Failure to monitor foreign worker applications leads to jail time for company boss
A district court in Singapore recently dealt with a case involving fraudulent work pass applications, where a company director was convicted of neglect for his role in an illegal scheme. The case centred on whether the director could be held liable for offences committed by companies under his control.
The director argued that he was merely a figurehead who provided his credentials when requested without knowing the details of the applications. He claimed that workers were put on "stand-by" pending the commencement of business operations, which were delayed due to issues with contractors.
He also attempted to shift blame to regulatory authorities for approving the applications despite the businesses not being operational, arguing that he shouldn't be held responsible for systemic failures.
The illegal scheme ran from January to October 2018 and involved obtaining Performance Artiste work passes for foreign employees who were never meant to be employed. The mastermind and his accomplice used companies including Comgo Pte Ltd and Liquid Kitty Pte Ltd to facilitate their plan.
Court documents revealed that the conspirators "engaged in a conspiracy to bring foreign citizens into Singapore on Performing Artiste work passes to be 'employed' by various companies. In reality, these companies did not actually require such PAs, and the foreigners brought in on such work passes would not work for these companies."
Instead of providing jobs, the conspirators demanded payments from the workers. After entering Singapore, the workers paid an "application fee" of S$2,000 to S$2,300 followed by a monthly levy of similar amounts for six months or until they left Singapore.
The director provided his account credentials and one-time passwords (OTPs) that were needed to access the Ministry of Manpower's (MOM) Work Pass Online system. Court records showed he provided these passwords on at least 51 occasions, enabling 17 fraudulent applications.
The court found the director neglected his duties by failing to exercise due diligence. Despite being the sole director of both companies, he took a completely hands-off approach to work pass applications.
When questioned about his involvement, the director admitted: "My duty is to provide OTP to [the accomplice] and I did not need to entertain or process the workers after the application." This statement revealed his misunderstanding of his legal responsibilities.
Evidence showed he disclosed his passwords without question whenever requested. When the accomplice was asked if the director inquired what the passwords were for, he replied "No," confirming the lack of oversight.
The director knew little about the work pass applications or the workers they were for. He never met any of the workers and didn't even know how many applications had been made using his credentials.
The court determined the companies had committed offences under Section 22B(1) of the Employment of Foreign Manpower Act (EFMA), which prohibits obtaining work passes for businesses that don't require the employment of foreign workers.
In explaining neglect under the law, the court cited legal precedent from the case of Abdul Ghani bin Tahir v Public Prosecutor: "To prove neglect, it must be shown that [the officer] knew or ought to have known of the existence of facts requiring him to take steps which fell within the scope of the functions of his role to prevent the commission of the offence by the company, and that he failed to take such steps."
The judge was clear about the director's failures: "[He] was derelict in his duty as he failed to ensure that employment of the foreigners was required before applications for work passes were made. [He] was a director in name only and turned a blind eye to the illegal activity."
When the director tried to blame MOM for approving the applications, the court rejected this as "ridiculous and uncalled for," noting that "it did not detract from the fact that [he] breached his duties as a director of both companies."
The director received nine months' imprisonment for the charge involving 16 work passes and six months for the charge involving one work pass, with sentences running concurrently. The mastermind and accomplice received longer sentences of 39 months and 42 months respectively.
MOM's manager testified that companies should only apply for performance artiste work passes when they had a public entertainment licence and operated for at least six hours a day. Neither of the director's companies met these criteria.
The court emphasised that directors have specific legal duties to ensure their companies comply with employment laws.
After finding the director guilty on both charges, the court concluded: "Having considered the totality of the evidence, I was satisfied that the prosecution had discharged its burden of proving both charges beyond a reasonable doubt."
The director filed a Notice of Appeal against conviction and sentence and was released on bail pending appeal.
