Lower Sentence in Novel Case of Director Liability for Company’s Money Laundering – Part 1

Lower Sentence in Novel Case of Director Liability for Company’s Money Laundering – Part 1

close up of a man holding onto prison bar

Part 1: Introduction

Abdul Ghani bin Tahir v Public Prosecutor [2017] SGHC is a landmark case is based on the issue of money laundering offences committed through bank accounts belonging to a company. This is the first prosecution of its kind under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (“CSDA”), which subsequently led to the conviction and imprisonment of the director of a company due to neglect that contributed to the company’s bank accounts being used for the purposes of money laundering. It is also the first reported case of a director who was sentenced to imprisonment for failing to exercise reasonable diligence under section 157(1) of the (“Companies Act”).

This appeal to the High Court led to the imprisonment term for the Defendant director to be reduced by more than half. In doing so, the Court established sentencing guidelines for the relevant offences regarding situations which warrant custodial sentences, relevant aggravating factors, and the corresponding starting points for sentencing.

The High Court also overturned a cost order issued against the Defendant for the conduct of his defence at the trial court.

 

Brief Facts

The Defendant was part of a business that engaged in the provision of corporate secretarial services. As part of the business, the Defendant incorporated 4 companies for foreign nations, all of whom were introduced by one Nadia Monica (“Nadia”). The companies include Kassar Logistics Pte Ltd (“Kassar”) and World Eastern International Pte Ltd (“WEL”). Due to the fact that the executive directors of these companies were based overseas, the Defendant opened bank accounts for them and acted as the local resident director of the companies.

In February 2012, the Defendant was made aware that Kassar was under investigation for money laundering offences which led to Kassar’s bank account eventually being closed.

From March 2012, multiple deposits and withdrawals were made from WEL’s bank account. Amongst this, 6 deposits and 6 withdrawals became the bases for the CDSA charges. The Defendant had received 7 recall notices from the bank regarding 6 deposits during this time. The Defendant then sent the notices to Nadia to ask her to deal with them. However, Nadia failed to respond.

Charges under the CDSA and the CA were later brought against the Defendant for his part in WEL’s transactions.

 

Decision of the District Judge

The District Judge found that the victims were tricked into transferring their monies into WEL’s account and thus, the 6 deposits were deemed to be stolen properties. Consequently, he found that WEL had dishonestly received these deposits.

The District Judge also went on to find that there were sufficient red flags during the Defendant’s exercise of his role as local resident director of WEL, for him to have reason to believe that WEL was involved in the act of receiving stolen properties. Thus, the Defendant was imputed with the knowledge of his principals (i.e. Nadia and/or the other WEL director based in Romania), for whom he was deemed to have acted “without discretion or volition”.

On concluding that the Defendant failed to exercise reasonable diligence as a director of WEL, the District Judge convicted him of 6 charges pursuant to section 47(1)(b) read with section. 59(1)(b) of the CDSA for WEL’s transfer of the stolen monies being attributable to his neglect as an officer of the company. Further, the defendant was also charged with failing to exercise reasonable diligence as a director under section 157(1) of the CA.

Custodial sentences that ranged from 2 to 14 months were imposed by the District Judge for the CDSA charges. Additionally, a 4-week custodial sentence was imposed for the Defendant’s breach of duties as a director under section 157(1) of the CA. Upon taking the entirety of the charges into account, the Defendant was setenced to an aggregate of 26 months and 4 weeks’ imprisonment.

The District Judge also granted the request made by the Prosecution for an order of costs amounting to S$3,992.74 against the Defendant for his conduct of the defence.

 

Please note that this article does not constitute express or implied legal advice, whether in whole or in part. If you require legal advice, please contact me at walter@silvesterlegal.com.

 

 

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