Former Attorney-General Walter Woon wrote an article, which was published in ST today (‘Punishing corporate corruption’, 30 Apr), criticising the government for not prosecuting the Keppel management involved in the 1995 bribery case.
In June 1995, Keppel was cited in a UK probe into a bribery scandal involving an Exxon subsidiary’s employee. The person, Cornelius Van der Horst, who handled ship repair contracts at Exxon’s subsidiary, was charged with accepting bribes from Keppel Shipyard. As a result, on Singapore’s end, then Home Affairs Minister Wong Kan Seng announced that CPIB had also initiated investigation into the case. The case was finally brought up in Singapore court in Dec 1997.
In court, it was revealed that Keppel’s marketing manager Chan Lim Hong and its Senior General Manager, Kung Yew Hock, had entertained Van der Horst at Club Kabuki in Orchard Road. Kung reportedly told Van der Horst, “If that side (Keppel’s competitor) takes care of you, we can also take care of you.”
Subsequently, the Exxon subsidiary awarded a contract to Keppel to repair a tanker. After the job was completed, Van der Horst wanted his “cut” which he was promised earlier. Chan passed this message to Kung, who, according to ST report, “discussed this with other Keppel directors”. One of these directors was revealed to be PBM Holder Tong Chong Heong. Incidentally, Tong was also named as one of the 5 senior Keppel executives in a Brazilian court two years ago, allegedly involved in another bribery scandal. The investigations into the individuals are still pending but Keppel as a company has already pleaded guilty last year and agreed to pay a total of US$422 million fines to authorities in US, Brazil and Singapore.
In any case, the Keppel directors in the 1995 case then “decided to give Van der Horst a cut of 1 per cent of the contract sum for all tenders” awarded to Keppel by the Exxon’s subsidiary. Van der Horst’s cut was wired to his Citibank account in Singapore. Van der Horst would then give information to Keppel about its competitors’ bids, including the price and deadline to complete a job. Thereafter, Keppel became very successful in winning nearly all the ship repair tenders from the Exxon’s subsidiary.
After the British court found Van der Horst guilty, Keppel also pleaded guilty for giving a total of $8.53 million in bribes to him for more than 3 years. The Singapore court then fined Keppel $300,000 for the Exxon bribery case. No Keppel personnel was charged. After Van der Horst was jailed in UK in 1996, Keppel moved Tong out from Keppel Shipyard to Keppel Cairncross Shipyard in Australia. He continued to work in Keppel.
Prof Woon: For whatever reason, prosecutor only proceeded with 3 out of 17 charges
Referring to the 1995 Exxon bribery case 23 years ago, former AG Walter Woon said, “Of late, there has been several high-profile cases involving bribery and embezzlement, attracting commentary both in the media and outside. One recurrent theme is that the penalties for corruption and criminal breach of trust are insufficient.”
But Prof Woon countered that this view is “not quite accurate”. He explained that the problem is not that the penalties are too low but that the “available tools have not been utilized fully”.
He explained that in the 1995 case, Keppel actually faced 17 charges of bribery. “The statement of facts tendered to the court revealed that his had been done with the knowledge and approval of senior Keppel executives, including some directors,” he added.
But the prosecution at the time chose to proceed with only 3 of the charges. “Keppel pleaded guilty, which meant that it admitted the statement of facts without qualification,” noted Prof Woon. “The district judge fined Keppel the maximum $100,000 on each of the charges, a total of $300,000. And there, the matter ended.”
“The Public Prosecutor chose for whatever reason to proceed with only 3 out of 17 charges. If all 17 charges had been pressed, the maximum fine would have been $1.7 million, a much more painful hit,” he argued.
JBJ queried the govt in Parliament
In the article, Prof Woon also revealed that a couple of months later in Feb 1998, opposition MP JBJ questioned the government in Parliament if it would also be taking legal actions against any of the individuals involved in Keppel.
Then, Minister of State for Law, Ho Peng Kee, replied on behalf of the government that the Public Prosecutor had decided that “the company should be prosecuted, not the employees who gave the bribes. He did so after considering all the facts of the case, including the fact that they did not act for their own personal gain”.
When pressed further, Ho Peng Kee would not say why the directors were not prosecuted. Instead, he kept reiterating the Public Prosecutor’s stated view that they did not act for their personal gain.
“But this reasoning also raises questions,” Prof Woon said. “Why do employees of a company bribe others to get business?”
“It is true that they may not benefit directly (unlike where they receive bribes),” he explained. “Employees have KPIs to meet. More business translates into bigger profits for the company (or at least smaller losses). This in turn leads to enhanced bonuses and improved promotion prospects. For the directors, there is also the prestige associated with leading a ‘successful’ company.”
In other words, Prof Woon was referring to the indirect benefits an individual may get through bribery.
Punishing the people involved
Prof Woon explained that companies cannot be deterred from bad behaviour as a company cannot think for itself. It has no personal morality or conscience. Fines are merely written off as a cost of business, he added.
“It is therefore for the sake of deterrence – specific and general – that the humans responsible for corruption should be prosecuted as well,” Prof Woon asserted.
In general, Prof Woon thinks that penalties for bribery and embezzlement are already sufficient under our laws. “The toolkit is already there,” he said. But the decision who to prosecute and what laws to use in the prosecution lies with the Public Prosecutor, acting on behalf of the State.
But just fining companies is not enough as it only “trims the weeds without digging out the roots”, Prof Woon further explained with an analogy.
“Eradication of corruption requires that the humans responsible for the offenses account for their misdeeds, no matter how influential or well connected they may be,” he argued. “If we want to have standards, we must be willing and able to defend them.”
Prof Woon served as the AG for Singapore between 2008 and 2010 before returning to the academia.