Criminal Procedure and Sentencing – Principles – Falsification of Accounts

Appellants and Charges

• The first respondent, Leow Ban Leong (“Leow”), is the chief executive officer of Prelim Construction Pte Ltd (“Prelim”) and a director/shareholder of Advance Facilities Pte Ltd (“Advance”) which are related companies controlled by Leow.
• The second respondent, Foo Fang Liong (“Foo”) is a senior manager at both Prelim and Advance.
• The appellants each faced three charges under s 477A read with s 109 of the Penal Code for engaging in a conspiracy to falsify company documents. In a joint trial, they were both convicted on all three charges.
  • Leow was fined a total of $90,000 ($30,000 fine per charge);
  • Foo was fined a total of $45,000 ($15,000 fine per charge).
• Both filed appeals against their conviction, while the Prosecution filed cross-appeals against the sentences imposed.

Decision for Appeals Against Conviction

• The Court agreed with the trial judge that Foo and Leow had both acted on the basis that the “Term Contract” would apply to the Floating Sea Barrier Project (“FSB Project”), which would require Prelim to charge for the buoys only on a cost-plus basis for the following reasons: –
  • This only contract governing the relationship between Prelim and the Police Coast Guard (“PCG”) was the Term Contract.
  • Leow’s statement to the Commercial Affairs Department suggests that he had believed the Term Contract would apply to the said project.
  • Prelim made reference to the Term Contract in the authentic “Form D9” that was submitted to the Auditor-General’s Office (“AGO”)
• Appellants stated that it was Benson, an agent of PCG, who initially prepared a quotation dated 12 February 2010 (“Quotation”) using Prelim’s letterhead without first seeking the authorisation of Prelim.
  • The price quoted was $2,500 plus 5% per buoy in this Quotation.
  • After PCG approved the purchase based on the price stated in the Quotation, Benson informed Prelim to proceed based on the Quotation.
• By agreeing subsequently to perform the contract in accordance with the terms stated in the Quotation, albeit prepared initially by Benson, Prelim had ratified what Benson had done, adopted the Quotation on its letterhead as its own and therefore confirmed that the contract with PCG would be performed in accordance with that Quotation.
• There was an asterisk marked in the Quotation next to the item for the buoys to indicate that it was to be on a cost-plus basis as would be under the Term Contract.
  • Upon accepting to perform the contract as per the Quotation, Leow and Foo must have known at least by this time (if not even earlier) that they would be overcharging PCG as the cost-plus basis of charging would have only allowed them to charge at $1,500 plus 5% per buoy and not $2,500 plus 5% per buoy. However, the true cost-plus price should have been $1,500 per buoy from its supplier plus 5% and no more.
• Acts committed by Leow and Foo: –
  • Leow and Foo decided to fabricate supporting documents on the letterhead of Prelim’s related company Advance.
  • Leow and Foo deliberately suppressed the invoice from Wealth Marine which would have clearly showed that Prelim had purchased the buoys for only $1,500 each.
  • Leow and Foo also fabricated and submitted an invoice, claim form and Form D9 (collectively, the “offending documents”) which falsely specified Advance as the supplier of the buoys.
  • The fictitious documents fraudulently misrepresented to the AGO that there was a three-year extended warranty provided by Advance to Prelim in respect of the 91 buoys for which PCG had to be additionally charged to artificially boost the overall average price per buoy to $2,500, a figure that the appellants were anxious to show to AGO on the supporting documents to match the costplus price Prelim had charged to PCG of $2,500 plus 5% per buoy as per the Quotation when no such extended warranty was asked for.
  • The payment of $136,500 (based on 91 buoys at $1,500 per buoy) and $91,000 (for additional services) by Prelim to its related company Advance was intended to create some evidence of a payment trail to support the false fact stated in the fictitious invoice from Advance of having purportedly supplied the 91 buoys to Prelim for $1,500 per buoy when in fact it did not, to mask their misdeeds from the AGO and prevent discovery.
• The mens rea of the offence has two components: Intention to deceive and intention to gain some advantage or benefit. The mens rea requirement was satisfied as the appellants intended to use these offending documents to mislead and deceive the AGO into thinking that Advance was the actual supplier of the buoys, and that $2500 was comprised of $1500 for the buoy itself that Advance supplied to PCG and an additional $1000 for the fictitious extended warranty. The offending documents would have allowed Prelim to retain the additional $1000 per buoy.

Conclusion

The Court dismissed Leow and Foo’s appeals against conviction.