On 25 March 2022, a 36-year-old Singapore Citizen, Chai Chung Hoong (“Chai”), having been convicted after a trial, was sentenced to imprisonment of six weeks for four counts of offences under Section 157(1) punishable under Section 157(3)(b) of the Companies Act, for failing to exercise reasonable diligence in the discharge of his duties as a director of four Singapore-registered companies. He was also disqualified from being a director for five years.
Chai was the director of a corporate service provider, 3E Accounting Pte Ltd (“3E Accounting”). Sometime around August or September 2012, one “Florina” contacted Chai to engage 3E Accounting’s corporate secretarial and nominee director services for four companies that were incorporated between June and July 2012 through another corporate service provider. Chai agreed to provide the services to the four companies, and was appointed as the corporate secretary and local resident director of the four companies on 2 October 2012.
Before being appointed as the director of the four companies, Chai had neither met nor contacted any of the foreign directors and shareholders of the four companies. He also did not take any steps to verify the identity of “Florina” or check if she was authorised to represent the foreign directors. He did not conduct any background checks on the foreign directors and shareholders and did not perform checks on the companies’ business activities. For the period he was a director of the four companies, he did not take steps to exercise any supervision over the companies’ activities. Instead, on “Florina’s” request, Chai couriered the bank tokens and banking documents of the four companies to foreign addresses in Lebanon, where none of the foreign directors or shareholders resided. As a result of Chai’s failure to exercise any supervision over the companies, the companies’ bank accounts received criminal proceeds totalling USD558,404.67 between December 2012 and February 2013. The criminal proceeds were linked to business email compromise scams and Internet love scams, involving multiple local and overseas victims.
The offence of Section 157(1) punishable under Section 157(3)(b) of the Companies Act carries a fine of up to $5,000 or imprisonment of up to 12 months.
The Police treat this offence seriously and will continue to take action against such offenders. Individuals should not agree to be appointed as a director of a company which they have little or no information about. Should a director not exercise any supervision over the company’s’ affairs, the company may be used to facilitate illicit activities, such as the laundering of criminal proceeds.
SINGAPORE POLICE FORCE
25 March 2022 @ 4:30 PM