Singapore DPA framework – summary
In March 2018, the Singapore Parliament passed the Criminal Justice Reform Act, which introduced a DPA framework into Singapore’s Criminal Procedure Code. As in other jurisdictions, such as the United States and the United Kingdom, a Singapore DPA permits a company to enter into an agreement with an investigating or regulatory authority to defer or avoid prosecution on the condition that the company complies with specific terms in relation to its conduct and/or monitoring arrangements. If the company fails to observe the terms of the DPA, the public prosecutorial arm of the Attorney General’s Chambers may apply to the Singapore courts to prosecute the company.
In addition to corruption offences, the Singapore DPA regime applies to money laundering and receipt of stolen property offences. No statutory limit has been set under the DPA provisions.
The Singapore DPA regime appears to be substantially similar to the UK model, but also adopts facets of the U.S. model:
- Applicability – DPAs may only be entered into by companies, partnership or associations, and not by individuals.
- Significant fiscal and other penalties – The terms of a DPA may include significant financial penalties, disgorgement of profits (and provision for how this money should be used), compensation to victims, requirements to implement enhanced internal controls and other compliance measures, the imposition of an independent compliance monitor who reports to the Public Prosecutor, and a prohibition against further offences for the duration of the DPA.
In particular, companies may be compelled to pay financial penalties or disgorge profits generated from the alleged offence which could be significantly higher than the maximum fine of S$100,000 (and potentially, disgorgement of the amount of “gratification” paid or received) currently prescribed by Singapore’s Prevention of Corruption Act (PCA). This was foreshadowed in the KOM resolution, where KOM undertook to pay a total of US$105.5 million to the Singapore authorities, an amount that substantially exceeded the maximum fine that could have been imposed under the PCA.
- Court approval of DPA terms – As in the UK, the terms of a DPA must be approved by the Singapore High Court. The Court will consider whether the proposed DPA is being entered in the interests of justice, and the terms are fair, reasonable and proportionate.
- Once approved by the Court, a DPA must be published, and made accessible to the public – As with other DPA frameworks, the public nature of a DPA, and the potential reputational damage that may be sustained by a company upon public disclosure, is expected to be a factor in a company’s calculus as to whether to self-report corruption or bribery violations to the Singapore authorities. However, under the Singapore DPA framework, the Court retains the discretion to postpone or redact publications of any public notices of a DPA entered into, varied or expired, if the Court is satisfied that it is expedient “in the interests of justice, public safety, public security or propriety, or for other sufficient reason” to do so.
- Ongoing-co-operation – As with DPAs in the United States and the UK, companies will be required to cooperate on an ongoing basis in any investigation relating to any alleged offence(s) or other offences, including providing information that may be used to aid prosecutors in bringing charges against individuals.
Nevertheless, the Singapore authorities have already signaled a key difference in how the Singapore DPA regime will be administered, compared to the U.S. and UK models. It was stated during the second reading of the bill in the Singapore Parliament that Singapore is unlikely to publish prosecutorial guidelines for DPAs, in order to avoid such guidelines from becoming a “tool … in manipulating the criminal justice system to escape punishment.” Nonetheless, it is anticipated that Singapore prosecutors will apply some of the factors that are considered by anti-corruption enforcement agencies in the United States and the UK when determining whether a DPA is appropriate for a company, such as self-reporting, the level of cooperation and the presence of any remedial steps taken by the company to address its compliance risks or breaches. Ultimately, however, it remains to be seen how much weight the Singapore courts will place on such factors, or whether adverse inferences will be drawn if these factors are absent, when the terms of a proposed DPA are being considered for approval.
Conclusion
The introduction of a DPA regime in Singapore reflects the recognition by the Singapore authorities that there should be greater corporate accountability for acts of corruption or bribery that is consistent with Singapore’s public stance of a “zero-tolerance” approach on these issues.
Our thanks to Charlotte Simpson for helping with this Client Alert.
Note: Reed Smith Pte Ltd is licensed to operate as a foreign law practice in Singapore. Where advice on Singapore law is required, we will refer the matter to and work with licensed Singapore law practices where necessary.
Client Alert 2018-105
