On 3 October 2019, Chong Yit Cheong, resident director of a shell company, Milotex Trading Pte Ltd, pleaded guilty to one count of an offence under Section 157(1) punishable under Section 157(3)(b) of the Companies Act for failing to exercise reasonable diligence in the discharge of his duties as a company director. He was sentenced to the maximum fine of S$5,000.
In an earlier case, Pee Lee Ping, director of a corporate service provider who recruited Chong to be the said resident director, pleaded guilty to abetting Chong in committing the offence. Pee was convicted of an offence under Section 157(1) punishable under Section 157(3)(b) of the Companies Act read with Section 109 of the Penal Code on 23 September 2019 and was sentenced to the maximum fine of S$5,000.
Pee had entered into a fee sharing arrangement with Chong for the latter to take up the role of a resident director in Milotex Trading that was incorporated at the request of her client, a foreign national. Pee instructed Chong not to be involved in the operations or management of Milotex Trading. Chong subsequently signed the paperwork for the incorporation and opening of bank accounts without meeting the foreign national or finding out about the company’s business. He then ceded all control of the company, including its bank accounts, to the foreign national and failed to exercise any supervision over its financial affairs.
On 7 April 2014, Milotex Trading received a wire transfer of EUR 339,880 that was linked to criminal offences committed overseas. The said funds were subsequently transferred out of Singapore within a short period of time. Police investigations revealed that Milotex Trading had no legitimate business operations in Singapore and was set up purely to facilitate the laundering of criminal proceeds through Singapore.
The offence of Section 157(1) punishable under Section 157(3)(b) of the Companies Act carries a fine of up to S$5,000 or a jail term of up to 12 months. The Police would like to advise all individuals who intend to take on directorships in companies, or who are currently serving as directors, to familiarise themselves with the duties required of them.
Source: Singapore Police Force