Basis of conviction by judge in corruption offence debunks claim by AGC of having insufficient evidence to prosecute the six former Keppel executives

Basis of conviction by judge in corruption offence debunks claim by AGC of having insufficient evidence to prosecute the six former Keppel executives

Teo Chu Ha, a Singaporean, was prosecuted and convicted for 12 charges of corruption under Section 6(a) of the Prevention of Corruption Act (PCA) for having received a reward for assisting Biforst Singapore Pte Ltd to secure contracts to provide trucking services from Seagate.

In 2013, Teo was sentenced to a total of six months’ imprisonment and ordered to pay a penalty of S$576,225.

The offence was that Teo, as the former Senior Director of Logistics of Seagate Technology, took shares from a company in 2004, Biforst Singapore Pte Ltd, through a nominee of Teo to secure a logistic contract at Seagate.

In prosecuting Teo, the Public Prosecutor positioned the case against Teo as Biforst being incorporated specifically to secure the Seagate trucking contracts with the help of Teo, who would receive a share of the profits from these contracts as a reward.

Hence, the gratification which Teo 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 Teo’s shareholding in Biforst.

The District Judge arrived at his decision that Teo was guilty of all 12 Charges after making the following three findings.

(a) First, the DJ found that there was a plan between Teo and another person to obtain Seagate’s business for Biforst in return for Teo being given shares in Biforst. Whilst there was no direct evidence of this, the DJ inferred this from the following facts:

(i) Biforst was incorporated shortly before the tender process in 2004;

(ii) Koh Han Lee, a Director of Bifrost, was prepared to give a 20% stake in Biforst to a person whom he did not know personally so long as that person was able to obtain Seagate’s business;

(iii) Teo had asked to invest in Biforst and wanted a 20% stake in it;

(iv) Teo was directly involved in the tender committees which awarded the trucking contracts ; and

(v) The transfer of 20,000 shares to the nominee of Teo was only executed after the 2004 Contract was entered into even though Teo paid the $6,000 for the shares before the tender process.

(b) Next, the DJ found that Teo had the power to – and did in fact – influence the decisions of the tender committees to award the Seagate contracts to Biforst (see the DJ’s Judgment at [40]).

(c) Finally, the DJ concluded that Teo had a corrupt intent or guilty knowledge that what he was doing was corrupt. The DJ inferred this from the acts of Teo and the surrounding circumstances, namely:

(i) Teo knew that he was breach of Seagate’s conflict of interest policy by not disclosing his interest in Biforst and this was so he could continue to be part of the tender committee;

(ii) Teo had acted surreptitiously by, inter alia:

(A) holding the Shares through a nominee;

(B) receiving the profits of Biforst through cash payments in sealed envelopes.

While the High Court acquitted Teo as Justice Choo Han Teck was of the view that the shares could not be said that they were inducements to or rewards for Teo’s act, the Court of Appeal overruled the acquittal, saying the PCA covers cleverer and more sophisticated as well as devious schemes, such as in Teo’s case.

Lack of evidence to prosecute former Keppel executives

Let us now turn to the recent case where the Attorney-General’s Chambers (AGC) decided that there was insufficient evidence to prosecute six former senior executives of the management staff of Keppel Offshore & Marine Limited (KOM) for offences punishable under the Prevention of Corruption Act (PCA) for bribe payments to officials of Brazilian state-owned corporation Petróleo Brasileiro S.A. (Petrobras), pertaining to rigs-building contracts which Petrobras and/or its related companies had awarded to KOM.

In reply to 17 PQ filed by MPs, Minister at the Prime Minister’s Office, Indranee Rajah, stated on Monday (6 Feb) that the Corrupt Practices Investigation Bureau (CPIB) “had done it best” and the enforcement faced difficulties in gathering evidence in the high-profile case.

However, she defended that Singapore’s zero-tolerance policy towards corruption has not changed while no criminal proceedings have been brought in this case.

“In having regard to the rules of evidence, CPIB and AGC are observing the basic rules for a fair and just criminal justice system. What can be inferred from this is that while Singapore has zero-tolerance on corruption, it also strongly adheres to the rule of law, ” she told the House on Monday (6 Feb).

Ms Indranee said the public prosecutor (PP), in deciding whether to charge the six individuals, had to “consider whether he has the necessary evidence to prove that those individuals were involved in certain conduct and possessed a certain mental state to establish the offences”.

The Attorney-General also serves as the PP.

“Simply put, there is a lack of sufficient evidence, either documentary or through witnesses, which would establish any criminal charge beyond a reasonable doubt against a specific individual,” she reiterated the evidential difficulties that CPIB faced.

She said the Deferred Prosecution Agreement (DPA) and related documents were entered into between KOM, the US Department of Justice (DoJ) and the US Attorney’s Office.

KOM USA, a wholly-owned subsidiary of KOM, also entered into a plea bargain agreement with the US authorities and paid a fine which amounted to US$422 million. No individuals were parties to these documents, said Ms Indranee.

“While the documents make references to the actions of certain individuals, I have been advised that those references, on their own, are insufficient to establish any offences beyond reasonable doubt without witnesses testifying in Singapore about the context surrounding those actions and the intention behind them.”

District Judge inferred from facts to convict Teo

The six former KOM executives are publicly appointed in their official capacity, and oversee or make decisions on the project accused of having elements of corruption involved. There should be no doubt or room for denial of this by the six suspects.

Pritam Singh, Leader of Opposition, had pressed to ask Ms Indranee at Parliament, whether investigations had found that Keppel’s board of directors at the time had “constructive knowledge” of the corrupt payments made to secure contracts in Brazil.

Ms Indranee responded to the question by stating that constructive knowledge of an offence does not violate the PCA. As such, “there’s no reason for CPIB to be investigating this” as it only investigates offences under the Act.

“Whatever CPIB has been able to do or to uncover to us in its investigations in Singapore with respect to Keppel, it has done.”

As seen in Teo’s case, the judge did not have admissions from Teo or direct evidence of the offence being committed but inferred from the facts of the case to convict Teo.

Therefore, Ms Indranee’s explanation that “constructive knowledge of an offence does not violate the PCA” is highly questionable, given how the prosecutors in Teo’s case secured the conviction and how the executives and directors who could stand to benefit from the profits generated via the contracts obtained via bribery.

Furthermore, given the amount of evidence obtained by DoJ and admitted by KOM in its plea agreement with DoJ, it becomes to the point of being baffling when CPIB and AGC state that there is insufficient evidence to prosecute the six to secure a conviction.

In fact, one of the six former KOM executives who acted as a key witness for the DoJ said this in court:

    “I worked in the Legal Department at Keppel Offshore Marine for over 25 years and among my duties and responsibilities were to draft and prepare contracts with the company’s agents and one of those was an agent in Brazil.

By no later than 2008, I realized that Keppel was overpaying the agent, sometimes by millions of dollars, so that the agent could pay bribes to individuals who could help Keppel Offshore Marine doing business with Petrobras. The Petrobras was a Brazilian state — state-owned and controlled oil company.

Although no one ever named the bribe recipients for me, I knew that they were government officials and ruling political party. I should have refused to draft the contract that we used for paying bribes and I should have resigned from Keppel. Instead, I discussed the economic terms of the contracts with my seniors at Keppel and acting in agreement with my seniors, and others at Keppel, I drafted the contracts and made sure that they were executed.

And at least one case, it was in the U.S., that I sent the executed copy of the contract from Houston, Texas to the agent to confirm that my seniors at Keppel had signed the contract.

While I didn’t negotiate the contracts or make the decisions to pay the bribes, I knew that the contracts existed to make the payments legitimate and that they were an important part of the bribery scheme.

I am deeply sorry for my conduct.”

This cautious approach in prosecution taken by AGC on the six former KOM executives is in stark contrast with the positions it assumes in many other cases, such as the case involving Dr Yeo Sow Nam, the anaesthetist who was acquitted of molestation charges which were based on false accusations by an unnamed woman. AGC withdrew the charges against Dr Yeo after the woman confessed in court that she had lied in court about the molestation.

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