Singapore's anti-graft laws: 5 possible areas for reform

IN A move to arrest Singapore's slide in Transparency International's Corruption Perceptions Index and restore its leading reputation for non-corruptibility, Prime Minister Lee Hsien Loong announced a week ago that the Prevention of Corruption Act (PCA) will be reviewed, steps will be taken to boost the manpower of the Corrupt Practices Investigation Bureau (CPIB) by more than 20 per cent and a central corruption reporting centre will be set up for complaints to be made.

In the past couple of years, the island state had been rocked by a series of prominent scandals involving senior public officials and high-level executives from well-known private enterprises. While Singapore's anti-corruption laws are some of the most aggressively enforced in the world, those laws which were enacted in 1960 also need to keep pace with international developments. It is therefore timely for the PCA to be reviewed.

While it remains to be seen which aspects of the law will be revamped, we gaze into the crystal ball and outline five key areas for potential reform:

CORPORATE LIABILITY

Prosecutions in Singapore for bribery-related offences have primarily focused on individuals. While Singapore law allows corporations to be prosecuted, and international obligations under the OECD Anti-Bribery Convention require corporations to be legally liable for corrupt practices, the reality is that it is evidentially difficult to prove that a corporation had the requisite intent and had perpetrated the said corrupt act. This is usually proven by showing the individual who committed the crime can be regarded as the "embodiment of the company" or its "directing mind and will" - not an easy task in an era of large multinational corporations with complex decision-making trees.

Any reform to the PCA may do well to take a leaf out of the pages of Singapore's own anti-money laundering law - the Corruption, Drug-Trafficking and Serious Crimes (Confiscation of Benefits) Act (CDSA). The CDSA renders money laundering by a corporation a criminal offence that can be proven through the state of mind as well as the conduct of any "director, employee or agent" who was acting within the scope of his or her actual or apparent authority. In other words, the evidential threshold is significantly lowered and the outdated "directing mind and will" test is done away with.

COMPLIANCE DEFENCE

If the threshold for proving corporate liability is lowered, some balance can be restored by introducing a compliance defence. A corporation that is found liable for bribes paid by its "director, employee or agent" can be absolved of legal liability if it can show that it took reasonable steps to prevent such corrupt practices from taking place. Such a compliance defence provides a legal impetus for companies to adopt prudent business practices and foster ethical corporate cultures through the implementation of anti-corruption compliance programmes.

This notion of a compliance defence finds support in the form of the "adequate procedures" defence enshrined in the recent UK Bribery Act 2010, and has been the subject of a movement in the US to introduce a similar affirmative defence in the context of the reform of the Foreign Corrupt Practices Act.

EXTRATERRITORIAL EFFECT

It has been observed that while the level of corruption in Singapore may be relatively low due to the authorities' strict domestic enforcement approach, the behaviour of Singaporeans and Singapore companies abroad may not necessary mirror that of their conduct back home. This could be partly due to the limited legal effect of the PCA on corrupt conduct abroad, and the practical difficulties of enforcement and investigations in foreign jurisdictions.

The PCA, as it currently stands, provides for limited extraterritorial effect in respect of the acts of bribery of Singapore citizens abroad. Such acts will be dealt with as if the bribe had taken place in Singapore. Notwithstanding this provision, non-citizens such as Singapore permanent residents and corporations are not subject to the extraterritorial scope of the law. If the non-corruptible image of Singapore is to be maintained, it should be burnished based on conduct at home and abroad. The PCA should be expanded to address this discrepancy.

WHISTLEBLOWING PROTECTION

While the establishment of a central corruption reporting centre could be a helpful facility, more can done to address the concerns surrounding reporting of complaints, particularly protection against retaliation. The PCA currently provides for the right to anonymity and protects informers' identities by prohibiting the disclosure of information such as the informer's name or address. However, given that there is no overarching whistleblower law in Singapore, unlike some other jurisdictions, there is no statutory protection afforded to employees of companies who may lodge complaints against their supervisors and lose their jobs as a consequence.

Singapore could also consider going a step further by giving monetary rewards to genuine whistleblowers whose timely complaints could help to prevent corruption or fraud. This may be a controversial idea since some consider that complaints should be made out of a sense of civic-mindedness and not because an incentivising carrot was dangled; this approach was taken in the US although it was not adopted in the UK. Singapore may, however, already have set a precedent in giving monetary rewards since the Inland Revenue Authority of Singapore operates a scheme which rewards whistle-blowers for information which leads to tax being recovered.

PRIVATE-SECTOR OUTREACH

If reform were to be instituted in the key aspects of corporate liability, compliance defence and extraterritoriality, an extensive private-sector outreach programme should be rolled out to prepare Singapore corporations and international corporations with a regional base in Singapore, to address corruption challenges internally and in their dealings with business partners and intermediaries both domestically and regionally. The advent of the Asean Economic Community provides the catalyst for Singapore Inc to take on the scourge of regional corruption with a robust approach to compliance which sets apart ethical, well-run, sustainable businesses from those which operate on dubious practices and questionable relationships.