Third-party inducement not needed to establish corruption: Appeals Court

SINGAPORE — The highest court of the land yesterday clarified anti-graft laws here, including making it clear that inducement by a third party is not always necessary for a corruption charge to be established.

Disagreeing with the grounds of decision issued last year by a High Court judge — which were binding on all state courts — the Court of Appeal said that if inducement by a third party were always necessary, it would lead to absurd outcomes where the more outrageously someone behaves in soliciting for a gift, the less likely he would be guilty of corruption.

“That not only is an unsatisfactory outcome, but also undermines the entire object of the Prevention of Corruption Act,” the Court of Appeal said in a judgment released yesterday on questions of the law on corruption.

The Court of Appeal was presided by Judges of Appeal Chao Hick Tin and Andrew Phang, as well as Justice Tay Yong Kwang. The questions were referred by the public prosecutor after former IKEA food and beverage manager Leng Kah Poh — who was first sentenced to 98 weeks in jail for 80 corruption charges by a district judge — was acquitted in September last year by High Court Judge Choo Han Teck of corruption.

Mr Leng and two others had hatched a plan to supply food to IKEA through two companies at marked-up prices.

The companies, whose only client was IKEA, made S$6.9 million in profit over seven years, and Mr Leng received a third of it.

His collaborators were handed jail terms of 40 weeks and 70 weeks.

Justice Choo had said Mr Leng had to have been induced by a third party to act against the interests of Ikano, the company that operates the IKEA furniture stores here, in order to establish a corruption charge. But there had been no third party, as it was Mr Leng who was one of the masterminds.

With the latest judgment, prosecutors will now argue before the Court of Appeal for Mr Leng’s acquittal to be overturned.

The Court of Appeal also ruled that the two companies — AT35 Services and Food Royal Trading — could be considered third parties even if Mr Leng had an interest in them.

Justice Choo was wrong in thinking that because Mr Leng had an interest in the two companies and had merely obtained a share of their profits, a corrupt transaction could not have taken place, the Court of Appeal judges said.

A proper inquiry must be made into the true nature of the arrangements between agents such as Mr Leng and the third parties, or it would be all too simple for them to devise “inventive and sophisticated schemes related to skimming secret profits” off their targets in order to escape legal sanctions, the judges wrote.

In his ruling, Justice Choo Han Teck had said what Mr Leng had pocketed were “secret profits” from a ploy he had hatched, rather than bribes from a third party. He said: “Whatever the appellant was guilty of; I find that it was not corruption under the Prevention of Corruption Act.”

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, Justice Choo had added.

Mr Leng’s acquittal was one of two cases that prosecutors had referred to the Court of Appeal to determine legal questions of public interest.

The other case involved former Seagate director Henry Teo Chu Ha, who had paid S$6,000 for 20,000 shares in trucking company Biforst (which had contracts with Seagate) and was paid dividends totalling S$576,225 from these shares. In ruling on the questions of law from Teo’s case, the Court of Appeal said the fact that he had paid for the shares did not mean they were not gratification.

It could hardly have been the purpose of the Prevention of Corruption Act to exclude schemes that were cleverer and more devious than “traditional” or blatant forms of corruption, the apex court had ruled. Teo had his six-month jail term restored last month.