CPIB WENT AFTER THE SERVANTS NOT THE MASTERS

The Corrupt Practices Investigation Bureau issued stern warnings on 11 January 2023 to six individuals who were formerly senior management staff of Keppel Offshore & Marine Limited for their roles in the case of the bribery of Brazil's state oil company Petrobas. Singaporeans view this as not even amounting to a slap on the wrist. There is public outcry against a sense of rules-for-thee-but-not-for-me kind of justice. Although many ordinary Singaporeans feel justice has not been adequately and equitably served, and have made their voices heard in social media, but there has been no fair articulation of the legal basis of what they stand on.

A short recap of the case. In 2014 Brazilian police conducted Operation Car Wash in a huge money laundering investigation. It napped more than 1,000 suspects including very high government officials and politicians. The investigations expanded into bribery and corruption involving embezzlement at Petrobas. It resulted in the jailing of 3 former ex-presidents including  Luiz Inácio Lula da Silva. Lula was released from prison recently and supposedly won the 2022 presidential election. Keppel was just one of the enablers caught up in the massive investigation. American DOJ took jurisdiction and Jeffrey Chow, legal officer of Keppel was arrested. Keppel and Chow were charged under the Foreign Corrupt Practices Act for corruptly making bribe payments of about US$55m to Petrobas officials to secure 13 contracts and make profits such as US$350m from a particular project.  In 2017,  Keppel was found guilty and agreed to a global settlement for US$422.2m (US$105.5 for US, US$211.1 for Brazil and US$105.6m for Singapore). In 2018 CPIB, placed 6 Keppel employees on investigation. 

Keppel disguised the bribe payment as consultation fees and made several payments over a period of time. If you are wondering how come the US had jurisdiction, well the bribes were in US$, they made use of the US banking system, and Keppel has a US office.

The DOJ went after Chow for obvious reasons - to turn him into a key prosecution witness. In a plea bargain, Chow gave evidence against Keppel. He was sentenced in 2019 to 1 year probation to be served at his residence in Singapore and fined US$75,000. Last reported in 2019, Chow was jobless in Singapore. We don't know if he is driving Grab today.


CPIB's lexicon of equivocation

"CPIB conducted investigations into the six individuals who had allegedly conspired with each other to give bribe payments totalling about US$55 million to foreign consultants involved in KOM’s business interests in Brazil. These consultants then used these monies to pay bribes to Petrobras officials." ... CPIB

CPIB prefers to say "allegedly" when Keppel had already admitted guilt in the global settlement agreement.

"This case is complex and transnational, involving multiple authorities and witnesses from several countries. There are evidentiary difficulties in cases of such nature. Many of the documents are located in different jurisdictions. In addition, key witnesses are located outside of Singapore and cannot be compelled to give evidence here. The decision whether to prosecute the six individuals for criminal offences has to take into consideration all relevant factors, such as the culpability of each individual, the available evidence and what is appropriate in the circumstances. Having taken these into consideration, stern warnings were issued to the six individuals." ... CPIB

Firstly, the statement seeks to exculpate Keppel from acts of the employees. In an employee-employer situation, agency relationship exists when the employees act under the authorisation of the company. The scope of employee functions determines the authority of the company and there is no doubt such is the case here. The doctrine of respondeat superior applies – “let the master answer for the servant”. Keppel has vicarious liability. CPIB should be investigating the master and not the servants.

Secondly, on evidentiary difficulties due to different jurisdictions is hogwash. The CPIB made no comments on whether they made attempts to liase with the authorities in Brazil and US. Last year 11 January 2021, Teo Suya Bik Judy, 68-year-old Singaporean female, was sentenced to 41 months’ imprisonment and a penalty of S$2,320,864.10 and Teo Chu Ha Henry, 72-year-old Singaporean male, was sentenced to 50 months’ imprisonment. The duo conspired to provide insider information to a Chinese company which allowed it to win a tender to provide logistics services to Seagate in China. CPIB worked with Chinese authorities, such as the Shanghai City Zhabei District People’s Procuratorate and received invaluable assistance from them in the form of critical evidentiary records such as bank statements, and assistance in interviews and statement-taking under the mutual legal assistance framework spanning over a few years. (For details read here.) 

Thirdly, the Yap Chwee Khim v American Home Assurance Co 2001 case demonstrates the court is prepared to look into an extraterritorial case and do judicial review of a decision of a foreign jurisdiction. 

Yap v American Home was a case involving 60-year-old Singaporean, Mr Lim Mah Chan, who was found dead on 2 Jun 1997 in a bathtub of water in a hotel in Phnom Penh, Cambodia. Mah Chan had been on a 5-day packaged tour and his companion was Lim Chok Young, ex-husband of Yap. Cambodian Investigation Committee found no foul play and ruled accidental death, no autopsy was conducted. 

Mah Chan had 5 insurance policies and had willed his assets to Yap. One insurer paid up, the others refused and Yap sued. The lower court ruled against Yap who appealed. The Higher Court upheld the ruling and agreed with the lower court the death of Mah Chan was suspicious and absence of autopsy weighed strongly against the appellate. I recall back then I was amazed at the decision that a Singapore court with no discovery process could by simple judicial reasoning, override a foreign investigative finding. 

CPIB had all the documentation from the American DOJ and the US court decision. Would the court be able to do a judicial review and agree or disagree with the findings of the foreign jurisdiction?

Fourthly, the main witness in the trial in US was Jeremy Chow. As Keppel's legal officer, Chow drafted all those incriminating contracts. The DOJ went after Chow with a criminal charge. It's the usual ploy to get a star witness and they got what they wanted as Chow turned state witness. Chow lives in our own backyard and I'm sure would be more than happy to oblige as witness for CPIB.


The Executive trap:

Chow had indicated he should have resigned but instead remained to work on the contracts, thus participating in the act of corruption. I recall a friend of decades ago who called me one day to let me know he had resigned as accountant as he refused to sign off on a stock take certification which inflated the inventory levels. Fudging closing stocks is one of the easiest ways to manipulate the bottom line. Higher closing stocks means lower cost of sales, which translates to higher gross profits. Many salaried professionals are often caught in a bind to overstep ethical and moral lines in furtherance of corporate objectives. Were the 6 Keppel employees in similar positions?  Was the sweetheart deal of just a warning a way out of the predicament and did it come with a non-disclosure agreement? Why are names not disclosed? Gag orders in a criminal case issued to protect the identities of accused persons, are only with the main intent of protecting the victim involved rather than the accused person. It does not apply in this instance.


Failure to report a crime: 

Under Section 202 of the Penal Code, “whoever, knowing or having reason to believe that an offence has been committed, intentionally omits to give any information respecting that offence which he is legally bound to give, shall be punished with imprisonment for a term which may extend to 6 months, or with fine, or with both”.

CPIB was faced with the sensitive task of investigating how far up the chain of command did the decision for extending bribes to secure contracts go. It's a stretch to lay out that in Keppel the modus operandi of offering bribes to the extent of US$55m were strictly line manager decisions and CEO was kept out of the loop. Were the CEO and the board privy to the criminal act, either as participant or had knowledge? Does the operating unit have full independence, or does the parent unit monitor certain activities? If not officially, then at least in social settings these closely-knit elites would have had conversations over meals and toast to contracts won and how they were won.

CPIB has complete independence in criminal investigation as it reports directly to the Prime Minister. We have a delicate situation here as the ultimate parent is Temasek and the CEO is the wife of the PM. It's a huge conflict of interest situation that concerned citizens have raised alarm bells for years. 

The lack of evidence before us is persuasive that the sweetheart deal to the 6 employees was most probably to stop the bucks in their tracks to protect powerful incumbents, several of whom most likely have knowledge but failed to report as required by law.


What will other interested parties do:

SGX as the front-line regulator and operator of the securities and derivatives markets in 

Singapore, has remained silent. So too the Monetary Authority of Singapore that regulates the SGX. 

Will the IRAS review Keppel's tax returns and disallow the US$55m bribe paid out?


Conclusion:

What extraterritorial effect means to Singaporeans is a conviction in a foreign jurisdiction is not necessarily the end of your woes. On retuning to Singapore one may be charged again under Singapore law if the crime is one which is also punishable under local legislation. This is not double jeopardy and is only acted in cases relating to corruption, money laundering, drug and human trafficking and other very serious crimes. 

The AG didn't go after Keppel may be due to the fact the company has paid US$106.5m to Singapore under the global resolution agreement. This may be construed as having been charged and found guilty in Singapore.

The meek and soft views of the local legal profession in the todayonline 12 Jan 2022 article  is hardly surprising in the land with kiassu kiassi bochup syndrome.

Singapore's squeaky clean image has taken another blow. CPIB's non-action is a message to Singaporeans. Nothing to see here. Move on. Try looking at it from another another angle. The Singapore government had a windfall of US$105.6m, never mind it's the left hand paying to the right hand.

In going after the servants and not the masters, a stern warning is a compromise.

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