Foreign national sent financial aid in exchange for Singapore residency
A Magistrate's Court in Singapore recently dealt with a case involving a company director who made false statements to obtain an Employment Pass for a foreign national. The case highlighted important issues surrounding work pass regulations and the consequences of attempting to circumvent the system.
This case serves as a reminder of the serious repercussions that can arise from providing false information in work pass applications. It underscores the importance of strict compliance with employment regulations, especially for businesses engaging foreign talent.
The court's decision emphasised the need for deterrence in such cases to maintain the integrity of Singapore's foreign workforce management system.
Deception in Employment Pass application
The case centred around a Singapore-registered company that provided consultancy services on mergers and acquisitions. The company director had agreed to apply for an Employment Pass for a Chinese national, despite having no intention of actually employing him.
In exchange, the foreign national arranged for payments to be made to the company, including his supposed 'salary'.
The director and the foreign national had met through a mutual friend in 2018. At the time, the foreign national ran companies in China but was considering relocating to Singapore.
He approached the company director with the proposal to apply for an Employment Pass under the director's company, allowing him to live in Singapore.
The arrangement involved the foreign national's China client posing as a client of the director's company and making payments to it.
These payments included the foreign national's 'salary' and some additional money for the director as compensation for arranging the Employment Pass. The director agreed to this proposal as the promised funds would serve as an interest-free loan to ease his company's cash flow problems.
The application process
In June 2019, the company director applied for a 5-year Employment Pass for the foreign national, stating that he would be employed as a business operations manager. This statement was false, as neither party intended for actual employment to take place.
After the Employment Pass was issued in August 2019, the foreign national arranged for 11 payments totalling S$887,873.94 to be made to the company's bank account via remittance companies in China.
To legitimise these payments, the director created a fake consultancy agreement between his company and a Chinese company, purportedly for providing "advisory and consultancy services". He also created eight invoices for these fictitious services.
The deception continued when the director applied to renew the foreign national's Employment Pass in April 2021.
When this application was rejected, they submitted two appeals to the Ministry of Manpower, falsely claiming that the foreign national had significantly increased the company's revenue. The previously created fake agreement and invoices were submitted to support this false claim.
Employment Pass holder
The foreign national later applied for Singapore Permanent Residency as an Employment Pass holder. This application was rejected after his Employment Pass expired in September 2021.
Following the expiry of the Employment Pass, the director returned S$306,000 to the foreign national, as per their agreement. This amount was calculated by subtracting taxes, payments made to the director, and other expenses from the total amount paid to the company.
It's worth noting that the foreign national was also charged for his role in the offence. However, he absconded from court in January 2024, leading to a warrant being issued for his arrest.
Seriousness of the offence
The prosecution argued for a custodial sentence, citing several factors that increased the severity of the offence:
- The false statement was material to the Employment Pass application.
- The deception involved sophisticated arrangements to disguise illegitimate payments.
- The company director played an integral role in the scheme.
- Substantial financial benefit was obtained through the fraudulent arrangement.
- The deception resulted in significant consequences, including unfair immigration advantages.
The prosecution applied the sentencing framework established in a previous case, Chiew Kok Chai v PP [2019], which outlined different sentencing bands based on the seriousness of the offence.
Meanwhile, the defence counsel sought to position the case in the "low-harm, low-culpability" category, arguing for a fine instead of imprisonment. They highlighted the director's personal circumstances, including his role as the sole breadwinner for his family and his various personal challenges.
The defence also emphasised the director's background, describing him as an accomplished senior corporate professional with more than 20 years of business experience and significant academic achievements.
They argued that these factors, along with the director's active volunteerism and positive character references, should be considered in sentencing.
Additionally, the defence pointed out the director's family circumstances, including caring for a sickly young child and an elderly mother with dementia, as well as ongoing financial support for his ex-wife and children from a previous marriage.
The court’s decision
The court ultimately rejected the defence's arguments for a non-custodial sentence, emphasising the need for deterrence in such cases. The judge noted:
"The predominant sentencing consideration for an offence under s.22(1)(d) was deterrence. This was necessary to prevent the object of the EFMA from being undermined. Any deception of public institutions that frustrated the aims of the EFMA should not be tolerated."
The court applied the sentencing framework from the Chiew Kok Chai case, which established that "a custodial sentence should be the norm for offences under s.22(1)(d) of the EFMA. A fine would generally not be sufficient punishment unless substantial mitigating factors were present."
In explaining this approach, the court highlighted the broader implications of such offences:
“Breaching the work pass system would generally bring some economic or financial advantage to the errant employer, who profits from not paying the true costs of hiring foreign manpower,” the court said.
“Additionally, the societal interest to be protected, namely, the proper regulation of foreign manpower in Singapore's labour market and the protection of local workers and honest employers, requires a heavy response outweighing any likely economic benefits from the breach,” the court added.
The court ultimately sentenced the company director to three months' imprisonment, taking into account both the seriousness of the offence and the mitigating factors presented by the defence. This sentence was a reduction from the potential five to seven months' imprisonment the prosecution had initially suggested for a conviction after trial.
This case serves as a crucial reminder for employers and HR professionals about the importance of strict compliance with work pass regulations. It highlights that attempts to circumvent the system through false declarations or elaborate schemes can result in severe consequences, including imprisonment.
