The International Investigations Review: Singapore
The standards of corporate governance have a major role in the maintenance of Singapore's reputation as a secure and established financial and business centre. Singapore is ranked first in 'Doing Business 2016' by the World Bank Group and has been lauded for its high standards of corporate governance by the 2014 CG Watch, ranking first with Hong Kong.
A number of regulatory bodies in Singapore are empowered to investigate and prosecute corporate misconduct:
- The Monetary Authority of Singapore (MAS) acts as the central bank of Singapore. The MAS is responsible for regulating and supervising the financial services sector, administering the Securities and Futures Act (SFA) and conducting surveillance on financial stability. Pursuant to Part IX of the SFA, the MAS has powers to require the disclosure of information about securities and futures contracts, to require the production and inspection of companies' books, to enter premises to carry out investigations and to examine witnesses. Effective from March 2015, the MAS and the Commercial Affairs Department (CAD) of the Singapore police force jointly investigate potential market misconduct offences such as insider trading and market manipulation under Part XII of the SFA.2
- The Singapore Exchange Limited (SGX) acts as a front-line regulator to promote a fair, orderly and transparent marketplace and a safe and efficient clearing system through monitoring the continuing compliance of the Singapore Exchange Securities Trading Limited (SGX-ST) Listing Manual (the Listing Manual) and the review of listings applications. Enforcement of compliance with the Listing Manual by listed companies is performed through investigations by the SGX, with appropriate sanctions imposed for breaches.
- The Accounting and Corporate Regulatory Authority acts as the regulator of business entities, public accountants and corporate service providers.
- The Competition and Consumer Commission of Singapore (CCCS) is tasked with administering and enforcing the provisions of the Competition Act, which promotes competition in the markets, and the Consumer Protection (Fair Trading) Act, which protects consumers against unfair trade practices. The CCCS's key sectors of focus in 2019 were digital platforms, transport, hospitality, and administrative and support services. The CCCS will take action against anticompetitive agreements, abuse of dominant positions, and mergers and acquisitions that substantially lessen competition. As at 31 March 2019, the CCCS had completed 67 investigations relating to anticompetitive agreements and abuse of dominant positions (including leniency applications) and reviewed 83 merger notifications. The CCCS has the power to require the production of specified documents or information, to enter premises without a warrant, and to enter and search premises with a warrant, if the CCCS has reasonable grounds for suspecting that the provisions of the Competition Act have been infringed. In respect of its consumer protection function, the Consumers Association of Singapore (CASE) and Singapore Tourism Board (STB) are the first points of contact for complaints by local consumers and tourists, respectively. However, where errant retailers continue to persist in unfair practices, the CASE and the STB may refer them to the CCCS, which has the power to gather evidence, file timely injunction applications with the Singapore courts, and enforce compliance with injunction orders issued by the courts, against such errant retailers. An example would be the CCCS's successful application to the State Courts on 28 November 2019 to obtain an injunction against Fashion Interactive and its director, Mr Magaud to stop them from engaging in an unfair practice known as a 'subscription trap' on its shoes e-commerce website, myglamourous.sg.
- The Singapore police force has wide investigative powers pursuant to Part IV of the Criminal Procedure Code (CPC). In the course of its investigations, the police may issue written orders to summon any person in Singapore to attend and assist in investigations, failing which a warrant may be issued to order the attendance of that person. The police may also order the production of or access to documents and other relevant evidence necessary or desirable to any investigation and may search or apply for a search warrant in the event of non-compliance. The CAD is the principal department of the Singapore police force that investigates white-collar commercial and financial crimes and has similar powers. In April 2017, the MAS and the CAD announced the launch of a government-industry partnership to strengthen Singapore's capabilities in the fight against money laundering and terrorism financing.3
- The Corrupt Practices Investigation Bureau (CPIB) operates with functional independence and is mandated to investigate corruption offences under the Prevention of Corruption Act (PCA) and other related offences. CPIB officers have wide investigative powers pursuant to the PCA and may exercise all those powers in relation to police investigations given by the CPC in the course of CPIB investigations. Additionally, CPIB officers may, with authorisation from the Public Prosecutor, investigate any financial account or safe deposit box in any bank.
- The Financial and Technology Crime Division of the Attorney-General's Chambers is responsible for the prosecution and appeals of white-collar and other commercial crimes, including corruption cases investigated by the CAD and the CPIB.
It is generally advisable for all businesses, corporate entities and individuals under investigation to cooperate fully with the authorities and provide full and frank disclosure of material information. This is in view of the legislation in place to secure cooperation with many of the above authorities. For example, it is an offence under the SFA to refuse or fail to appear before the MAS and render assistance in investigations. Further, Chapters IX and X of the Penal Code specify further offences such as (1) failing to attend before, (2) failing to produce a document and (3) furnishing false information to any public servant.
Singapore's legislative and regulatory corporate governance framework has shifted from a merit-based approach to a disclosure-based regime of supervision. Under a disclosure-based regime, market participants are provided with better information, thus allowing them greater choice and freedom to take calculated risks, which promotes a more dynamic market.
To be successful, a disclosure-based regime requires an effective and robust enforcement regime to ensure accurate disclosure of material information to maintain the confidence of market participants.
Companies listed on the SGX-ST are required to comply continuously with the Listing Manual. Pursuant to Rule 703 of the Manual, listed companies must announce any information known to it concerning itself, or any of its subsidiaries or associated companies, that is (1) necessary to avoid the establishment of a false market in the securities of the listed company, or (2) would be likely to materially affect the price or value of its securities. Under Section 203 of the SFA, a listed company must not intentionally, recklessly or negligently fail to notify the SGX of information that is required to be disclosed under the Listing Manual. A breach of Section 203 of the SFA is not a criminal offence unless the failure to notify, if the company withholds disclosure, is intentionally or recklessly in non-compliance with Rule 703 of the Listing Manual. Section 331 of the SFA provides that directors may be prosecuted in their personal capacity for acts of the company provided that the non-compliance was committed with the consent or connivance of, or could be attributable to any neglect on the part of, the directors.
The Listing Manual is complemented by the revised Code of Corporate Governance 2012 (the CG Code 2012), issued by the MAS. Although compliance with the CG Code 2012 is not mandatory, listed companies are required under the Listing Manual to describe in their annual reports their corporate governance practices with specific references to the principles of the CG Code 2012. If the company deviates from any guidelines of the CG Code 2012, the deviation must be disclosed, with an appropriate explanation. The CG Code 2012 is aimed at increasing accountability and transparency, and the amendments are related to matters such as director independence, board composition, multiple directorships, alternate directors and disclosure of remuneration. In February 2017, the MAS announced that it had formed a Corporate Governance Council (the Council) to review the CG Code 2012.4 The Council has been considering how the 'comply-or-explain' regime under the CG Code 2012 can be made more effective. This includes 'improving the quality of companies' disclosure of their CG practices and explanations for deviations' from the CG Code 2012.
In relation to competition law, the CCCS has implemented a leniency programme to incentivise cartel members to come forward and inform the CCCS of the cartel activities. To encourage self-reporting, a company stands to benefit from total immunity from financial penalties if the company is the 'first in the door' to provide the CCCS with evidence of the cartel activity before an investigation has commenced, and provided that the CCCS does not already have sufficient information to establish the existence of the alleged cartel activity.
The company must also satisfy the following general conditions:
- it provides the CCCS with all the information, documents and evidence available to it regarding the cartel activity;
- it grants an appropriate waiver of confidentiality to the CCCS in respect of any jurisdiction where the applicant has also applied for leniency or any other regulatory authority it has informed of the conduct;
- it unconditionally admits to the conduct for which leniency is sought and details the extent to which this had an impact in Singapore by preventing, restricting or distorting competition in Singapore;
- it maintains continuous and complete cooperation throughout the investigation and until the conclusion of any action by the CCCS arising as a result of the investigation;
- it refrains from further participation in the cartel activity from the time of disclosure of the cartel activity to the CCCS (except as may be directed by the CCCS);
- it must not have been the one to initiate the cartel; and
- it must not have taken any steps to coerce another undertaking to take part in the cartel activity.
In this regard, two companies (Koyo Singapore Bearing (Pte) Ltd and DHL Global Forwarding) have avoided financial penalties for their involvement in international cartel activities under the leniency programme. Full immunity was granted to both companies when they reported on price fixing to the CCCS.
If the company is not the first-in-the-door leniency applicant but provides evidence before the CCCS issues a proposed infringement decision, the company may still be granted a reduction of up to 50 per cent of the financial penalty, if the general conditions in points a to e above are satisfied. In particular, the CCCS, in its revised Guidelines on Lenient Treatment for Undertakings coming forward with information on Cartel Activity 2016, had clarified that coercers and initiators of cartels may also apply for leniency and may qualify for up to 50 per cent discount of the financial penalty.
The CCCS has reportedly seen an increase in the number of leniency applications and has recently stated that antitrust enforcement remains a priority for the CCCS, with bid-rigging cases in the pipeline. As at 31 March 2019, the CCCS had received leniency applications in 24 cases.
Notwithstanding that there is no obligation on retailers for self-reporting, retailers are nevertheless encouraged to work with the CASE, the STB and the CCCS to address complaints by local consumers and tourists.
ii Internal investigations
Generally, internal investigations are those that a company decides to carry out in relation to itself and into its own affairs. They may be prompted by regulatory concerns, or complaints from third parties, or concerns raised as a result of inquiries by independent directors and shareholders.
Internal investigations usually involve conducting interviews with employees, managers and directors, and the collection and review of hard-copy documents and electronic files stored on various forms of media (e.g., emails, telephone records or other electronic transmissions). The involvement of external parties, such as lawyers, forensic accountants, private investigators or computer experts, may occasionally be required. During the course of its investigations, the company may be obliged to comply with its legal disclosure obligations (e.g., under the Listing Manual) and legal professional advice should be sought in this regard.
Depending on the seriousness and nature of the matter, the individuals being investigated may retain their own lawyers. If there are reasonable grounds to suspect that the investigations may lead to prosecutions, it is advisable to consider retaining lawyers at an early stage so that any statements given during the internal investigations that may be subsequently turned over to the police are given with the benefit of legal advice.
On the issue of maintaining legal professional privilege during an internal investigation, the Court of Appeal considered the doctrine of legal professional privilege in light of significant developments at common law in the case of Skandinaviska Enskilda Banken AB (Publ), Singapore Branch v. Asia Pacific Breweries (Singapore) Pte Ltd. The issue before the Court of Appeal was whether draft reports prepared and produced by an external accounting firm (and law firm) in respect of an internal investigation of Asia Pacific Breweries (Singapore) Pte Ltd's (APBS) internal control systems and procedures attracted both legal advice and litigation privilege. The internal investigation by APBS was prompted by a fraud perpetuated by an APBS finance manager, who had obtained credit and loan facilities from banks. The action was brought against APBS to recover the monies after the fraud was uncovered. In the action, the banks sought specific discovery of the draft report.
On the issue of legal advice privilege, the Court of Appeal endorsed the decision of the Australian Federal Court in Pratt Holdings Pty Ltd v. Commissioner of Taxation, which held that whether privilege is accorded to documentary communications of a third party is dependent on the nature of the function the third party performed for the party that engaged it. Privilege will be accorded if the function was to enable the engaging party to obtain legal advice if required. This is as opposed to the nature of the relationship of the third party's legal relationship with the party that engaged it. The Court of Appeal stated that 'the approach taken in Pratt Holdings is principled, logically coherent and yet practical and is also consistent with the reality of legal practice' and held that third-party communications could be covered by legal advice privilege, but it had to be demonstrated that the communications were made for the dominant purpose of obtaining legal advice.
On litigation privilege, the Court of Appeal set out the basic principles or requirements of litigation privilege as set out in Section 131 of the Evidence Act (i.e., if the dominant purpose for which the legal advice had been sought and obtained was for the anticipation or contemplation of litigation, the advice concerned would be protected by litigation privilege). The Court of Appeal held that as litigation was 'foremost in the mind' of APBS and the dominant purpose of the draft reports was in aid of litigation at the time, litigation privilege applied to the draft reports.
The Evidence Act was amended in 2012 to extend legal advice privilege to communications with in-house legal counsel for the dominant purpose of seeking legal advice.
Note that there are statutory exceptions to situations in which legal advice privilege may be asserted over communications or documents. In particular, Section 128(2) of the Evidence Act expressly states that 'any communications made in furtherance of any illegal purpose' or where 'any fact observed by any legal counsel in an entity in the course of his [or her] employment as such showing that any crime or fraud has been committed since the commencement of his [or her] employment' are examples of such exceptions.
In respect of litigation privilege, the High Court held in Gelatissimo Ventures (S) Pte Ltd & Ors v. Singapore Flyer Pte Ltd that litigation privilege under Section 131 of the Evidence Act is subject to the same fraud exception as found in Section 128(2)(b) of the Evidence Act. This is despite the literal wording of Section 131 of the Evidence Act, which suggests that litigation privilege is an absolute privilege.
Although there is currently no general overarching legislation in Singapore specifically addressing whistle-blowing, certain programmes and specific legislation have been created or enacted that address this issue. An example is the implementation of the CCCS's leniency programme. The CCCS encourages businesses that are part of a cartel agreement or concerted practice, or a member of the general public who is aware of a cartel activity, to blow the whistle and provide information on cartel activity, and the CCCS will keep the identity of whistle-blowers confidential. In appropriate circumstances, the CCCS may also pay a monetary reward to informants for information that leads to infringement decisions against cartel members.
According to a press release by the CPIB, it received 808 complaints in 2016 (an 8 per cent decrease from the 877 complaints received in 2015), of which 118 were registered for investigation, as compared with 132 cases registered in 2015.5 In January 2017, as part of the CPIB's anti-corruption efforts, the new Corruption Reporting and Heritage Centre (CRHC) began operations. The CRHC was set up to enable people to make complaints discreetly and in a more accessible manner. The identity of informants is protected under Section 36 of the PCA, which includes provisions that a complaint about an offence under the PCA shall not be admitted in any civil or criminal proceedings and no witness is obliged or permitted to disclose the name or address of any informer. The court is further obliged to redact or expunge any references to the name or identity of the informer that may be found in any document in evidence to protect the informer from discovery. Citing Section 36 of the PCA, the court has observed, in Dorsey James Michael v. World Sport Group Pte Ltd, that there is a compelling public interest consideration ever present in Singapore to encourage whistle-blowing against corruption.
The MAS has stated that supervision can only go so far in preventing corporate misconduct in the financial industry, and that the creation of a safe environment for whistle-blowing is necessary to build a culture of trust and strong values in the financial industry. In this regard, Guideline 12.7 of the CG Code 2012 provides that a company's audit committee 'should review the policy and arrangements by which staff of the company and any other persons may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters', and the 'existence of a whistle-blowing policy should be disclosed in the company's Annual Report, and procedures for raising such concerns should be publicly disclosed as appropriate'. Further, the Guidebook for Audit Committees (revised on 19 August 2014) lays out guidelines on the implementation, conduct and review of whistle-blowing policies within companies. The guidelines for whistle-blowing policies recommend the protection of the identity of the whistle-blower, and provide for independence, objectivity and fairness of the investigation and resolution process.
Courts take a dim view of whistle-blowers who knowingly provide false information. In PP v. Mohd Ghalib s/o Sadruddin, the court imposed a deterrent sentence of six months' imprisonment against the accused for providing false information in a complaint to the CPIB. The court stated that the sentence was meted out as the correct signal must be sent so that like-minded individuals will think twice about blatantly lying about alleged conduct. Note that the court took pains to emphasise that the decision should not apply to whistle-blowing 'done in good faith, which is a helpful check and balance, and there should not be a chilling effect on such conduct'.
i Corporate liability
In Singapore, corporate conduct is capable of attracting both criminal and civil liability. A 'person' is defined in law as including a body corporate unless a contrary intention arises. Hence, whenever a statute purports to impose liability on any person, a company can be held directly liable unless otherwise specified, or unless such a construction is inconsistent with the subject or context of the said statute.
Concurrent liability of officers and employees
Since a company is a legal construct, it has to act through its officers and employees; therefore, situations giving rise to a finding of corporate wrongdoing are likely to also involve wrongful conduct on the part of particular individuals.
In such situations, the potential criminal and civil liability of the company and these individuals are distinct and independent. That said, there is no bar against criminal or civil liability being imposed on both the company and these individuals concurrently, save for the prohibition against double recovery in the civil context.
Criminal liability for conduct of officers and employees
A company can be subject to criminal liability for the conduct of its officers and employees in one of several ways.
First, a company may be guilty of a strict liability offence; namely, an offence that does not require proof of a culpable mental state, such as intention, recklessness or knowledge. If a company's officers or employees have caused the commission of a strict liability offence, the company may be held liable.
Second, a company may be guilty of being an accessory to the criminal conduct of its officers and employees. Accessory liability offences generally take the form of abetment or criminal conspiracy, and typically require some proof that the company was complicit in the conduct of its officers and employees.
Third, a company may be guilty of an offence if the criminal statute in question expressly makes a company liable for the acts of its officers and employees.
Fourth, and as a general catch-all, a company may be guilty of any other offence insofar as it is committed by the company's organs (board of directors, or shareholders in general meeting) or agents. Under Singapore law, the acts of such organs and agents are regarded as the acts of the company.
A particular complication arises whenever an offence requires proof of a mental state because a company, by its very nature, has no 'mind' to speak of. In this regard, the matter is straightforward if the statute specifies how such a mental state is to be determined. Where the statute does not, Singapore law recognises two methods of attributing the mental state of officers and employees to that of the company. First, the mental state of agents may be attributed subject to certain conditions. Second, the mental state of an officer or employee or such group of the same who is considered the 'directing mind and will' of the company may be attributed to that of the company (this would typically include directors or senior officers of the company).
Civil liability for conduct of officers and employees
A company can be subject to civil liability for the conduct of its officers and employees and is not exempt from any category of civil wrongs (e.g., contract, tort or equity). A company may be personally liable for the conduct of its agents and organs and may be vicariously liable for the tortious conduct of its employees insofar as the conduct was committed during the course of employment.
Legal representation of a company and its officers and employees
There is generally no objection to a company and its officers and employees being represented by the same counsel in the same matter where their interests are aligned. However, if a conflict or a risk of conflict between the interests of the company and the interests of the officers and employees exist, it is preferable that separate representation be sought to avoid the need for counsel to discharge him or herself from acting for both the company and the officers and employees.
Save for custodial sentences, companies may generally be subject to the same penalties as natural persons (e.g., fines). That said, the corporate penal regime has several unique additional features.
First, companies may be subject to heightened criminal sanctions. Although the typical criminal sanction is the imposition of a fine, some statutes impose higher fine limits for companies.
Second, companies may be subject to regulatory sanctions on top of criminal sanctions. For instance, companies who hold regulatory licences may have their licences revoked under the terms of the licence or the authorising statutes under which the licences were issued. Also, if the company in question is listed on the Singapore Exchange, the Exchange is empowered to impose sanctions on the company for breaches of the Listing Manual. Such sanctions could include a private warning, public reprimand, suspension of the trading of its securities, or even delisting of the company.6
Third, companies may avail themselves of deferred prosecution agreements (DPA) in certain situations.7 A DPA is a type of plea bargain. Under these agreements, prosecutors agree not to bring charges against a company in exchange for the company's fulfilment of certain conditions within a fixed duration. Such conditions are not limited and may include cooperation in investigations, implementation of compliance programmes, and payment of financial penalties or compensation. The DPA option is only applicable to certain scheduled offences, including certain offences under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA), the PCA and the SFA. All DPAs need to be approved by the High Court. After approval, the company will be deemed to be granted a discharge not amounting to an acquittal. Upon the expiry of the DPA and subject to the company's compliance with the terms of the DPA, the High Court may, on the application of the Public Prosecutor, grant a discharge amounting to an acquittal.
iii Compliance programmes
Unless specifically provided for under a particular statute, the existence of a compliance programme does not generally function as a legal defence. That said, it is prudent for companies to institute reasonable internal compliance programmes depending on the risks that they foresee and the costs involved.
From the outset, the existence of compliance programmes may play a preventive function in that it may lower the risk of wrongdoing or, if any wrongdoing has already been committed, the duration of such wrongdoing (which may affect any penalties imposed on the company subsequently).
Compliance programmes may also be relevant at one of three stages insofar as criminal proceedings are concerned. First, prosecutors may take into account the existence of a compliance programme when exercising their discretion to prosecute. Second, DPAs may be conditioned on the institution of compliance programmes or the implementation of changes to existing compliance programmes. Third, the existence of a compliance programme may be relevant after the conviction of a company, as a mitigating factor during sentencing.
Beyond the company, compliance programmes may also assist the officers and employees of a company insofar as their personal liabilities are concerned. Such programmes may allow the officers and employees to show that any offence that they are accused of was not committed as a result of their consent, connivance or neglect.
iv Prosecution of individuals
Where there has been corporate wrongdoing, there is no bar prohibiting the authorities from holding a particular individual liable under criminal law as well, whether in addition to liability on the part of the company or otherwise.
Further, if an officer of a company, especially a senior officer, is accused of corporate wrongdoing, this will likely have reputational effects on the company, regardless of whether the company itself is also charged. How the company manages the continued relations with the officer in question should, therefore, take such considerations into account.
There is no obligation on the part of the company to dismiss or discipline an officer or employee who has been the subject of a criminal investigation or charged with a criminal offence. That said, this is likely to be dependent on the company's internal policies and the view that the company takes with respect to the individual's conduct. In practice, most companies would have in place their own disciplinary or investigation procedures, which may apply where there have been allegations of wrongdoing against a particular employee. This is likely to be governed by the relevant employment agreement between the company and the employee.
Needless to say, companies should cooperate with investigators insofar as they are legally obliged to do so. For example, authorities may require that a company produces documents or information relevant to their investigations or require that witnesses (such as other employees of the company) attend to be examined.
There is no bar against the company coordinating with the individual's counsel. This may be a course that the company may wish to take where the interests of the company and the individual are aligned. There is also no legal bar against the company paying for the legal fees of the employee. In practice, it is common for a company to purchase directors' and officers' insurance, which may indemnify the legal costs to be incurred by an individual director or officer who is subject to criminal allegations. How such policies may operate, including the scope and extent of coverage, would depend on their precise terms.
i Extraterritorial jurisdiction
There is generally a presumption against the extraterritorial application of Singapore criminal statutes. That said, specific statutes have been enacted by Parliament to extend the reach of particular criminal laws beyond Singapore's borders. Some key examples are discussed below.
Prevention of Corruption Act
The PCA, which is the principal anti-bribery statute in Singapore, expressly provides that it would apply extraterritorially to Singapore citizens outside Singapore. Section 37(1) of the PCA states:
The provisions of this Act have effect, in relation to citizens of Singapore, outside as well as within Singapore; and where an offence under this Act is committed by a citizen of Singapore in any place outside Singapore, he may be dealt with in respect of that offence as if it had been committed within Singapore.
Therefore, if a Singapore citizen commits an offence within the meaning of the PCA outside Singapore, he or she would be held liable as though it was committed within the Singapore territory.
Terrorism (Suppression of Financing) Act
The Terrorism (Suppression of Financing) Act, which is one of the key pieces of anti-terrorism financing legislation in Singapore, also contemplates extraterritorial application. It provides at Section 34 that certain offences committed outside Singapore would be deemed to be committed in Singapore and that the person in question may be charged, tried and punished accordingly. In addition, it also provides that if a Singapore citizen commits certain other offences outside Singapore, he or she may be dealt with as though the offence was committed in Singapore.
Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act
The CDSA, which is the principal statute criminalising money laundering, also contemplates extraterritorial application. This is clear from Sections 3(1), 3(3) and 3(5) of the CDSA, which respectively state that the Act 'shall apply to any drug dealing offence or foreign drug dealing offence', 'shall apply to any serious offence or foreign serious offence' and 'shall apply to any property, whether it is situated in Singapore or elsewhere'. This is also evident from Section 2(1), which defines 'criminal conduct' and 'drug dealing' as the doing of such acts 'whether in Singapore or elsewhere'.
Organised Crime Act 2015
Finally, the Organised Crime Act 2015 contains provisions that are intended to prevent and disrupt the activities of both local and transnational criminal organisations. To this end, the definition of 'organised criminal group' under Section 2 includes groups 'based within or outside Singapore' whose purposes include obtaining material benefit from the commission or facilitation of 'any act outside Singapore that, if it occurred in Singapore, would constitute [a] serious offence' as defined under the Act.
ii International cooperation
Mutual Assistance in Criminal Matters Act
The Mutual Assistance in Criminal Matters Act (MACMA) sets out the framework for mutual legal assistance between Singapore and other states in criminal matters. It allows the Singapore authorities to provide assistance to other states in respect of criminal investigations or proceedings concerning certain offences, without the need for a mutual legal assistance treaty between the requesting state and Singapore, on the basis of reciprocity.
The assistance Singapore may provide to other states in respect of criminal matters under the MACMA includes:
- taking of evidence;
- production of things (including documents);
- securing the attendance of a person;
- securing the custody of a person in transit;
- enforcement of a foreign confiscation order;
- search and seizure;
- locating or identifying persons; and
- service of process.
Extradition is possible and not uncommon in Singapore. The Extradition Act (EA) is the primary statute that governs the extradition of fugitives to and from foreign countries and territories. It sets out a general regime in respect of 'foreign State[s] . . . between which and Singapore an extradition treaty is in force' and 40 'declared Commonwealth countries'. Additionally, it also contains a set of specific rules that are only applicable to extradition to and from Malaysia (Part V of the EA).
Under the general regime, extradition out of Singapore is only allowed in respect of persons who are accused of or have been convicted of committing an 'extradition crime' within the defined meaning of the EA.10
- In the case of a foreign state, this refers to an offence against the law, or part of the law, of the foreign state; where the act or omission constituting the offence would, if it took place in Singapore, constitute a Singapore law offence described in the First Schedule to the EA (or would be so described if the relevant description contained a reference to the necessary state of mind or circumstance of aggravation).
- In the case of a declared Commonwealth country, this refers to an offence against the law, or part of the law, of the declared Commonwealth country that is punishable with a maximum penalty of death or imprisonment for not less than 12 months; where the act or omission constituting the offence would, if it took place in Singapore, constitute a Singapore law offence described in the First Schedule to the EA (or would be so described if the relevant description contained a reference to the necessary state of mind or circumstance of aggravation).
Embodied in the definition of an 'extradition crime' is the requirement of double criminality. In considering whether the requirement of double criminality is satisfied, the Singapore courts will apply what is known as the 'conduct test', which requires that the conduct forming the basis of the relevant offence be punishable in both the extraditing state and the requesting state. The Singapore courts will not apply the 'ingredients test', which requires strict correspondence or identity between the elements of the foreign offence and the elements of the local offence.
In addition to the above, various Singapore agencies are also parties to informal channels of cooperation with agencies of other countries. For instance:
- The MAS is a signatory to a number of bilateral and multilateral memoranda of understanding (MOUs) that establish arrangements for, among others, information sharing and mutual assistance in regulatory actions.
- The Singapore police force (SPF) is a member of Interpol. Additionally, under the CDSA, the SPF's Suspicious Transaction Reporting Office (STRO) is authorised to share information with foreign financial intelligence units (FIUs) subject to certain conditions.11
- Other Singapore agencies, such as the CPIB and the Central Narcotics Bureau, have their own informal bilateral relationships with their counterparts in other jurisdictions.
Singapore is also a member of the Financial Action Task Force (FATF), a 39-member intergovernmental standards-setting body that develops and issues guidelines on combating international money laundering and terrorism financing. The Ministry of Home Affairs, the Ministry of Finance, and the MAS jointly lead Singapore's inter-agency effort to implement and maintain legislative and regulatory compliance with periodic FATF recommendations.
iii Local law considerations
Singapore has certain laws that may impose limitations on the sharing of information across jurisdictions. For example:
- Banking secrecy laws prohibit licensed banks from disclosing customer information that would include, but is not limited to, any information relating to an account of a customer of the bank or any information relating to any deposits of a customer of the bank.12
- Similarly, data privacy laws provide that any data that is collected by any organisation that can be used to identify an individual cannot be disclosed unless the individual gives or is deemed to have given his or her consent.13
- Additionally, before the STRO shares information with a foreign FIU under the CDSA, the foreign FIU needs to provide appropriate undertakings for protecting the confidentiality of information shared and controlling its use, including an undertaking that such information will not be used as evidence in any proceedings.14
That being said, if a court order is obtained under the MACMA for the production of a thing or description of a thing for the purposes of foreign criminal matters, the MACMA provides for civil and criminal immunity to any person who acts in good faith to comply with the court order; hence, any production in compliance with the court order will not be treated as a breach of any restriction on disclosure (whether imposed by law, contract, or rules of professional conduct).15
Year in review
The past year has seen a continued focus on investigation and enforcement in relation to corporate misconduct in Singapore's financial markets.
In August 2019, the MAS issued a consultation paper on 'Requirements on Controls against Market Abuse'.16 The consultation paper sought comments on proposals to improve controls and facilitate investigations into market abuse, including market manipulation and insider trading. The proposed requirements are intended to apply to licensed and exempt financial institutions in Singapore that undertake the regulated activity of dealing in capital markets products.
One of the proposed requirements in the consultation paper is for financial institutions to record all communications between their trading representatives and the person instructing the order and trade in the customer's account, even if the communication does not result in an actual transaction. This will include communications such as instant messages on personal electronic devices.
In February 2020, the MAS also published a staff paper on cyber risk in the financial sector. This paper focused on Singapore as a case study, and discussed the impact that cyberattacks can cause to financial institutions, including solvency, liquidity, market, operational, legal and reputational risks.17 The paper concluded that cyber risk poses a growing threat to financial stability, and many questions remain that will require further analysis. Public agencies will need to do more to better understand and assess its financial stability implications.
Transnational investigations have featured prominently in the CAD's profile in the past year. The Singapore Police Force signed a Memorandum of Understanding with the Antwerp Police Department in 2019, to enhance cooperation in information sharing, capability building and training.18
In 2019, the CAD announced that a transnational internet love scam syndicate based in Malaysia had been crippled through the joint efforts of enforcement agencies in Malaysia, Hong Kong, Macau and Singapore.19 In 2020, the CAD announced that a transnational fraud syndicate based in Malaysia had also been crippled through the joint efforts of the Singapore Police Force and Royal Malaysia Police.20 The Singapore Police Force has also focused its attention on scams involving the impersonation of local and foreign government officials.
More corruption-related reports were investigated by the CPIB in 2019.21 The vast majority (90%) of corruption-related reports concerned private sector cases. Public sector corruption remains low in Singapore, which was ranked fourth in the Transparency International Corruption Perceptions Index for 2019.
Conclusions and outlook
Since the start of 2020, Singapore's enforcement authorities have increasingly been dealing with cases of misconduct arising from the global covid-19 pandemic. These have included government official impersonation scams, business collapses and fraudulent scams involving government subsidy payments. This trend is expected to continue as fraudsters seek to exploit uncertain circumstances created by the pandemic.
The CAD had noted in its Annual Report22 that government subsidies meant to support businesses and defray rising health costs inadvertently open up areas for opportunistic fraudsters to exploit. Singapore's enforcement authorities have made it clear that they will take a tough stance against criminals who seek to exploit such schemes. This is in line with Singapore's consistent stance that it will spare no effort to safeguard Singapore's status as an international financial hub, and the country's reputation as a corruption-free business environment.
1 Jason Chan, Lee Bik Wei, Vincent Leow and Daren Shiau are partners at Allen & Gledhill LLP.
4 www.mas.gov.sg/news/media-releases/2017/mas-announces-establishment-of-corporate-governance-council. In January 2018, the Corporate Governance Council released a consultation paper on its recommendations to revise the Code of Corporate Governance 2012.
6 See Rule 1417 of the Listing Manual.
7 See Part VIIA of the Criminal Procedure Code.
8 Attorney-General's Chambers' Annual Report 2018, page 22.
9 Attorney-General's Chambers' Annual Summaries 2017, page 42.
10 See Section 2(1) of the EA.
11 See Section 41 of the CDSA.
12 See Sections 40A and 47 of the Banking Act.
13 See Sections 2(1) and 13 of the Personal Data Protection Act 2012.
14 See Section 41(2) of the CDSA.
15 See Section 24 of the MACMA.
22 CAD Annual Report 2018, issued on 6 September 2019