Singapore's High Court examines proof requirements in financial misconduct case
The General Division of Singapore's High Court recently dealt with an employment dispute involving allegations of financial misappropriation.
A finance manager faced claims of misappropriating over $420,000, while two former directors were accused of breaching their duties regarding a loan transaction.
The finance manager admitted to misappropriating $339,730 and had repaid $420,955, but disputed additional claims. She sought to recover what she considered excess payments. Meanwhile, the directors defended their handling of a $150,000 loan transaction, maintaining it was properly documented.
The Court examined evidence of financial controls, documentation practices, and allegations of misconduct, ultimately dismissing several claims due to insufficient evidence.
The employer, a bakery chain, operated a central kitchen and 12 retail outlets when proceedings began in August 2024. The finance manager's employment ended in September 2018 after financial discrepancies emerged.
Four criminal charges of breach of trust were brought against the finance manager. She pleaded guilty to two charges involving $240,376.72, with the remaining amount becoming subject to civil proceedings.
The Court found significant issues with internal controls, stating: "The evidence suggested that [the employer] lacked proper financial controls, including allowing the issuance of cash cheques and cash payments, which [the finance manager] appeared to have exploited."
The Court examined transactions between 2015 and 2018, finding many lacked proper documentation. For numerous transactions, the employer could not prove the finance manager had misappropriated funds.
Some allegations were directly contradicted by evidence. For instance, the managing director confirmed the existence of an employee incentive scheme that the employer had claimed was fabricated.
The Court noted: "In most cases, [the employer] had no evidence that the monies were even taken by [the finance manager], much less taken wrongfully by her."
A separate dispute involved a $150,000 loan from January 2017. The employer claimed the loan could not be repaid until the business became profitable, but provided no documentation of this agreement.
The managing director had approved repayment of this loan in instalments throughout 2017. Contemporary communications supported the directors' position that this was a standard short-term loan.
The Court found: "The WeChat messages shortly after the Loan was made also supported [the director's] case that the Loan was a temporary one."
The Court ultimately dismissed the employer's claim against the finance manager for the remaining disputed amount, as well as claims against both directors.
The Court found the employer's approach problematic, noting: "The clear impression I had from the evidence was that [the employer] had done a review of its documents for the period 2015 to 2018, and decided (initially) to claim misappropriation, and conspiracy to misappropriate, against all the defendants, for any transaction that looked suspicious, could not be explained or where supporting documents could not be found."
The Court ordered the employer to pay costs to all three defendants, with amounts of $95,000 to one director, $120,000 to the managing director, and $75,000 to the finance manager.
