1. How would you characterize the corruption environment in Singapore?
Singapore ranks 7th out 197 countries on the TRACE Matrix, with an overall risk score of 26. This indicates a low business-bribery risk level with a very low risk of intensive interaction with government, a low regulatory burden and a low expectation of bribes. Singapore offers a relatively high quality of administration and governmental transparency, and a robust civil society.
Companies continue to choose Singapore as an investment hub in Southeast Asia because of its comprehensive and effective legal system. The low level of corruption is widely attributed to very tough laws against bribery and fraud, very strict enforcement and high salaries for government officials to incentivize good behavior. Notably, the government agency responsible for investigating and prosecuting corruption offences, the Corrupt Practices Investigation Bureau (CPIB), exercises far-reaching powers – such as the power to detain suspects without legal proceedings – and acts independently of the Singapore Police force and other government agencies, to prevent undue interference.
However, precisely because of Singapore’s low corruption-risk rating, foreign companies operating in this country should take extra care not to be lax with respect to compliance issues. Surprisingly, many companies operating in Singapore have no written anti-bribery and corruption policy or have yet to implement risk-based and ongoing due diligence on third parties.
2. What corruption risks do foreign businesses face?
Recent corruption cases reveal situations where foreign companies funnel bribes to foreign officials through Singaporean subsidiaries or consultants. For instance, companies have been known to use intermediaries operating in Singapore as a conduit for illicit payments heading to Malaysia, Vietnam and Indonesia. This trend and Singapore’s inherent risks as a leading international financial centre have led the government to crack down on money laundering and to impose stringent Know Your Customer (KYC) rules. In turn, these measures have resulted in long delays in opening bank accounts, as well as an acute shortage of qualified local compliance officers.
3. Are certain foreign business sectors more vulnerable to corruption than others?
Recent investigations and enforcement actions relating to bribes paid in Singapore or by Singaporean companies have centred on the life sciences, shipping, petroleum and defence industries.
4. What steps can foreign companies take to avoid violating Singapore’s corruption rules?
Regulators will consider myriad factors to determine whether a company has established effective compliance procedures. These include: management commitment; a clearly articulated policy against corruption; a code of conduct overseen by a senior company official; risk assessment; continuous training; due diligence; and ongoing monitoring of third parties.
It is particularly important for companies operating in Singapore to make sure their compliance program is not just strong on paper, but also works in practice. Companies need to periodically test and review their compliance program, conduct ongoing training of employees and intermediaries, and/or set up systems of confidential reporting and investigating throughout the organization. Further, companies must ensure that they put in place proper due-diligence procedures for agents, and sufficient internal controls to prevent or detect corruption, and that they maintain proper books and records.
5. What anti-bribery compliance support is available in Singapore?
A variety of information is provided by the Corrupt Practices Investigation Bureau (CPIB), including material on local and international legislation, case studies and training clips. The CPIB also offers “prevention talks” to private-sector organizations, particularly those companies that deal with public safety and security.
Multinational corporations may also work with TRACE Certified companies, which have completed a rigorous due diligence process based on international standards, including training and continuous daily monitoring of international sanctions and enforcement lists.
TRACE also recently launched TRACEpublic, the first global register of beneficial ownership information, which allows companies to share and search for beneficial ownership information at no cost. The database supports the efforts of companies seeking to conduct business ethically.