Former Seagate director’s acquittal in question as court clarifies graft Act

SINGAPORE — The fate of a former Seagate Technology director, whose graft conviction was overturned on appeal, is again in question.

This comes as the Court of Appeal clarified the interpretation of the Prevention of Corruption Act, following questions prosecutors raised about comments made by the High Court judge who had acquitted Mr Henry Teo Chu Ha.

In its grounds of decision released last week, Judge of Appeal Andrew Phang wrote on behalf of the court: “It could hardly have been the purpose of the Act to exclude from its scope schemes which were no different from the more ‘traditional’ or blatant forms or methods of corruption — except that they were cleverer and more sophisticated as well as devious.”

He added: “On the contrary, in our view, it is even more important that the Act cover these last-mentioned forms of corruption as well, especially now that the world and the concomitant schemes of corruption have become more complex and sophisticated since the Act was first passed.”

Central to Mr Teo’s case were 20,000 shares of trucking company Biforst, for which he paid S$6,000 in 2004, before the firm won contracts with his then employer. The 65-year-old was convicted, sentenced to six months’ jail and ordered to pay a S$576,225 penalty — the amount he received in 11 dividend payouts between 2006 and 2010.

In acquitting Mr Teo last September, Justice Choo Han Teck noted that in cases where the alleged gratification consisted of shares an accused person had paid for, “it is for the prosecution to prove, beyond a reasonable doubt, that the payment for the shares was a sham”.

Given that Justice Choo’s finding would be binding on future corruption cases, the Attorney-General’s Chambers (AGC) sought clarity on this point with the appellate court.

In its judgment, Justice Phang ruled that the fact Mr Teo had paid for the shares did not mean they were not gratification. Indeed, his payment was a “legal red herring”, he said.

First, Mr Teo would have been unable to buy Biforst’s shares in the open market as it is a private firm, which had been formed for the purpose of securing trucking contracts from Seagate through Mr Teo’s influence in the company, the judge noted.

Without the shares, he would not have been able to receive the “subsequent kickbacks which were camouflaged and sanitised through ... (taking) the form of his ‘share of profits’”, said Justice Phang.

“At the end of the day, one has to look at the substance of the entire scheme and its context rather than only at the actual and more specific transaction involving payment for the shares themselves,” he said.

“That it is not necessary for prosecutors to prove that the share transaction was a sham ... is also consistent with the broader spirit and policy behind the Act itself — which is to prevent corruption in its various forms, and all the more so with regard to deliberate and involved as well as sophisticated schemes.”

To require otherwise would be to “effectively undermine the pith and marrow of the Act itself by permitting it to be circumvented by sophisticated as well as disingenuous schemes”, he added.

A hearing has been fixed today for the AGC and Mr Teo’s lawyers will make submissions on Justice Choo’s decision to acquit Mr Teo.