Appeal dismissed for duo who cheated Singapore banks by concealing firms' foreign ownership

THE High Court has dismissed the appeal of Andruew Tang You Liang and Koryagin Vadim, who were convicted last year of conspiracy to deceive 2 banks in Singapore by falsely declaring the beneficial ownership of several companies.

Justice Kannan Ramesh highlighted that the false declarations hindered the checks carried out by the banks and thus made it more likely for the reputation of OCBC and Maybank Singapore to be harmed.

He upheld the sentences that were imposed in September 2021, which entailed 4 weeks' jail for Russian national Vadim and 2 weeks' jail for Singaporean Tang.

Vadim owned and ran corporate service provider MEA Business Solutions Pte Ltd, which employed Tang as a nominee director. MEA's services included incorporating companies and setting up Singapore corporate bank accounts for its clients.

Tang received fees for acting as a nominee director - to fulfil the requirement in the Companies Act that every company must have at least 1 director who is ordinarily resident in Singapore - and for helping to open corporate bank accounts.

Court documents stated that between September 2014 and May 2016, MEA incorporated 3 entities - Evoque Capital Corp Pte Ltd, Babo Group Pte Ltd and Sensetec Pte Ltd - for its foreign (Russian) clients. Tang was named the sole shareholder and director for the trio.

A few days after each of the 3 companies was incorporated, he opened corporate bank accounts with OCBC, for Evoque and Babo, and with Maybank, for Sensetec.

In the account opening forms, Tang declared that he was the beneficial owner for Babo, Evoque and Sensetec. The beneficial owner was defined as the person who ultimately owns and/or controls the management of either the company (for OCBC's form) or the bank account to be opened (for Maybank's form).

According to the court documents, Tang depended on Vadim "to a large extent as he would consult Vadim for instructions before taking any step in relation to the companies he was nominee director of".

Tang "also knew that he was a director in name who ultimately held the shares in the companies for someone else and was not responsible for the companies' management or operations, and also did not have access to the banking tokens required to access the corporate bank accounts", the documents noted.

Both individuals were charged in 2019 for their offences. After a trial in the State Courts, District Judge Eddy Tham in 2021 convicted them on 3 counts of cheating each. The judge also noted then that there was no evidence of illicit funds involved in these cases.

Both individuals went on to appeal against their conviction and sentences. Their key arguments included that Tang was in fact the actual beneficial owner of Babo, Evoque and the account to be opened for Sensetec at the material time. They also claimed there was no evidence of any conspiracy between Tang and Vadim to deceive the banks.

In response, the prosecution argued that Tang could not be considered the beneficial owner at any point in time because he could not independently make any decision on the companies and he understood that the monies in the corporate bank accounts were never his. Besides, he had no control over the accounts of the companies' transactions from the start, since the banking token to access the accounts and the cheque book were given to MEA.

The successful deception also induced the banks to omit considering the actual beneficial owners, which "invariably called into question the quality and effectiveness of the banks' internal due diligence controls", the prosecution stated.

In dismissing the appeal against both men's convictions and sentences, Justice Ramesh noted that the declaration of beneficial ownership was a necessary step introduced by the banks to mitigate the risk of illicit funds flowing through their system.

"A truthful declaration was key to mitigating the risk of the banks' accounts being used for illegal activities. Conversely, a false declaration was a significant if not insuperable stumbling block to the checks carried out by the banks on the beneficial owner and increased the risk of illicit monies flowing through their system," he said.

The judge added that the direct consequence of this was an increase in the likelihood of harm to the banks' reputation.

Furthermore, the evidence showed that Tang did not have any substantive ownership rights over the corporate bank accounts and could only act on Vadim's instructions, Justice Ramesh said.

"The evidence, when viewed together, clearly demonstrated that Tang and Vadim had acted in concert to deceive the banks into opening the corporate bank accounts," he noted.

Vadim had requested for his sentence to be deferred because he wanted to apply to the Court of Appeal against the decision. Justice Ramesh ordered that Vadim's sentence be deferred by 1 week, for him to study the judge's oral grounds and decide what he wishes to do.

A press statement by the Corrupt Practices Investigation Bureau (CPIB) in September last year noted that Vadim had a pool of Singaporean individuals, including Tang, to serve as local resident directors for companies set up on behalf of foreigners. In falsely declaring the ultimate beneficial ownership of the companies, Vadim and the directors circumvented the banks' anti-money laundering procedures, CPIB said.

Besides Tang, 3 other Singaporean individuals who acted as the directors were also charged in court in 2019: Joel Sam Thomas, Seet Mei Siah, Phee Sim Gek. In 2020, the 2 women, Phee and Seet, were each sentenced to 5 days' jail. Thomas' case was still pending before the court as at Sep 8, 2021, CPIB said in its statement then.