PUBLIC PROSECUTOR v CHINA RAILWAY TUNNEL GROUP CO., LTD.

Facts

China Railway Tunnel Group Co Ltd, a company headquartered in China with 24 branches and registered in Singapore as a foreign company, was charged with three counts of corruptly giving gratification under s 6(b) read with s 7 of the Prevention of Corruption Act. The gratification was three loans, of $100,000, $100,000 and $20,000, given in 2018 and 2019 to Henry Foo, a Deputy Group Director at the Land Transport Authority, which had engaged the company on several rail projects. The loans were arranged by Xi Zhengbing, general manager of the Singapore branch, with his deputy Zhou Zhenghe. On Xi's instructions, Zhou obtained the first $200,000 through false invoices from a subcontractor supported by documents bearing forged signatures, and borrowed the $20,000 from an acquaintance. Xi and Zhou absconded to China after being arrested, and were later convicted there of bribing a foreign official.

The Prosecution's case on attribution rested on Xi alone. A District Judge acquitted the company, holding under the test in Tom-Reck Security Services Pte Ltd v PP [2001] 1 SLR(R) 327 that Xi's acts and knowledge could not be attributed to it. The Prosecution appealed (Magistrate's Appeal No 9040 of 2024/01) to a three-judge panel, and a Young Independent Counsel was appointed to address whether that test should give way to the approach in Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500.

Issues

1. Whether the Tom-Reck test for corporate criminal attribution should be replaced or modified by the Meridian approach
2. Whether Xi was the living embodiment of the company when giving the loans
3. Whether Xi's corrupt acts fell within a function of management properly delegated to him

Holding

The court dismissed the Prosecution's appeal and upheld the acquittal on all three charges. It affirmed that the Tom-Reck test remains the operative test for attributing criminal liability to a company, while recognising that a special rule of attribution on the Meridian approach may sometimes be appropriate, mainly for regulatory offences.

Reasoning

On the legal test, the court declined to adopt the Meridian approach for criminal attribution generally. It rejected the Canadian approach the Prosecution cited as too broad, since it would ignore a company's express prohibitions and attribute liability whenever some benefit accrued. Ostensible authority was developed to protect third parties in commerce and is not suited to criminal liability. Special rules of attribution create uncertainty and had, on the cases cited, been applied essentially to regulatory offences. The proposed rule, attributing the acts of any employee dealing with the agent with the company's authority, was overly inclusive, and the suggested exceptions did not fit: the breach of duty principle governs civil claims, and a reasonable-practicability defence would alter the corrupt-intent elements of s 6(b). Any wider liability for failing to prevent bribery, as in the UK Bribery Act 2010, was for Parliament, which in 2022 had said no amendment was needed. The directing mind and will analysis asks whether the employee's actions truly reflected the company's, and can catch a company whose senior management knew of and tacitly allowed the wrongdoing.

On the facts, the Singapore branch was one of many within an extensive hierarchy with strict reporting lines. Tenders needed approval from higher management, and Xi's power of attorney for one project excluded entering into financial contracts creating debt. The evidence did not prove the Prosecution's assertion that an overseas department manager, Liu, knew of or approved bribes: neither Xi nor Liu testified, and the messages relied on showed only that Liu might have been informed of an earlier 2016 request. The court found that the employees had to defraud the company to fund the loans, which showed it was not involved in or tolerant of the conduct. Xi was therefore not the company's living embodiment, and his acts were not within a delegated management function. The court did not decide the aggregation question, as the parties agreed it would not affect the outcome.

From the judgment