High court judge Kannan Ramesh has on April 1 dismissed the appeal of two individuals both of whom had been earlier convicted with three charges of conspiring to cheat.
Andruew Tang You Liang has been sentenced to serve two week’s jail while Koryagin Vadim, described by the prosecution as “the main mover and beneficiary of Tang’s deception”, was sentenced to four weeks behind bars.
The case was earlier heard by district judge Eddy Tham.
Tang was hired as a nominee director by MEA Business Solutions, which helps clients incorporate companies and set up Singapore corporate bank accounts. MEA is owned and run by Vadim.
Tang was paid for acting as a nominee director, a position required under Singapore’s Companies Act where every company incorporated here is to have at least one who is ordinarily a resident in Singapore.
The court was told that between Sept 10 2014 and May 16 2016, MEA helped its Russian clients incorporate entities Evoque Capital Corp, Babo Group and Sensetec.
A few days after the entities were incorporated, Evoque and Babo opened corporate bank accounts with OCBC Bank, whereas Sensetec opened a similar account with Maybank.
In the account opening forms, Tang was listed as the sole shareholder and director, as well as the ultimate beneficiary owner of the entities and that he manages them.
According to evidence put forward by the prosecution, Tang depended on Vadim to a “large extent”, given how Tang would consult Vadim for instructions before taking any new steps in relation to the companies he was nominee director of.
Tang also knew that he was a director in name who ultimately held the shares in the companies for someone else and that he was not responsible for the companies’ management or operations, and that he also did not have access to the banking tokens required to access the bank accounts.
Both Vadim and Tang also gave strikingly similar reasons for why a nominee director would declare himself to be the beneficial owner in the bank account opening forms, namely, to facilitate the opening of the corporate bank accounts because the actual beneficial owner was overseas.
In Vadim’s defence, it was argued that the entities Evoque, Babo and Sensetec were “work in progress” companies that were basically “inventory” held by MEA, which would not be handed over to clients who had asked MEA to help incorporate companies and open bank accounts.
The defence had also argued that the evidence was only sufficient to establish a mere risk of the banks being associated with illegal activity, and not the higher threshold of the banks being likely to be associated with illegal activity as a result of their failure to consider the actual beneficial owner of Babo, Evoque and Sensetec.
In other words, the banks did not suffer from the kind of reputational risk asserted.
As a response, the prosecution pointed out that Tang could not be considered the beneficial owner of the entities nor the bank accounts as Tang could not independently make any decision on the companies.
The prosecution also said Tang knew that the monies in the corporate bank accounts were never his and had no control over the corporate bank accounts or the companies’ transactions since the banking token to access the corporate bank accounts and the cheque book were given to MEA and not Tang.
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Furthermore, Tang was at all times acting as a nominee director and therefore was never intended to play any substantive role in the companies at all.
In his judgement, Justice Ramesh noted that the declaration of beneficial ownership was a necessary step introduced by the banks, as required by the Monetary Authority of Singapore, to mitigate the risk of illicit funds flowing through their system.
As such, a truthful declaration was key to mitigating the risk of the banks’ accounts being used for illegal activities.
In contrast, a false declaration was a “significant if not insuperable stumbling block” to the checks carried out by the banks, and runs a higher risk of illicit monies flowing through the banks.
“The direct consequence of this was an increase in the likelihood of harm to the banks’ reputation,” said Justice Ramesh.
