Madhavan Peter v Public Prosecutor and other appeals

• Jurisdiction: Singapore
• Judge: Chan Sek Keong CJ
• Judgment Date: 27 July 2012
• Neutral Citation: [2012] SGHC 153
• Court: High Court (Singapore)
• Docket Number: Magistrate’s Appeals Nos 1, 10 and 13 of 2011
• Year: 2012
• Published date: 07 August 2012
• Hearing Date: 24 February 2012,23 February 2012
• Plaintiff Counsel: Davinder Singh SC, Wendell Wong, Jaikanth Shankar, Pardeep Singh Khosa, Krishna Elan, Vishal Harnal and Chan Yong Wei (Drew & Napier LLC),Subramanian Pillai, Rasanthan Sothynathan and Luo Ling Ling (Colin Ng & Partners LLP),Michael Hwang SC (Michael Hwang Chambers) and Thong Chee Kun and Istyana Putri Ibrahim (Rajah & Tann LLP)
• Defendant Counsel: Jeffrey Chan Wah Teck SC, Peter Koy and Navin Thevar (Attorney-General's Chambers)
• Subject Matter: Financial and Securities Markets,Criminal Procedure and Sentencing
• Citation: [2012] SGHC 153

Chan Sek Keong CJ: Introduction

These are appeals by Madhavan Peter (“Madhavan”), Chong Keng Ban @ Johnson Chong (“Chong”) and Ong Seow Yong (“Ong”) against their convictions by the district judge (“the DJ”) for certain offences under the Securities and Futures Act (Cap 289, 2002 Rev Ed) (“the SFA”) in connection with the affairs of Airocean Group Limited (“Airocean”), a company which was previously listed on the main board of the Singapore Exchange (“SGX”) and of which the appellants (collectively, “the Appellants”) were directors at all material times (see Public Prosecutor v Chong Keng Ban @ Johnson Chong, Peter Madhavan, Ong Seow Yong [2011] SGDC 97 (“the Judgment”)).

The Appellants were each convicted of the following charge:¹

You …

…

are charged that on 25 November 2005, in Singapore, whilst as a director of Airocean …, you consented to Airocean making a statement, namely an announcement entitled “Clarification of Straits Times article on 25 November 2005” released via SGXNET on 25 November 2005, to wit, “We refer to the article entitled “AIROCEAN’S CHIEF EXECUTIVE THOMAS TAY UNDER CPIB PROBE” which appeared in the 25 November 2005 issue of the Straits Times. The Company learnt of the CPIB investigations with regard to practices of some other companies in the Aircargo Industry sometime in early September 2005 when the Company’s CEO Mr. Thomas Tay was called for an interview by the CPIB. The Company was advised by Mr. Thomas Tay that he provided Statements to the CPIB and offered his full co-operation. The Company also immediately appointed Solicitors to ascertain the nature of the investigations and advise the Company of its Corporate obligations and compliance. The Company was, inter alia, advised by Counsel that the scope of the CPIB investigations was uncertain but on the information presently available, there did not appear to be any impropriety on the part of the Company or its CEO Mr. Thomas Tay. Further, since then the CPIB has not made any allegations of impropriety against the Company or its CEO Mr. Thomas Tay.”

which statement was misleading in a material particular and was likely to have the effect of stabilizing the market price of certain securities, namely, Airocean shares, when at the time Airocean made the statement, it ought reasonably to have known that the statement was misleading in a material particular, and you have thereby committed an offence under Section 331(1) read with Section 199(c)(ii) and punishable under Section 204(1) of the Securities and Futures Act (Chapter 289, 2002 Revised Edition).

[emphasis in original]

I shall hereafter refer to the charges against the Appellants under s 199(c)(ii) read with s 331(1) of the SFA as “the Misleading Disclosure Charges”, and to the announcement mentioned in the Misleading Disclosure Charges as “the 25/11/05 Announcement”.

Two of the Appellants, Chong and Madhavan, were also each convicted of the following charge:²

You …

…

are charged that between 8 September 2005 and 1 December 2005, in Singapore, whilst as a director of Airocean …, you consented to Airocean’s reckless failure to notify SGX that its chief executive officer and director Thomas Tay Nguen Cheong was questioned by the Corrupt Practices Investigation Bureau in relation to 2 transactions involving 2 of Airocean’s subsidiaries,that he was released on bail and his passport was impounded, which information was likely to materially affect the price or value of Airocean shares and was required to be disclosed under Rule 703(l)(b) of the SGX Listing Rules, and you have thereby committed an offence under Section 331(1) read with Section 203(2) and punishable under Section 204(1) of the Securities and Futures Act (Chapter 289, 2002 Revised Edition).

[underlining in original; emphasis added in italics]

I shall hereafter refer to the charges against Chong and Madhavan under s 203(2) read with s 331(1) of the SFA as “the Non-disclosure Charges”, and to the information described in the italicised words in the quotation above as “the Information”.

One of the Appellants, Chong, was also convicted of three charges of insider trading of shares in Airocean which he had carried out on three occasions. Save for differences in the dates of the trades and the quantities of shares sold, each charge was as follows:³

You …

…

are charged that you, on 26 September 2005, in Singapore, whilst being the chief operating officer and a director of Airocean …, and by reason of you being connected with Airocean, you were in possession of information that was not generally available but, if it were generally available, a reasonable person would expect it to have a material effect on the price or value of the securities of Airocean, the information being: a) Thomas Tay Nguen Cheong (“Thomas”), chief executive officer and director of Airocean, was questioned by the Corrupt Practices Investigation Bureau (“CPIB”) in relation to 2 proposed transactions between 2 of Airocean’s subsidaries with Jetstar Asia Airways Pte Ltd and Lufthansa Technik Logistik Pte Ltd; and b) Pursuant to this questioning, Thomas was released on bail and surrendered his passport to the CPIB.

and whilst you were thereby precluded from dealing with the securities of Airocean, you sold 1,000,000 Airocean’s shares from your mother Foo Jut Wah’s (“Foo”) bank account number [xxx] with Malayan Banking Berhad, which you were the mandate holder, using Foo’s trading account number [xxx] with OCBC Securities Private Limited, and you have thereby committed an offence under Section 218(2)(a) and punishable under Section 221(1) of the Securities and Futures Act (Chapter 289, 2002 Revised Edition).

[underlining in original]

I shall hereafter refer to the charges against Chong under s 218(2)(a) of the SFA as “the Insider Trading Charges”. As the information referred to in these charges is the same as the information referred to in the Non-disclosure Charges (ie, the Information as defined at [5] above), I shall likewise use the term “the Information” when discussing the Insider Trading Charges.

Background facts

Airocean was the holding company of a group of air cargo logistics companies that provided services in freight forwarding, airline general sales agency as well as air terminal ground cargo handling. The operating subsidiaries involved in these proceedings were Airlines GSA Holdings Pte Ltd (“Airlines GSA”) and WICE Logistics Pte Ltd (“WICE Logistics”) (collectively, “the Subsidiaries”). The following were Airocean’s directors at the material time: Thomas Tay Nguen Cheong (“Tay”), an executive director and Chief Executive Officer (“CEO”) of Airocean; Madhavan, an independent director, who is the appellant in Magistrate’s Appeal No 1 of 2011 (“MA 1/2011”); Chong, an executive director and Chief Operating Officer (“COO”) of Airocean, who is the appellant in Magistrate’s Appeal No 10 of 2011 (“MA 10/2011”); Ong, an independent director, who is the appellant in Magistrate’s Appeal No 13 of 2011 (“MA 13/2011”); Ong Chow Hong (“Ong CH”), an independent director, who was also the non-executive chairman of Airocean’s board of directors; and Dunn Shio Chau Paul (“Dunn”), a director who was based in Hong Kong and the United States.

On 6 September 2005, Tay and three officers of the Subsidiaries (namely, Ray Teo, Senior Vice-President of Airlines GSA; Bob Lee, Director of Airfreight and Logistics of WICE Logistics; and Simon Ang Teck Choon (“Simon Ang”), Regional Manager of Airlines GSA) were questioned by the Corrupt Practices Investigation Bureau (“CPIB”) in connection with suspected corruption in the air cargo handling industry. Tay was asked: whether he had given any gratification to one Chooi Yee Cheong (“Chooi”) of Jetstar Asia Airways Pte Ltd (“Jetstar”) to procure the appointment of Airlines GSA as Jetstar’s cargo agent; and whether he had given any gratification to one Edward Goh of Lufthansa Technik Logistik Pte Ltd (“Lufthansa”) in exchange for introducing Lufthansa’s business to WICE Logistics.

Tay admitted to CPIB that he had previously instructed Simon Ang to inform Chooi that “if he [Chooi] would help us, in the future if he needed help, we would help him”.⁴ While at the premises of CPIB, Tay instructed Mak Oi Leng Sharelyn (“Sharelyn”), Director of Human Resource and Administration of Airocean, to surface the following documents as requested by CPIB: Airlines GSA’s business proposal to Jetstar; WICE Logistics’ quotations to Lufthansa; WICE Logistics’ cheque payment vouchers; and Tay’s bank statements from January to August 2005.

On the same day (viz, 6 September 2005), CPIB officers accompanied Tay to Airocean’s office, where they conducted a search and seized the aforesaid documents.

Also on the same day, Sharelyn informed Chong of the CPIB investigations (“the CPIB Investigations”) and Chong thereupon apprised Madhavan of what had happened. Tay was then still at CPIB’s premises. Chong telephoned Madhavan and informed him that Tay’s wife was concerned and had asked him what she should do. Madhavan suggested that Tay’s wife should seek advice from Mr Sant Singh, a lawyer.

Chong attempted to convene a meeting of Airocean’s board of directors on 7 September 2005, but there was no quorum. Nevertheless, the directors present decided that Airocean should seek legal advice on whether it had to disclose to SGX that its officers were involved in the CPIB Investigations. Madhavan suggested that Airocean seek legal advice from Mr Chelva Rajah SC (“Mr Rajah”) of Tan Rajah & Cheah (“TRC”). Later that evening, Chong, Madhavan and Doris Koh Bee Leng (“Doris Koh”), Airocean’s Director of Finance, met up with Mr Rajah to seek his advice. Mr Rajah informed them that before he could give his opinion on the issue, he would have to speak to Tay and the officers of the Subsidiaries who had been questioned by CPIB. His partner, Mr...