore's financial crime laws.