PP v Teo Chu Ha

• Jurisdiction: Singapore
• Judgment Date: 27 August 2014
• Date: 27 August 2014
• Docket Number: Criminal Reference No 3 of 2013
• Court: Court of Appeal (Singapore)

Public Prosecutor

Plaintiff

and

Teo Chu Ha

Defendant

[2014] SGCA 45

Chao Hick Tin JA

,

Andrew Phang Boon Leong JA

and

Tay Yong Kwang J

Criminal Reference No 3 of 2013

Court of Appeal

Criminal Law—Statutory offences—Prevention of Corruption Act (Cap 241, 1993 Rev Ed) —Accused agreeing with third party to influence tender exercise carried out by employer in favour of company B—Accused agreeing to pay for shares in company B—Employer awarding contracts to company B—Whether Prosecution had to prove consideration was inadequate or that transaction was a sham to show that transaction was objectively corrupt

Criminal Procedure and Sentencing—Criminal references—Prosecution referring questions of law to Court of Appeal—Whether requirements under s 397 Criminal Procedure Code (Cap 68, 2012 Rev Ed) made out—Section 397 Criminal Procedure Code (Cap 68, 2012 Rev Ed)

The accused's employer (Company A) carried out a tender exercise to award contracts in 2004 (‘the 2004 tender exercise’). The accused agreed with a third party to influence the tender exercise in favour of Company B, which was a private company formed solely for the receipt of financial benefits from Company A as a result of being successful in the aforementioned tender exercise. In exchange, it was agreed that the accused could buy 20,000 shares in Company B for $6,000. Company B eventually won the 2004 tender exercise. Company B won subsequent tender exercises conducted by the accused's employer in 2005 and 2007. The accused received a total of 11 dividend payments from his Company B shares.

The accused faced 12 charges. The first charge was for corruptly accepting 20,000 shares in Company B contrary to s 6 (a) of the Prevention of Corruption Act (Cap 241, 1993 Rev Ed) (‘the Act’). The remaining charges related to the 11 payments which the Prosecution asserted were also corruptly received. The district judge found the accused guilty of all charges. The High Court judge (‘the Judge’) reversed the conviction. In relation to the first charge, the Judge held that there was no evidence that $6,000 was insufficient consideration for the shares and was, on that basis, not satisfied that the share transfer was objectively corrupt. As for the remaining charges, the Judge found that there was no correspondence in time between the tender exercises and the 11 payments. In those circumstances, the Judge held that the payments could not be said to be objectively corrupt.

The Prosecution then referred two questions for determination by the Court of Appeal by way of a criminal reference under s 397 of the Criminal Procedure Code (Cap 68, 2012 Rev Ed) (‘CPC’):

Question 1: For the purposes of s 6 of the Act, in determining if a transaction was objectively corrupt where consideration was paid for the gratification, must the Prosecution prove that the consideration was inadequate or that the transaction was a sham?

Question 2: For the purposes of s 6 of the Act, in determining if a transaction was objectively corrupt, must the Prosecution prove that a reward to an agent corresponds in time with acts of assistance done or favours shown by the agent in relation to his principal's affairs?

Counsel for the accused argued that the questions did not satisfy the requirements of s 397 CPC in that they (a) were questions of fact; (b) were not of public interest; and (c) did not arise in the High Court judge's decision. Further, in relation to Question 1, counsel for the accused argued that answer had to be ‘yes’ since shares would not be considered as ‘gratification’ within the meaning of the Act if the accused paid a fair consideration for it.

Held, answering one of the questions raised:

(1) Both questions were questions of law and not fact. The courts had to determine whether there was sufficient generality embedded within a proposition posed by the question which was more than just descriptive but also contained normative force for it to qualify as a question of law; a question which had, at its heart, a proposition which was descriptive and case-specific was merely a question of fact. One way of testing the substance of the question was to consider the arguments in support of an answer to the proposition posed in that question. In the present case, the arguments in support of the propositions in both questions were not targeted at the specific facts of the case but at the essential ingredients before a charge of corruption could be established under the Act: at [31] and [32] .

(2) Both questions (as framed) were questions of public interest. In relation to Question 1, there was public interest in ensuring that the principles of law relating to corruption, a huge social evil, were correctly and authoritatively decided for future cases. In relation to Question 2, the legal proposition which was the crux of Question 2 (as framed) was at odds with previous case law and was thus statutorily deemed by s 397 (6) of the CPC to be one of public interest: at [35] and [36] .

(3) In relation to the first charge, the High Court Judge's decision propounded, as proposition of law, that so long as an accused had paid for what was alleged to be the gratification, it was incumbent upon the Prosecution to lead evidence to discharge its burden of showing that the transaction for value was a ‘smokescreen’. Question 1 was therefore directly squarely at this proposition and had to be answered: at [39] to [42] .

(4) Question 2, however, did not arise from the decision. The Judge's findings in relation to the remaining charges had to be read in light of his rejection of the Prosecution's case that the accused had received the shares corruptly. In that context, the Judge was merely stating that the Prosecution could offer no other plausible explanation which linked the payments to the acts of assistance by the accused stated in the remaining charges. The Judge was not attempting to state a new proposition of law which was the subject of Question 2. There was therefore no need to answer Question 2: at [44] to [48] and [52] .

(5) The answer to Question 1 was ‘no’. While the consideration paid by an accused was a factor which the court could take into account, it was not necessary for the Prosecution to prove that the consideration was inadequate or that the transaction was a sham before an offence under s 6 of the Act was made out: at [73] .

(6) Shares could still be considered as ‘gratification’ within the meaning of the Act notwithstanding that they were paid for. The Act was intended by Parliament to be of wide application and the definition of ‘gratification’ in s 2 of the Act was not exhaustive. In fact, the idea of consideration being given by the agent was inherent in some examples of gratification in s 2 of the Act: at [54] and [55] .

(7) The proposition of law which was the subject of Question 1 was premised on the notion that the gratification in the first charge consisted only of the shares per se and nothing else. This approach was, with respect, unduly narrow and technical. In the appropriate case it was the opportunity to purchase the shares and/or the assistance rendered in purchasing the shares which, together with the shares, constituted the gratification. The gratification also lay not merely in the shares per se but in what they represented. The shares could represent the necessary ‘key’ that ‘unlocked’ the many ‘doors of opportunity’ for the subsequent material gratification in the form of dividend payments. If an accused allowed himself to be ‘bought over’ by a third party who gave him an opportunity to acquire the shares and the shares unlocked the door to subsequent material gratification, then whether he paid the full consideration for the shares could not by itself be decisive. In fact it was entirely possible in such a situation for the agent to have paid an amount in excess of the market value for the shares and still be corrupt: at [56] , [58] and [64] to [67] .

(8) That it was not necessary for the Prosecution to prove that the share transaction was a sham or that inadequate consideration was paid was consistent with the broader spirit and policy behind the Act - to prevent corruption in its various forms and all the more so with regard to deliberate and involved as well as sophisticated schemes: at [71] .

(9) Nevertheless, it would not always be completely irrelevant that shares were purchased at full value. The Prosecution had to prove all of the corruption elements beyond a reasonable doubt. It was not inconceivable for an accused to maintain that shares were purchased as a result of a purely commercial transaction which was not corrupt. The plausibility of such a defence would, however, need to be evaluated in light of all other established facts to see if it raised a reasonable doubt: at [68] and [69] .

Fong Ser Joo William v PP [2000] 3 SLR (R) 12; [2000] 4 SLR 77 (folld)

Hassan bin Ahmad v PP [2000] 2 SLR (R) 567; [2000] 3 SLR 791 (folld)

Kwang Boon Keong Peter v PP [1998] 2 SLR (R) 211; [1998] 2 SLR 592 (refd)

Phang Wah v PP [2012] SGCA 60 (refd)

PP v Bridges Christopher [1997] 1 SLR (R) 681; [1997] 2 SLR 217 (refd)

PP v Fong Kit Sum [2008] SGDC 58 (refd)

PP v Henry Hsu Yen Shuenn [2012] SGDC 56 (refd)

PP v Li Weiming [2014] 2 SLR 393 (refd)

PP v Tang Eng Peng Alan [1995] 2 SLR (R) 672; [1995] 3 SLR 131 (refd)

PP v Teo Chu Ha @ Henry Teo [2013] SGDC 61 (refd)

Rainforest Trading Ltd v State Bank of India Singapore [2012] 2 SLR 713 (refd)

Tat Seng Machine Movers Pte Ltd v Orix Leasing Singapore Ltd [2009] 4 SLR (R) 1101; [2009] 4 SLR 1101 (refd)

Teo Chu Ha v PP [2013] 4 SLR 869 (refd)

Criminal Procedure Code (Cap 68, 2012 Rev Ed) ss 397, 397 (6)

Prevention of Corruption Act (Cap 241, 1993 Rev Ed) s 2 (consd) ;s 6

David Chew, Alan Loh and Cheryl Lim (Attorney-General's Chambers) for theappellant

Bachoo Mohan Singh and Too Xing Ji (Veritas Law Corporation) for the respondent.

...