In what appears to be a first in Singapore, a conditional warning in lieu of prosecution was served on Keppel Offshore & Marine, a Singapore multinational company (Company), for corrupt payments made outside of Singapore in order to win contracts with Petroleo Brasileiro S.A., the Brazilian state-run oil company, and its related companies. Under this conditional warning, the Company undertook to pay more than US$105 million to the Singapore authorities (Conditional Warning). This appears to be the largest amount a Singapore-incorporated company has undertaken to pay pursuant to a conditional warning in lieu of prosecution.
The Conditional Warning was issued as part of a global resolution led by the United States Department of Justice (DOJ) and discussed with Brazilian and Singapore authorities. The DOJ had filed an indictment against the Company for conspiring to violate the Foreign Corrupt Practices Act and entered into a deferred prosecution agreement with the Company under which the Company undertook to pay the United States, Brazilian authorities and Singapore authorities more than US$105 million, US$211 million and US$105 million respectively.
By way of background, a conditional warning is one of the administrative measures which law enforcement agencies in Singapore can impose when it is of the view that offense(s) have been committed but criminal prosecution would not be in the public interest. Broadly speaking, it is Singapore’s equivalent of the non-prosecution agreements used by the DOJ. Under a conditional warning, the relevant law enforcement agency would inform the suspect of the offense(s) the agency considers to have been committed and reserve its right to prosecute the suspect for these offense(s) should he/she breach certain conditions. These conditions typically include that the suspect will not commit any offenses within a specified duration after the warning is issued and will make restitution to any victim(s). Generally speaking, the conditional warning and its terms are not made public.
This recently issued Conditional Warning is noteworthy in several respects. It is a reminder that Singapore-incorporated companies may be made subject to similar warnings and/or prosecution under Singapore’s Prevention of Corruption Act for corrupt payments made outside of Singapore. Further, it shows that Singapore authorities can cooperate with foreign counterparts not only in investigating but also in sanctioning corruption offenses.
Further, this case serves as a timely reminder of benefits of self-reporting and cooperation with the authorities. In a joint press release, Singapore’s Attorney-General’s Chambers and Corrupt Practices Investigation Bureau made clear that they took into account the substantial cooperation rendered by the Company to investigations, including self-reporting of the corrupt payments made, and the Company’s extensive remedial action when deciding to issue a Conditional Warning to the Company. Similarly, the DOJ cited the Company’s thorough internal investigation and extensive remedial action, which included disciplinary action against its errant employees, enhancement of its compliance program and internal controls, as factors when it decided to enter into a deferred prosecution agreement with the Company.
Finally, in the wake of this case, Singapore authorities have revealed that they are reviewing Singapore’s Prevention of Corruption Act and have proposed the introduction of Deferred Prosecution Agreements (DPA) into Singapore law. In contrast to a conditional warning in lieu of prosecution where no charge(s) would be preferred, a DPA would see charge(s) being preferred against the corporation and later withdrawn if the corporation undertakes strict obligations (which would include the payment of a settlement and undertaking measures to prevent similar wrongdoing from occurring again). Further, the terms of the DPA would have to be approved by the Singapore Courts as well. The introduction of DPAs into Singapore law would see changes in how Singapore authorities prosecute and sanction corporate crimes. Traditionally, Singapore authorities have preferred to prosecute the individuals within the corporation that are responsible for the wrongdoing rather than to prosecute the corporation itself. However, with the introduction of DPAs, we could see more prosecutions of corporations by Singapore authorities and the imposition of monetary sanctions in much higher amounts than the fines currently provided for in existing legislation.