SINGAPORE - The Court of Appeal ruled on Thursday (Dec 30) that the recipient of a monetary bribe who returns his ill-gotten gains to his employer should not be made to cough up the full bribe amount to the state as a penalty.
The court said the law should incentivise the recipient of a bribe to repay his principal, or employer, which is the main victim and has the most legitimate claim to recover the sum of money.
"In our judgment, it is the principal's interest in recovery that assumes primacy. After all, he is the innocent party against whom the wrongs have been committed," said the court.
The ruling by Singapore's highest court came in the case of Japanese nationals Takaaki Masui and Katsutoshi Ishibe, who are in jail for extracting more than $2 million in bribes from a Singaporean flour distributor.
The three-judge court reduced the penalty payable by each man from about $1 million to about $900,000.
This was after it deducted $200,000 paid by the duo to the Singaporean subsidiary of their employer to settle a judgment sum awarded by a Japanese civil court against them.
The case involved the interpretation of a provision under the Prevention of Corruption Act (PCA), which provides for a penalty to be imposed on a person convicted of accepting a sum of money as a bribe, in addition to other punishment such as a jail term and a fine.
Under the provision, the offender has to pay a penalty that is equal to the amount of the bribe or the value of the bribe.
In the current case, the duo had urged the court to deduct various sums from the total bribe amount and, therefore, from the penalty imposed on each of them.
The prosecution also filed a criminal reference, asking the Court of Appeal to make a ruling on the provision in question.
The prosecution argued that the court could take into account any repayment or disgorgement of the bribe amount only if the sum was a loan, but not if it was a gift.
In a 64-page judgment, the apex court said the penalty should be a sum that reflected the value of the bribe retained by the recipient.
The court said the legislative purpose of the provision was not to impose an additional layer of punishment, but to "disgorge the gratification sum from the corrupt recipient".
"The state's primary interest is to prevent the corrupt recipient from profiteering from his offences; it is plainly not seeking to earn a revenue by way of Section 13(1) of the PCA," said the court.
The court said given that, repayment to the recipient's employer was a policy that the law should incentivise.
The quantification of the penalty will depend on the precise circumstances of the repayment or disgorgement, said the court.
It added that the prosecution's interpretation would discourage a recipient who wished to purge his wrongdoing by voluntarily returning the gratification sum to his employer.
Masui and Ishibe are each serving a jail term of three years, seven months and three weeks.
They were convicted of 28 charges of corruption for obtaining bribes from Singaporean Koh Pee Chiang between 2004 and 2007.
The pair were seconded to work for the Singapore subsidiary of trading firm Nissho Iwai Corporation.
Following a merger in 2004, the subsidiary was renamed Sojitz Asia, where Masui was general manager and Ishibe was manager.
Mr Koh was the sole proprietor of Chia Lee & Co, a longstanding distributor of edible flour for the duo's employer.
In 2002, the duo told Mr Koh to enter the industrial flour business.
The pair devised a profit-sharing arrangement pertaining to the industrial flour business to extract bribes from Mr Koh in return for them continuing to "support and protect" his edible flour business.
Masui and Ishibe received the lion's share of the profits under this arrangement, which was eventually discovered.