Experts weigh in on government's debarment policy on firms convicted of private-sector corruption

In Singapore, the Standing Committee on Debarment decides whether to bar contractors from procuring government contracts while in other countries, corrupt firms may be barred from public contracts as part of their sentence.
In Singapore, the Standing Committee on Debarment decides whether to bar contractors from procuring government contracts while in other countries, corrupt firms may be barred from public contracts as part of their sentence.ST PHOTO: KUA CHEE SIONG

SINGAPORE - Some experts have expressed concern that the Government’s policy, to let firms convicted of corruption in the private sector to bid for public contracts, may dilute Singapore’s anti-graft message.

Others, though, feel there could be practical reasons in drawing the line between public-sector and private-sector corruption.

The issue surfaced after ST Marine won a $316 million shipbuilding and maintenance contract from the Police Coast Guard in November last year.

In 2014, the company was embroiled in a graft scandal involving $24.6 million in bribes paid between 2000 and 2011. Seven senior executives were convicted in 2017. They are no longer with ST Marine.

On Monday (April 1), the matter, which surfaced online in February, was raised in Parliament.

Second Finance Minister Indranee Rajah said there has been no reason to debar the company from the government tender.

She said a probe by the Corrupt Practices Investigation Bureau (CPIB) into the case did not reveal any connection with a government agency or contract. "Hence the circumstances in which debarment can be recommended under the policy parameters did not arise," she said.

She added that debarment from participation in government contracts is a separate exercise from court proceedings and is aimed at protecting the Government's interests as a service buyer.

 
 

It also does not duplicate the courts' function of adjudication or punishment, she said in response to a question by Non-Constituency MP Leon Perera on why firms convicted of corruption in private-sector contracts are not debarred from government contracts.

Corporate governance advocate Mak Yuen Teen, who is associate professor of accounting at the National University of Singapore, felt the distinction between public-sector and private-sector corruption could dilute Singapore's tough stance on fighting graft.

"It is sending a very poor message... we might as well say we have some tolerance for corruption as long as it is not public sector-related," he said.

"In any case, debarment is intended to supplement any penalties imposed on a company - which under our current law are rather low - to send the message that there's a big business cost to acting corruptly."

He said the government should review and change its debarment policy to align with international practices.

In Singapore, the Standing Committee on Debarment (Scod) decides whether to bar contractors from procuring government contracts while in other countries, corrupt firms may be barred from public contracts as part of their sentence.

In Britain, firms convicted of corruption in the European Union could be debarred from public contracts for up to five years.

There are no such laws here. Instead, the CPIB submits recommendations to Scod, which is helmed by the deputy secretary for the ministry of finance or his deputy and includes other members, such as the deputy secretaries for the transport, environment and national development ministries.

Associate Professor Mak said the current policy for debarment is "too narrow" and companies need to be held responsible if corruption took place - regardless of which sector - because of weak compliance or oversight.

However, Nanyang Technological University's Associate Professor Victor Yeo said that in the ST Marine case, the individuals involved had paid the penalty, and debarring the firm may have the unintended effect of punishing the company's shareholders.

Associate Professor Lawrence Loh, director of the Centre for Governance, Institutions and Organisations, said a key factor is whether the corrupt practices were the result of individual actions or the firm's culture.

"It's not useful to put hammer on the whole organisation, especially if it's not a systemic issue," he added.

In ST Marine's case, the seven individuals convicted were part of the senior management, including former chief executive and president See Leong Teck and former chief operating officer and deputy president Han Yew Kwang.

On Monday, Ms Indranee said that ST Marine, a separate legal entity, did not have any charges or convictions against it.

Prof Loh said a blanket debarment policy could also reduce the options available for the Government to get the best value for money in public tenders.

He said: "Just think about how many big companies are there in Singapore. Not many. It's not an issue of equity but of practicality."