Public Prosecutor v Katsutoshi Ishibe and another

• Jurisdiction: Singapore
• Judge: Shaiffudin Bin Saruwan
• Judgment Date: 19 September 2018
• Neutral Citation: [2018] SGDC 239
• Docket Number: DAC 907112/15 & 27 Ors & DAC 907041/15 & Ors
• Year: 2018
• Published date: 13 November 2018
• Citation: [2018] SGDC 239
• Plaintiff Counsel: DPP Jasmin Kaur & DPP Loh Huimin
• Defendant Counsel: Mr Mark Goh & Ms Charlotte Melody Wong
• Court: District Court (Singapore)

District Judge Shaiffudin Bin Saruwan: INTRODUCTION

The accused persons, Ishibe and Masui are Japanese nationals. At the time of the commission of the offences, they were managers with M/s Nissho Iwai Singapore/Sojitz Singapore. They faced 28 charges each of conspiring with one another to corruptly obtain from one Koh Pee Chiang (“Koh”) bribes as an inducement for doing acts in relation to their principal affairs, to wit, by assisting the business interest of Koh’s company, M/s Chia Lee (“Chia Lee”), with its flour supplier, M/s Nissho. Koh made 28 payments of bribes of various amounts to the two accused persons. These are offences under s 6(a) read with s 29(a) of the Prevention of Corruption Act, Cap 241 (“PCA”).

BACKGROUND

At the material time, the accused persons were employees of Nissho Iwai Corporation (“Nissho Japan”) and from April 2004, of Sojitz Corporation (“Sojitz Japan”), after Nissho Iwai Corporation merged with Nichimen Corporation. The company was based in Japan. During the course of their employment, they were seconded to Nissho Iwai International (Singapore) Ltd (“Nissho Singapore”) and Sojitz Asia Pte Ltd (“Sojitz Singapore”). These two entities were Singapore incorporated subsidiaries (100% owned) of Nissho Iwai Corporation and Sojitz Corporation. One of their businesses was the supply of edible and industrial flour. M/s Nippon Flour Mill was the manufacturer of the flour supplied by the company.

Chia Lee was a longstanding distributor of edible flour for Nissho Singapore/Sojitz Singapore. Chia Lee would purchase edible flour from Nissho Singapore/Sojitz Singapore before on-selling the edible flour to its customers. Sometime in mid-2002, Chia Lee was appointed to replace the company Sin Heng Chan as the industrial flour distributor for Nissho Singapore/Sojitz Singapore. This was because Sin Heng Chan had suffered severe financial difficulty in running its business.

It was not disputed that Koh and the accused persons had entered into arrangement to ‘share’ the profits earned by Chia Lee from the industrial flour business (“profit-sharing arrangement”). When this was agreed upon, the expected profit from the industrial flour business was US$23 per metric ton of industrial flour. Koh would get only US$3 per metric ton. The remaining US$20 per metric ton was shared equally by the accused persons. The true character of this profit-sharing arrangement was the main bone of contention in the trial.

The prosecution alleged that the profit sharing arrangement was in reality a scheme devised by the accused persons to obtain bribes from Koh as a quid pro quo for them to continue to ‘support and protect’ Chia Lee’s long-standing edible flour business with Nissho Singapore/Sojitz Singapore. To continue to ‘support and protect’ meant that they would ensure that Chia Lee remained the only edible flour distributor in Singapore for Nissho Singapore/Sojitz Singapore. Koh, under the impression that the accused persons had the power and/or authority to affect Chia Lee’s edible flour business, reluctantly agreed to be a party to the profit-sharing arrangement, despite his strong reservations about the industrial flour business. Subsequently, when Koh wanted out from the profit-sharing arrangement, the accused persons threatened to remove their ‘support and protection’ for Chia Lee’s edible flour business. Out of fear for his edible flour business, he continued with the arrangement. The prosecution submitted that the accused persons’ guilty knowledge could be inferred from their conduct and the surreptitious manner in which the arrangement was carried out.

The Defence’s case was that the profit-sharing arrangement was a legitimate business transaction between Koh and the accused persons in relation to the distribution of industrial flour. The lop-sided sharing of the profit was because they had agreed to personally take on the risks of the industrial flour business. They had done so in order to allay Koh’s misgivings about being the distributor of industrial flour, and to persuade him to take on the distributorship. The accused persons conceded that payments had been made to them pursuant to the arrangement. However, they disputed that the amount that had been paid to them was S$2,051,402. The accused persons also denied the Prosecution’s assertion that they had the power or authority to affect Chia Lee’s edible flour business.

THE ISSUES

The issues in this case were as follows - whether the accused persons were agents of Nissho Iwai Singapore/Sojitz Singapore; whether the accused persons had received the payments as averred in the charges from Koh; whether the accused persons had received these payments as a quid pro quo for continuing to support and protect Chia Lee’s edible flour business; and whether the accused persons had recognised that the payments were meant to act as an improper influence on their actions and were corrupt.

ANALYSIS OF THE ISSUES Were the charges sufficiently particularised?

The Defence argued that the charges were insufficiently particularised, thereby prejudicing the running of the accused person’s defence. The deficient related to the omission to state the exact acts allegedly carried out by the accused persons to advance Chia Lee’s business interests on each occasion when payment was received. On a side note, the Defence argued that insofar as the accused persons had threatened to stop their “support and protection” of Chia Lee, this was not a conferment of an advantage but rather a forbearance to show disfavour.

I rejected the Defence arguments. I was satisfied that there was sufficient particularisation insofar as each charge stated the acts done in relation to the principal’s affairs ie the advancement of Chia Lee’s business interests with Nissho Singapore/Sojitz Singapore. The evidence adduced in court through the prosecution witnesses averred to this. On the side note, the accused persons had promised to provide their continued “support and protection” of Chia Lee’s business interests by ensuring that it remained the sole distributor of edible flour in Singapore for Nissho Singapore/Sojitz Singapore. I did not find that there was any ambiguity in the charges that the accused persons have to answer, and no prejudice was caused.

Further, the payments that Koh had made to the accused persons were made to ensure that they continued to advance Chia Lee’s business interest. Logically, to stop advancing Chia Lee’s business interest by supporting or protecting Chia Lee did not necessarily entails showing disfavour to Chia Lee. Rather, it was a return to the ordinary state of affairs. The phrase “acts in relation to his principal’s affairs” have been widely construed: Mohamed Ali bin Mohamed Iqbal v PP [1978-1979] SLR 447 (at [5]). Such acts could encompass any act so long as they were something which the accused persons could have performed within the scope of their duties: see PP v Mohamed Abdul Gofar [1997] 1 SLR 497 (at [34]). In the present case, the selling of edible flour to other dealers or directly to Chia Lee’s customers fell within the scope of the accused persons’ duties.

Were the accused persons agents of Nissho Singapore/Sojitz Singapore?

The definition of agent in s 2 PCA was a broad one. It encompassed not only employees, but also “any person acting for another”, which was in turn framed as an inclusive category of persons. The same was true for the definition of principal in the PCA. The critical inquiry was whether the recipient of the gratification owed a duty to act in the interest of the principal.

In the present case, it was clear that the accused persons owed a duty to act in the interest of Nissho Singapore/Sojitz Singapore whilst they were assigned or seconded to the subsidiary. I agreed with the Prosecution that their duty to act in the interest of the subsidiary did not cease upon their re-deployment to the parent company, Nissho Japan/Sojitz Japan. To hold otherwise was to ignore the reality of the relationship between the parent company and its subsidiaries. The evidence showed that in this case, the parent company and its subsidiaries were run as a group along divisional lines. Each division in the parent company managed the corresponding division in the overseas subsidiary¹. As Ishibe had testified, there was “HQ control” over the credit applications, appointment of distributors, and amount of commissions earned by the overseas subsidiary².

The evidence also showed that the accused persons had continued to be concerned in the affairs of Nissho Singapore/Sojitz Singapore even after their return to Japan. Masui was General Manager of the Foodstuffs Department in Nissho Japan/Sojitz Japan between April 2005 and November 2007 (Exhibit P4-T)³. As General Manager, he was responsible not only for the flour business in Japan but also oversaw the flour business worldwide⁴. This was reflected in Masui’s resume in Exhibit P4-T and confirmed by one Kato Hideaki (PW1), the company representative⁵. Both these evidence were not challenged or disputed. However, on the stand, Masui did an about-face by denying that he had been appointed to that position, claiming that the translation of his resume (Exhibit P4-T) was inaccurate. The Defence also called a former employee, one Miyamoto (DW3) to corroborate Masui on his denial. He testified that Masui was in the Foodstuffs Department when Masui returned to Japan. But significantly, he asserted that the Foodstuffs Department did not deal with wheat flour. This contradicted Masui’s evidence. I noted pertinently that Miyamoto was not even present in Nissho Japan/Sojitz Japan during the material period as he had been seconded to the USA. He had then resigned from Nissho Japan/Sojitz Japan at the end of March 2005. In my view, this fact and the fact that his evidence that directly contradicted Masui’s evidence rendered his testimony unreliable. I therefore...