Public Prosecutor v Teo Chu Ha

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 27 August 2014
• Neutral Citation: [2014] SGCA 45
• Court: Court of Appeal (Singapore)
• Docket Number: Criminal Reference No 3 of 2013
• Published date: 29 August 2014
• Year: 2014
• Hearing Date: 06 May 2014
• Plaintiff Counsel: David Chew, Alan Loh and Cheryl Lim (Attorney-General's Chambers)
• Defendant Counsel: Bachoo Mohan Singh and Too Xing Ji (Veritas Law Corporation)
• Subject Matter: Criminal law,Statutory offences,Prevention of Corruption Act
• Citation: [2014] SGCA 45

Andrew Phang Boon Leong JA (delivering the judgment of the court): Introduction

It would be appropriate to commence the present judgment by considering the following scenario: An employee of company A (“the employee”) agrees to a third party’s offer that in exchange for shares in company B, a private company, the employee will perform certain acts in relation to his principal company A’s affairs which will financially benefit company B. In fact, company B was formed precisely (and solely) in order that it might benefit financially in the manner just mentioned. The employee performs the agreed acts as a result of which company B benefits financially. The employee subsequently receives the shares in company B as promised. Company B remains profitable as a result of the employee’s acts in relation to company A and the employee benefits from this via the receipt of dividends paid out by company B over time. In order to receive these dividends, the employee must of course own shares in company B (which, through the arrangement with the third party described above, he in fact now does). In the scenario just painted above, an honest and reasonable member of the public would not hesitate to conclude that the shares in company B and the dividends received represent the employee’s ill-gotten gains from his acts of corruption.

Now assume that the only change to the scenario just described is that the shares in company B were not given for free; in other words, the employee had to pay for them. In this new scenario, in order to secure a conviction for corruption, does the Prosecution have the additional burden of proving that the amount which the employee paid for the shares did not reflect the true value of the shares in company B or that the share transaction was a “sham”? That is the central question before the court in this Criminal Reference.

The present Criminal Reference (Criminal Reference No 3 of 2013) arises from the decision of the High Court judge (“the Judge”) in Magistrates Appeal No 279 of 2012 (“MA 279/2012”) which was reported as Teo Chu Ha v Public Prosecutor [2013] 4 SLR 869 (“the HC Judgment”). MA 279/2012 was an appeal against the decision of the district judge (“the DJ”) in Public Prosecutor v Teo Chu Ha @ Henry Teo [2013] SGDC 61 (“the DJ’s Judgment”).

This criminal reference is timely and furnishes us a valuable opportunity to provide some practical guidance and clarity in this particular area of the law. We hope that the decision will serve to emphasise (and warn) all potential offenders that the courts will not hesitate to look at the substance of any given entire scheme and its context rather than only at the actual (and more specific) transactions which make up the scheme when determining if an offence under the Prevention of Corruption Act (Cap 241, 1993 Rev Ed) (“the Act”) has been committed.

The charges

The questions relate to 12 charges brought against the Accused. The First Charge read as follows:

[Y]ou, on or about the 20th day of December 2004, in Singapore, being an agent, to wit, a Senior Director of Logistics in the employ of Seagate Technology International, did corruptly accept from one Koh Han Lee, a Director of Biforst Singapore Pte Ltd, through one Choo Ah Moi @ Winnie Choo, a gratification in the form of 20,000 shares in the said Biforst Singapore Pte Ltd, as a reward for doing an act in relation to your principal’s affairs, to wit, assisting the said Biforst Singapore Pte Ltd to secure a Logistics Service Provider contract with Seagate Technology International, namely, the “Seagate Technology / Biforst Singapore Pte Ltd. Logistics Service Provider Agreement dated 1 November 2004”, and you have thereby committed an offence punishable under Section 6(a) of the Prevention of Corruption Act, Chapter 241.

[emphasis added]

We shall refer to the “Seagate Technology / Biforst Singapore Pte Ltd. Logistics Service Provider Agreement dated 1 November 2004” as “the 2004 Contract”.

The Second Charge read as follows:

[Y]ou, on a day in January 2006, in Singapore, being an agent, to wit, a Senior Director of Logistics in the employ of Seagate Technology International, did corruptly accept from one Koh Han Lee, a Director of Biforst Singapore Pte Ltd, through one Yap Chin Guan, a gratification of $81,000/- (Eighty-one Thousand Dollars), as a reward for doing acts in relation to your principal’s affairs, to wit, assisting the said Biforst Singapore Pte Ltd to secure Logistics Service Provider contracts with Seagate Technology International, namely, the “Seagate Technology / Biforst Singapore Pte Ltd. Logistics Service Provider Agreement dated 1 November 2004” and the “Seagate Technology / Biforst Singapore Pte Ltd. Logistics Service Provider Agreement dated 17 June 2005”, and you have thereby committed an offence punishable under Section 6(a) of the Prevention of Corruption Act, Chapter 241.

We shall refer to the “Seagate Technology / Biforst Singapore Pte Ltd. Logistics Service Provider Agreement dated 17 June 2005” as “the 2005 Contract”.

The Third to the Twelfth Charges were framed along the same lines as the Second Charge. The only difference was the amounts of monies received by the Accused on different occasions from 2006 to 2010. In addition, for the Sixth to the Twelfth Charges, there was an additional contract included in the charge: the Logistics Service Provider Agreement for cross border trucking dated 15 November 2007, which we shall refer to as “the 2007 Contract”.

Background facts

The facts may be briefly stated. The Accused was employed by Seagate Technology International (“Seagate”) as its Senior Director of Logistics. One of Seagate’s trucking contracts with a company known as “Richland” was expiring on 31 October 2004. A tender exercise was thus carried out before the expiry of this contract to award a new trucking contract to two companies (“the 2004 tender exercise”).

Prior to this, one Yap Chin Guan (“Yap”), an ex-employee of Richland, met the Accused on several occasions through one Steven Lim (“Steven”) who knew both Yap and the Accused. Initially, Yap wanted to use these meetings to sell some logistics software to Seagate but the Accused was not interested. Shortly after, however, discussions between the two of them gravitated towards the potential incorporation of a company to take over the trucking contracts from Richland.

Meanwhile, Biforst Singapore Pte Ltd (“Biforst”) was incorporated on 10 September 2004 by one Mr Koh Han Lee (“Koh”), another ex-employee of Richland and an acquaintance of Yap. At that particular point in time, Koh did not know who the Accused was. In fact, Koh only discovered the identity of the Accused much later. However, Koh was informed by Yap that someone in Seagate wanted a stake in Biforst and Koh was prepared to give that someone a stake, provided that Biforst could obtain the Seagate business.

It was subsequently agreed between the Accused and Koh (through Yap) that the Accused could pay $6,000 for 20,000 shares in Biforst (“the Shares”). On 29 September 2004, the Accused paid for the Shares via a cheque for $6,000 handed to Steven.

The 2004 tender exercise closed on 7 October 2004. Biforst was one of the two successful bidders and was awarded the 2004 Contract which commenced on 1 November 2004. On 20 December 2004, the Shares, which were previously owned by Koh, were transferred to a nominee of the Accused (and not to the Accused directly).

It is not disputed that the Accused was in contravention of Seagate’s conflict of interest policy by not disclosing his beneficial interest in Biforst to Seagate. It was also not in dispute that the Accused was in the Seagate tender committee which assessed the various tenders in the 2004 tender exercise. In this regard, both the DJ and the Judge found that the Accused had the power to influence – and did, in fact, influence – the tender process which led to the 2004 Contract.

In June 2005, an additional 2,500 Biforst shares were transferred to the Accused’s nominee. These 2,500 shares eventually did not form the subject of any of the Charges.

Biforst subsequently submitted successful bids in three further tender exercises in 2005, 2007 and 2010 which cumulated in, inter alia, the 2005 Contract as well as the 2007 Contract. The contract which was awarded pursuant to the tender exercise conducted in 2010 did not form the subject of any of the Charges.

It is not disputed that between 2006 and 2010, the Accused received periodic pay outs from Biforst totalling $576,225 by way of dividend payments.

The Prosecution’s Case

The Public Prosecutor’s case theory is a straightforward one: that Biforst was incorporated specifically to secure the Seagate trucking contracts with the help of the Accused who would receive a share of the profits from these contracts as a reward. Hence, the gratification which the Accused received as a reward for assisting Biforst in securing trucking contracts from Seagate consisted of: the Shares, and the portion of Biforst’s profits by virtue of the Accused’s shareholding in Biforst.

The Defence Case

The Accused did not deny the receipt of the Shares and cash. Instead, his case was that the Shares and the profits arising from the Accused’s shareholding in Biforst did not constitute gratification and that he therefore had no corrupt intent. He maintained that he had obtained the Shares as part of a business opportunity. Since the Shares and the additional 2,500 Biforst shares were obtained as a business opportunity, the profits derived therefrom were dividends from the Accused’s shareholding in Biforst and not bribes. The Accused also denied influencing the tender committees.

The decision at first instance

The DJ held that the Accused was guilty of all 12 Charges and sentenced him to a total of six months’ imprisonment and ordered him to pay a penalty of $576,225. The DJ arrived at...