Ex-IKEA F&B manager cleared of graft on appeal

SINGAPORE — A former food and beverage manager at IKEA Singapore who was convicted in one of the largest private-sector corruption cases here walked away from a 98-week jail term and S$2.3 million penalty yesterday after the High Court cleared him of all 80 graft offences on appeal.

Mr Leng Kah Poh, 52, had been found guilty in February of receiving S$2.3 million in kickbacks for providing “insider tips” over more than six years to two companies supplying food to the Swedish furniture giants.

But Justice Choo Han Teck ruled yesterday that what Mr Leng had pocketed were “secret profits” from a ploy he had hatched, rather than bribes from a third party.

He said: “The offence of corruption does not capture a situation like the present one where he created his own secret benefit and not that it was a gratification given to him as a reward. Whatever the appellant was guilty of; I find that it was not corruption under the Prevention of Corruption Act (PCA).”

He added that prosecutors had not proven the “crucial objective corrupt element of corruption”, which was that Mr Leng was “induced by another party to carry out the alleged acts against his principal”.

Mr Leng’s role was that of an “insider” instead, in a “elaborate scheme” he had hatched with an accomplice “to skim money off the top” of food contracts with IKEA Singapore, the judge said. Two other persons were involved in the scheme and they were earlier convicted of bribery. One was sentenced to a 70-week jail term, while the other was jailed 10 months and fined S$180,000.

The court heard that Mr Leng gave AT35 Services and Food Royale Trading (FRT) tips on how to make their products — marinated chicken wings and dried goods, respectively — “palatable” to IKEA Singapore and granted exclusive contracts to them.

However, the firms, which had no other customers, effectively did nothing other than transport the products from its supplier to IKEA and marked up the prices — making a S$6.9 million profit from 2003 to 2009, of which one-third went to Mr Leng. The furniture chain was overcharged S$8 million, it was found.

There is a “reasonable chance” that this was a situation where the appellant was “paying himself” through the two “effectively special purpose companies”, the judge said.

He added: “The appellant might have committed some other offences or simply just a civil fraud, but I do not think that the PCA was intended to cover these sorts of circumstances.”

The judge also pointed out that if cases like this were included in the scope of the offence of corruption, it would mean that “every time an employee or director gained secret profits by virtue of a conflict of interest he would have committed an offence under the PCA”.

But he noted that Mr Leng’s acquittal does not preclude IKEA Singapore from suing him for fraud or for breach of fiduciary duties to recover the sums taken from it.

In response to TODAY’s queries, IKEA Singapore said it has “taken note of the court’s decision” while the Attorney-General’s Chambers said it will “study the grounds of decision carefully”.