Iswaran case may deter private-sector individuals from taking public appointments

In the wake of former minister S Iswaran’s trial, private-sector individuals may be deterred from sitting on public sector boards – as they would be subject to laws that apply to public servants, said lawyers and legal observers.

Iswaran’s trial has raised awareness of Section 165 of the Penal Code, which prohibits public officers from obtaining gifts from parties with whom they have official business dealings.

And this does not apply only to government employees. Section 21 of the Penal Code determines whether an individual is considered a public servant for the purposes of criminal offences, lawyers and legal observers told The Business Times.

The definition includes an “officer in the service or pay of government, or remunerated by fees or commission for the performance of any public duty”.

Private-sector board members of statutory boards would fall squarely within this definition, said Johannes Hadi, partner at law firm Eugene Thuraisingam.

Board directors may be given letters of appointment or contracts, but this is not what defines their legal liability, he added.

Based on a plain reading of the law, private-sector individuals on public boards would be deemed as “public servants” for the purposes of the Penal Code, agreed Assistant Professor Benny Tan from the National University of Singapore (NUS) Faculty of Law.

This is in line with the stance of the Public Service Division (PSD).

The PSD said that for the purposes of Section 165, a board member of a government statutory board is deemed to be a “public servant” when carrying out any function of the statutory board.

“Where there is any conflict of interest, the board member is expected to disclose this and recuse themselves from decision-making on the issue,” a PSD spokesperson told BT in response to queries.

Furthermore, the law does not distinguish between types of public servants.

In determining if an offence has been committed under Section 165, the considerations are the same for public servants defined in Section 21 and those deemed so by other statutes, said Prof Tan.

For greater clarity, government bodies could make clear – in letters of appointment or contracts – that an individual in a public-sector role would be regarded as a public servant in the course of his service, said Singapore Management University (SMU) law don Eugene Tan.

The Attorney-General’s Chambers does not advise on legal interpretation in response to media queries.

Which capacity?

NUS’ Prof Tan said: “It is important to note that a public servant does not commit an offence under Section 165 just because he or she has received a gift from anyone.”

Instead, broadly speaking, the gift giver has to have a connection with the public servant’s official functions.

Private-sector board members should refrain from accepting gifts of significant value from anyone with whom they have business dealings in the context of their public function, said Hadi of Eugene Thuraisingam.

However, this line may not always be easy to draw.

TSMP Law joint managing partner Stefanie Yuen-Thio said it is not clear when private-sector board members’ activities are circumscribed by their duties as “public servants”, and when they are deemed to be private citizens.

A real estate CEO who sits on the board of a statutory board, for example, may have to network with service providers such as contractors and asset managers, she added. This may involve the giving and receiving of gifts and meals.

Those third parties may then tender for contracts with that statutory board. Said Yuen-Thio: “Is that director in breach of Section 165? Section 165 is drafted so broadly that it is not clear.”

Board members are usually not involved in the day-to-day operations of the statutory board and may not know the identities of third-party contractors, she noted.

SMU’s Prof Tan said such individuals should put themselves in the shoes of a public employee. When in doubt, they should err on the side of caution and transparency by declaring gifts.

“People think that just because of Section 165, you cannot receive gifts. I’m not so sure. You can receive them, but then make full and prompt disclosure.” 

For better or worse

TSMP’s Yuen-Thio believes Iswaran’s case has “far-reaching” implications, saying: “Civil servants will clamp down on their activities engaging with the private sector, which is a crucial component for government to work well with the community.”

She noted that the government is encouraging public-private partnerships, which would involve “informal engagements” for discussions, feedback and building relationships.

The case may put a “huge dampener” on the willingness of good private-sector candidates to volunteer for public-sector appointments, she added.

“If you’re a successful business person or professional, who would previously have accepted an appointment as part of your service to the nation and the community, you would certainly think twice now,” she said.

Still, other lawyers and academics said it may “not be a bad thing” if individuals shy away from public appointments due to worries over the legal requirements.

A higher standard of integrity is not too onerous a demand to have of those who exercise public functions, said Hadi of Eugene Thuraisingam.

“You’re dealing in the public sector, you cannot treat it as though this is your company,” said SMU’s Prof Tan.

“If you want to accept gifts from people you have dealings with, if it’s your own company, it’s completely within your prerogative. But when you’re talking about the public sector... the stakes are very much higher, and there is a need for proper controls.”

He added: “I think it would be a pity if someone were to shy away from taking an appointment where they can contribute, just to be on the very safe side.”

Source: Business Times © SPH Media Limited. Permission required for reproduction.

Sembcorp Industries settling lawsuit against OK Lim, his children for US$50.9 million MFA director-general appeals against jail sentence over the misuse of diplomatic bags