Business ethics and anti-corruption laws: Singapore

Contributed by: Norton Rose Fulbright

Singapore is ranked 8 out of 167 on the TI CPI 2015.

Singapore has ratified the UNCAC. It is a member of the ADB/OECD Anti-Corruption Initiative for Asia and the Pacific, the FATF and the APG.

In Singapore, the primary anti-corruption statutes which prescribe corruption as substantive offences are:

• the Prevention of Corruption Act (the PCA); and
• the Penal Code.

Section 5 of the PCA creates public and private offences of active and passive bribery by both individuals and companies. Persons are guilty of bribery if:

• they corruptly solicit, receive, or agree to receive, any gratification as an inducement or reward for any person doing (or not doing) anything; or
• they corruptly give, promise or offer any gratification as an inducement or reward for any person doing (or not doing) anything.

Section 6 creates agency bribery offences involving either the corrupt offer to, or acceptance of, gratification by an agent in relation to the performance of the principal’s affairs or for the purposes of misleading that principal. Employees may be considered agents, and their employers, principals, for the purposes of this section.

In addition to the above, specific provisions in the PCA (sections 11 and 12) prohibit bribery of domestic public officials. Section 11 addresses both active and passive bribery in relation to Members of Parliament, while section 12 creates offences in respect of any ‘member of a public body’. Section 10 creates an offence in relation to offering or accepting gratification in relation to Government tenders.

The term ‘gratification’ is broadly defined under the PCA to include money, gifts, loans, fees, rewards, commissions, valuable security, property, interest in property, employment contracts or services (section 2, PCA). Both the PCA and the PC cover a broad range of domestic public officials. The provisions of the PCA pertaining to public officials refer to such an official as a ‘member, officer or servant of a public body’. The definition of ‘public body’ under the PCA includes ‘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 provisions of the Penal Code use the term ‘public servant’. This has been defined under the Penal Code to include judges and officers of a court of justice, arbitrators, Government officers and army officers. The PCA and Penal Code do not specifically target the bribery of foreign officials, although such bribery could fall under the ambit of the general provisions of the PCA (at sections 5 and 6).

The Penal Code also contains provisions that deal specifically with the bribery of domestic public officials (sections 161 to 165). Scenarios cited include:

• 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 such consideration that the public servant knows to be inadequate, from a person concerned in any proceedings or business conducted by the public servant.

A Singapore citizen will be liable under section 37 of the PCA for corrupt behaviour, even if such behaviour took place outside Singapore. Similarly, the Penal Code provides that an act committed outside Singapore by a Singapore public servant (who is a Singapore citizen or permanent resident) purporting to act in the course of his or her employment that would constitute an offence within Singapore, will be deemed to have been committed in Singapore. Accordingly, if the Singapore public servant accepted a bribe overseas, he or she would be liable under Singapore laws.

There is no express defence of adequate anti-bribery compliance procedures under the statutes pertaining to corruption in Singapore. Having adequate procedures in a company to guard against corruption may be a relevant factor at the mitigation stage, and also may be viewed favourably by regulators and prosecutors when deciding whether to pursue a case against the company and/or directors of the company. Further, having such adequate procedures in place may be an argument against liability for a director or officer in respect of civil claims brought by the company or shareholders of the company for breach of fiduciary or other duties or for failing to take steps to guard against corruption. The Public Prosecutor has prosecutorial discretion to initiate, conduct or discontinue any criminal proceedings.

The PCA does not provide an express defence for extortion or intimidation. However, extortion is specifically prohibited by section 383 of the Penal Code. Extortion is defined as placing a person in fear of being harmed in the mind, body, reputation, or property. In cases of extortion which involve a threat to life, the defence of duress in section 94 of the Penal Code may be available. This defence only applies when there is a threat of instant death directed towards the accused or any other person. Under section 94, nothing is an offence if done by a person who is compelled with threats which cause reasonable apprehension at the time of instant death (except murder and offences against the State punishable with death).

There is no express defence for bribery if such conduct was permitted or required by the written laws of the country in which it was made. This accords with the position that Singapore citizens are liable for actions prohibited under the PCA even when outside of Singapore (PCA, section 37).

Neither the PCA nor the Penal Code expressly permit facilitating or ‘greasing’ payments. Such payments would technically constitute an act of bribery under the general prohibitions set out in 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. As section 37 of the PCA applies to actions taken by Singaporean citizens outside of Singapore, facilitation payments made outside of the country will also constitute an act of bribery.

There are no specific types of gifts or gratuities which are permitted under the PCA and the Penal Code. Any gift or gratuity is potentially caught by the PCA and Penal Code if accompanied with the requisite corrupt intent, and if the other elements required by the statutes are met.

Domestic public officials are also subject to the Government Instruction Manual, which details the circumstances in which gifts and entertainment can be accepted and when they must be declared. A breach of the Government Instruction Manual may result in disciplinary proceedings being instituted against the said public official. As a matter of practice, public officials are not allowed to accept any gift offered to them on account of their official position or official work. However, a public official may accept a gift if it is impracticable or inappropriate to do so in the circumstances and is required to report the receipt of such a gift to his permanent secretary immediately. Any gift valued at more than S$50 (US$40) can be kept by the public official only if they are donated to a Governmental department or independently valued and purchased from the Government by that public official.

Companies can be held liable for bribery offences. The various provisions of the PCA and the Penal Code set out certain offences which may be committed by a ‘person’. The term ‘person’ has been defined in the Interpretation Act (Cap 1) 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. This will depend on whether the person who has 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’.

Both individuals and companies can be held liable for bribery offences, including bribery of a foreign official. Generally, individual directors and officers of a company will not be held strictly liable for an offence found to have been committed by the company if they were not personally responsible for, or otherwise involved in, that particular offence.

There are no express provisions in the various key statutes which would seek to attribute the criminal liability of a company to its directors and officers. However, it may be possible for the individual directors and officers who are not personally guilty of the corrupt acts committed by the company to be potentially liable for consequential offences related to such corrupt acts, including money laundering and the failure to report the suspicion that certain property is connected to criminal offences.

The directors and officers (whether of Singapore-incorporated companies or companies incorporated in other jurisdictions) who are personally involved in the corrupt activities may be liable beyond bribery offences for abetment or conspiracy, breach of fiduciary duties, breach of disclosure requirements under the Companies Act, breach of reporting obligations, and could potentially be exposed to civil liability arising out of the corrupt acts.

The PCA imposes a fine and/or custodial sentence for the contravention of the general offence provisions. The guilty individual or company may be liable for a fine not exceeding S$100,000 (US$79,600) and/or imprisonment (for individuals only) for a term generally not exceeding five years, which ceiling is extended to seven years for public officials. Civil remedies are available for a victim of corruption to recover property of which he or she has been deprived as a result of the corrupt activity.

Section 14 of the PCA provides for the recovery as a civil debt, by the principal, of an amount paid to its agent.

The Penal Code imposes a fine and/or imprisonment for a term ranging from one to three years for violation of the bribery offences listed in the statute.

The main Government enforcement agency is the Corrupt Practices Investigation Bureau (the CPIB), which derives its powers from the PCA. The CPIB carries out investigations into complaints of corruption, but does not prosecute cases. These complaints are subsequently referred to the Public Prosecutor for assessment upon the conclusion of investigations. Depending on the merits case and public interest involved, the Public Prosecutor may decide to prosecute the case or direct the enforcement agency to issue a warning (that may be conditional or unconditional) or to take no further action in the matter.

The Financial and Technology Crime Division (the FTCD) (previously known as the Economic Crimes and Governance Division) was established within the Attorney-General’s Chambers in January 2011. It is one of two divisions in the Attorney-General Chamber’s Crime Cluster, with the Criminal Justice Division being the other. The FTCD is primarily responsible for prosecutions and all related appeals in respect of white-collar and other commercial crimes, as well as corruption cases. This includes money laundering and terrorist financing offences.

The CAD is the specialist department within the Singapore Police Force which investigates complex fraud, white collar crime, money laundering and terrorism financing. There are four groups within the CAD that deal with such issues:

• the Financial Investigation Group, which is in charge of investigating money laundering and counter financing of terrorism under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (the CDSA);
• the Intelligence Group, which identifies trends in crime and areas of concern. It contains the Suspicious Transaction Reporting Office, the central agency in Singapore for receiving, analysing and disseminating Suspicious Transaction Reports;
• Enforcement Group I, which investigates capital market offences and investment fraud; and
• Enforcement Group II, which investigates fraud in the private and public sectors. It also focuses on commercial crime.

The CDSA criminalises any dealing with the proceeds of certain criminal conduct, including predicate corruption offences under the PCA. Both the CDSA and the Criminal Procedure Code prescribe various reporting obligations in respect of corrupt behaviour.

Section 39 of the CDSA requires a person who ‘knows or who has reasonable grounds to suspect’ that any property represents, was used in connection (or intended to be used in connection) with any act which may constitute ‘criminal conduct’, to disclose such knowledge or suspicion to the relevant authorities. This obligation to disclose knowledge or suspicion of a corrupt act applies regardless of whether such corrupt act is committed in or outside Singapore.

Section 44 of the CDSA, which prohibits a person from assisting another to retain benefits from ‘criminal conduct’, extends to property derived from corruption outside of Singapore. This is because ‘criminal conduct’ has been defined in the CDSA to include the ‘doing or being concerned in, whether in Singapore or elsewhere, any act constituting a serious offence or a foreign serious offence’. A ‘foreign serious offence’ refers to an offence that, if it had been committed in Singapore, would have been a ‘serious offence’. Offences under sections 5 and 6 of the PCA would constitute ‘serious offences’ under the CDSA.

Section 47 of the CDSA, which prohibits the acquiring, possessing, using, concealing or transfer of benefits of ‘criminal conduct’, extends to benefits derived from corruption outside of Singapore on similar grounds as those discussed above.

There is currently no overarching whistleblowing legislation in Singapore. As regards corruption, section 36 of the PCA affords anonymity to whistleblowers. However, the right to anonymity may be revoked where:

• the courts believe that justice cannot be done without revealing the identity of the informer; or
• the whistleblower did not believe that the statement he or she was making was true, or actually knew that the statement was false.

Currently, there are no express provisions that protect or reduce the sentence of whistleblowers who have participated in the illegal activity they have reported. In such instances, the court has the discretion to determine whether the act of whistleblowing should result in a reduced sentence or fine for the whistleblower. The exercise of discretion will depend, in part, on the motivation of the whistleblower.

Members of the public are obliged to provide any information relating to corrupt acts they are in possession of if the Director of the CPIB requires them to do so.

Personal data is protected in Singapore by the Personal Data Protection Act (the PDPA), which came into force in January 2014. The PDPA aims to provide a comprehensive data protection regime. Before it was in force, the protection was provided through sector-specific legislation, regulations and common law principles on confidentiality. The PDPA prohibits the unnecessary collection of personal data and prohibits the unauthorised use of personal data. However, the disclosure of data is permitted if it is ‘necessary for any investigation or proceeding’ or to a public agency and such disclosure is necessary in the public interest (section 1(f) and (g) of Fourth Schedule).

Customer information is protected from disclosure by banks under section 47(1) of the Banking Act unless such disclosure is necessary for compliance with an investigation (Third Schedule of the Banking Act).

The basic rule for disclosure under Singapore law within judicial proceedings is that each party has a mutual and ongoing duty to disclose all the relevant documents in his or her possession, custody or power on which he or she relies or will rely; or which could affect his or her own case, adversely affect another party’s case or support another party’s case.

In regulatory proceedings, the extent of disclosure required is determined by the rules applicable to the particular regulatory proceedings. Regulatory bodies can have fairly extensive powers in this regard. For instance, the Monetary Authority of Singapore has extensive powers to obtain documents for the purposes of carrying out investigations.

Two types of privilege are recognised under Singapore law: legal advice privilege and litigation privilege (both codified in sections 128 and 131 of the Evidence Act).

• Legal advice privilege protects communications between a client and his or her advocate and solicitor, the dominant purpose of which is to seek and obtain legal advice. Legal advice privilege can include third party communications, provided the communication was for the dominant purpose of enabling the client to obtain legal advice. Communications for the purpose of obtaining business advice from a solicitor are not privileged even if giving business advice of a certain kind is within the ordinary business of a solicitor. In circumstances when legal and non-legal purposes are interconnected and hard to separate distinctly, such communications are likely to still be privileged. The Evidence Act expresses this privilege as a duty of the advocate and solicitor to prevent disclosure of privileged communications. The client is the holder of the privilege and is permitted to disclose privileged communications if he or she so desires. This privilege includes communications with in-house counsel provided they relate to legal rather than administrative matters.
• Litigation privilege is concerned with protecting information and materials created and collected for the dominant purpose of litigation. This privilege extends to third party communications. Litigation privilege exists only when there is a reasonable prospect of litigation. Singapore courts require that the dominant purpose be for litigation if legal privilege is to be asserted, but litigation does not have to be the sole purpose. For documents that are privileged, the privilege belongs to the person for whose benefit the documents were created.