Jurisdiction - Singapore
Singapore – Two Recent Cases Consider Whether Acting In Conflict of Interests Amounts In Itself to Corruption.

20 December, 2013


Legal News & Analysis – Asia Pacific – Singapore – Corporate/M&A


Two recent cases on corruption provide further clarification as to what the offence entails. Both cases dealt with a situation where an employee secretly set up a company in order for this company to enter into contracts with his employer where he was in a position to award those contracts to that company. In both these cases, Teo Chu Ha v PP [2013] SGHC 179 and Leng Kah Poh v PP [2013] SGHC 180, the Singapore High Court clarified that such a conflict of interest does not amount, in itself, to corruption.

Teo Chu Ha v Public Prosecutor


In 2004, Seagate had a contract with Richland Logistics Services Pte Ltd for trucking services which was due to expire. The point person for Richland in its Seagate trucking contracts was a Tan Ah Kwee. He left Richland to set up a trucking company with two other Richland employees, Koh Han Lee and Ng Kok Seng.

The appellant was a senior director of logistics at Seagate Technology International (“Seagate”). He wanted to get rid of Richland as the middleman in the trucking operations and to deal directly with the transport operators, represented by Ah Kew. He and a third party hence came up with the idea of setting up a trucking company, Biforst Singapore Pte Ltd (“Biforst”), together with Koh Han Lee and Ng Kok Seng. The appellant subscribed and paid for shares in Biforst amounting to 22.5% of its issued share capital.

When Seagate tendered for contractors to provide trucking services, Biforst was one of the top three companies that was shortlisted. When concerns were expressed about its lack of a track record, the appellant was able to exercise his influence on the selection process. He explained that Biforst was linked to a company set up by Ah Kwee, and hence, would be fully familiar with Seagate’s operations. Partly due to this influence, the contract was eventually awarded to Biforst. Other contracts were also awarded by Seagate to Biforst in 2005, 2007, and 2010. Throughout the years from 2004 to 2010, the appellant received regular payouts from Biforst of 22.5% of its distributable profits.

The prosecution charged the appellant with corruption for his receipt of the Biforst shares, and the payments made by Biforst to him. It alleged that the shares and the payments amounted to gratification received for assisting Biforst to secure contracts to provide trucking services from Seagate. The prosecution succeeded before the District Court, and the appellant appealed to the Singapore High Court.


The High Court held that the prosecution had not proved its case.

It noted that in order to show that there had been corruption, it had to be shown that the purpose of or reason for the gratification was as a reward or as an inducement for the act done by the appellant in relation to his principal, Seagate. There had to have been a direct causal link between the alleged gratification and the alleged acts looked at from both the receiver’s and the giver’s perspectives. The prosecution had not been able to establish this for either the transfer of shares or for each of the payments made by Biforst to the appellant:

  • As regards the receipt of shares by the appellant, the Court first noted that he had paid S$6,000 for the shares. In these circumstances, the usual inference was that the shares had been transferred to him because they had been duly paid for and not because they were a bribe. The prosecution had led no evidence showing that the payment was a sham or that the shares were worth considerably more than the S$6,000 paid. Accordingly, it held that it had not proven its case that the transfer of shares was for the purpose of inducing or rewarding the appellant to secure the Seagate contracts and not simply as consideration for the S$6,000 paid by the appellant.
  • As regards each of the payments made over 2004 to 2010, the Court noted that there was no correspondence in the timing of the payments and the awarding of the Seagate tenders to Biforst. In the absence of this, the prosecution had to point to something else or provide a reason to show that the payments were given as a reward for or an inducement to the appellant to assist Biforst in securing Seagate contracts. The prosecution had not done so, and accordingly, had not proven its case for each of these payments as well.


The Court noted that the prosecution had made much of the appellant’s actions being in contravention of Seagate’s conflict of interest policy. However, it observed that while all cases of corruption involved the accused being induced to and being rewarded for acting in a manner which conflicted or appeared to conflict with his principal’s affairs, it was not the case that all conflicts of interest amounted to corruption. Instead, corruption was a narrow subset of situations which involve a conflict of interest. The one could not be conflated with the other.


The Court hence allowed the appeal and acquitted the appellant of all 12 charges against him.

Leng Kah Poh v Public Prosecutor


The appellant was the Food and Beverage Manager at IKEA Singapore (“IKEA”). This position allowed him exercise influence to approve suppliers to IKEA. The appellant and a third party, Gary, came up with the idea of becoming food suppliers to IKEA, leveraging on the appellant’s inside knowledge and influence. To cover their tracks, Gary approached Andrew Tee. Andrew registered the companies, AT35 and Food Royale Trading (“FRT”), in his own name. While there was some dispute as to whether the appellant had been brought in later or whether he was the mastermind behind the scheme, the High Court was of the view that it was at least a reasonable possibility that he had masterminded the entire set up.

Via the appellant’s exercise of influence within IKEA, as well as his insider’s knowledge on how to make food products palatable to IKEA, AT35 and FRT were able to become the exclusive suppliers of chicken wings and dried food products to IKEA at a highly profitable mark-up. Over a period of seven years, Gary, Andrew, and the appellant made a profit of S$6.9 million from the food supply contracts with IKEA.

As a result of payments made to him by FRT and AT35 over the seven years, the appellant was charged with 80 counts of corruption.


The High Court held that to establish corruption, it had to first ascertain that the accused had intended to do an act which was objectively corrupt and then it had to find that such intention tainted the transaction with a corrupt element. Once such an intention was established, it could go on to make a finding as to the accused’s corrupt intent. Such an inquiry was directed at whether the accused knew that what he was doing was, by the ordinary and objective standard, corrupt.

In order to show corruption, it was not sufficient to find that the accused had acted with a dishonest intent, but that there was an inducement for him to act the way he did. The Court emphasised that an agent who has acted with dishonest intent and interfered with the affairs of his principal but has not been induced to do so by a third party might be guilty of some other crime of dishonesty, but would not be guilty of corruption as defined under the Prevention of Corruption Act. It made it clear that the offence of corruption did not capture a situation where an employee or director acted in conflict of interest to make secret profits.

In the present case, the Court held that this was an elaborate scheme which involved two different companies, both distanced from the appellant, carrying out the specific business of supplying food to IKEA at a mark-up. AT35 and FRT were effectively special purpose companies to carry out a scheme which would allow Gary, Andrew, and the appellant to skim money off the top of food contracts with IKEA. An insider was needed to embark on such a scheme and the appellant was this insider.

While the appellant might have committed a breach of fiduciary duty or fraud against IKEA, these sorts of circumstances were not intended to be covered by the Prevention of Corruption Act. The Court therefore acquitted the appellant of all charges. However, it also noted that this did not preclude IKEA from commencing a civil action against the appellant.

Our Comments / Analysis

The High Court has, in its decisions in these two cases, made it quite clear that the offence of corruption must involve some form of corrupt act: there must be an inducement by another party acting on the accused to undertake or omit to undertake certain acts. The mere derivation of benefits as a result of acting against the interests of the agent’s principal would not, in itself, amount to corruption, especially if the facts showed that the substance of the transaction was one where the “third party” payer was in actuality merely a sham front for the agent himself. These decisions reinforce the District Court’s decision in PP v Ng Boon Gay where it was successfully argued that not every conflict gave rise to corruption.

Neither of the two cases involved employees in the Government or in a public body. Accordingly, the presumption of corruption under section 8 of the Prevention of Corruption Act did not apply. Under this section, if gratification is given to or received by a person in the employment of the Government, any Government department, or any public body, the onus falls on the accused to show that he did not receive the gratification with corrupt intent. In PP v Ng Boon Gay, the Defence argued that while section 8 gave rise to a rebuttable presumption of corrupt intent, it did not absolve the prosecution of its obligation to establish the facts to support other elements of the offence, viz. that gratification was received in exchange for an inducement (i.e., favour or advantage) for, or reward by, another party (i.e., the giver). The Singapore District Court did not decide this question, and accordingly, it remains to be seen whether facts similar to those in these two cases arising in the context of a Government or public body employee would result in the accused having to establish his innocence or whether the onus would still remain on the prosecution to establish the elements of the offence other than intent.




For further information, please contact:


Tan Chee Meng, WongPartnership

[email protected]

Melanie Ho, WongPartnership

[email protected]


WongPartnership Corporate/M&A Profile in Singapore


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