Grab driver, who was director of 60 companies, gets S$28,000 fine after neglecting duties at 46 of them
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- Leonard Koh Meng Huat, a Grab driver, applied to be a nominee director of dozens of companies to earn some extra money
- Between 2019 and March 2022, he was a director of 60 companies
- Despite being told of his director duties, Koh failed to exercise due diligence, neglecting to find out more about the companies
- A bank account at one of the companies ended up being used to funnel S$171,200 in proceeds from a scam
- Koh was fined S$28,000 for neglecting his duties as director
BY
JASMINE ONG
Published December 8, 2023Updated December 9, 2023
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SINGAPORE — Hoping to earn some cash on the side, a Grab driver failed to do his due diligence when he signed on to become a nominee director for various companies.
As a result of his negligence, Leonard Koh Meng Huat faced court on Friday (Dec 8), after scam proceeds were funnelled through one of the company's bank accounts.
Koh, 46, was fined S$28,000 after he pleaded guilty to seven charges of failing to use reasonable diligence in the exercise of his duties as a director under the Companies Act.
Another 39 similar charges were taken into consideration during sentencing.
The court heard that as of March 18 last year, Koh was registered as a director of 60 companies here.
He was charged in relation to 46 of the companies, of which his directorships of seven companies were related to the seven proceeded charges.
Responding to TODAY’s queries on Saturday, the Accounting and Corporate Regulatory Authority (Acra), referenced a ministerial statement made by Second Minister for Finance Indranee Rajah in Parliament on Oct 3 regarding anti-money laundering controls for companies.
One of Acra's proposals under the new Corporate Service Providers Bill is to limit the number of nominee directorships an individual can hold, as well as enhance penalties for companies and their senior management for breaches of anti-money laundering laws and terrorism financing.
The agency is looking to table this Bill in parliament early next year.
APPLYING TO BE A NOMINEE DIRECTOR
In 2019, Koh joined a panel of nominee directors at a firm called Osome because he wanted to earn more money and he would receive S$100 a month for each company where he was a nominee director.Osome offers corporate services such as providing directors who are Singaporean to companies that require such directors to satisfy the requirements of the Companies Act, in exchange for a fee.
When companies seeking directors engage Osome, the firm provides them with a list of names that they can choose from to have as their nominee directors.
Before deciding to join the panel, Koh was told that he needed to conduct due diligence checks on the companies.
This includes looking at the foreign director's passport, proof of address and "watch list" screening results — a check by the authorities that is done to see if the companies are vulnerable to financial crimes.
Deputy Public Prosecutor (DPP) Ronnie Ang said that Koh did not perform any checks or due diligence before agreeing to become a director because he assumed that Osome's checks would suffice.
Koh also did not take any steps to ensure that the companies had complied with the relevant rules and regulations because he thought that their foreign directors would do so.
During the time that he was a director of the companies, he knew only of the industry classification of their businesses, which were provided to him by Osome.
Between 2019 and March 18 last year, Koh logged onto Osome's application four times to browse through some bank statements of the companies of which he was a director.
He browsed the bank statements at random and was unable to tell if there were any irregularities. He took no further steps to ascertain if there were in fact any issues.
From 2019, he received a S$100 payout each month for every company of which he was a nominee director until July 2020 when the fee was reduced to S$1 a day.
In total, Koh received payment of S$57,009 for his role as a nominee director.
CRIMINAL PROCEEDS IN COMPANY BANK ACCOUNT
AAH & Partner was one of the companies where Koh was registered as a director from April 5, 2019 to March 18 last year.The company was incorporated in Singapore on April 5, 2019, and had another director who was residing in Malaysia.
Investigations revealed that on June 29, 2021, Mr Tan Kwee Sang, deputy general manager of manufacturing and engineering firm Meiden Singapore, was the victim of a scam.
Mr Tan had received a spoof email purportedly from a company that he worked with, requesting S$171,200 for payment of services.
A follow-up email asked that the money be transferred to a United Overseas Bank account that belonged to AAH & Partner, DPP Ang said.
It was only months later that Mr Tan learnt that Meiden had been scammed. He filed a police report.
Further investigations revealed that the money Meiden transferred to AAH & Partner's bank account was transferred to various bank accounts overseas and was not recovered.
'HIGH LEVEL OF NEGLIGENCE'
During mitigation, defence counsel Jacintha Gopal sought a fine of S$15,000 for her client on the basis that this was Koh's first time as a nominee director and he was a private-hire driver for ride-sharing firm Grab with no related skills.Seeking a fine of between S$29,000 and S$30,000, DPP Ang said that Koh exhibited a high level of negligence in breaching his duty as a director and he had earned S$57,009 for doing nothing.
He argued that a high fine would be a fair and deterrent outcome for Koh, who was entrusted with duties under the law but was rewarded for blatantly disregarding his director duties.
"The public must be protected from persons who flagrantly disregard the totality of their duties to manage and supervise their company, as well as to deter others who accept appointment as directors from such behaviour," he added.
For each charge of failing to use reasonable diligence in the exercise of his duties as a director under the Companies Act, Koh could have been jailed for up to 12 months or fined up to S$5,000, or both.
