DRUG TRAFFICKING (CONFISCATION OF BENEFITS) BILL

Order for Second Reading read. 2.10 pm

The Minister for Home Affairs (Prof. S. Jayakumar): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, the aim of this Bill is to deny drug traffickers the enjoyment of the benefits of their crime by confiscating their assets which are derived from drug trafficking. So that the Bill will be made effective, the laundering of drug assets will also be made an offence and benefits derived from this offence will be confiscated.

The provisions of this Bill are based largely on the United Kingdom Drug Trafficking Offences Act with modifications to suit local circumstances. Members will recall that our Corruption (Confiscation of Benefits) Act, 1989, was also modelled on this United Kingdom law.

While we want this additional weapon to deal with drug traffickers, we, at the same time, have to be cautious to ensure that the Bill will not adversely or unnecessarily affect the operations of the financial institutions in Singapore. Therefore, one of the important concerns in drafting this Bill was that the new law should not undermine the confidence of depositors, investors and property owners over the confidentiality of records of their assets. Many safeguards have been built into the Bill. And with these safeguards, third parties will not be able to pry into a person's financial accounts under frivolous pretext or under the guise of drug trafficking investigations.

Equally important, this new law ought not to be more liberal than other financial centres in releasing information to foreign enforcement agencies. Therefore, the Bill provides that such information can only be released to a foreign government agency provided that certain stringent criteria are satisfied. Furthermore, there is a prerequisite that a mutual legal assistance treaty must exist in the first place with that country and that the Attorney-General must be satisfied that there is a prima facie case of drug trafficking against the person in question.

The proposed legislation will be restricted to confiscation of assets derived only from drug trafficking and that there will be no unrestricted access to financial records.

Sir, the provisions themselves are quite complicated and technical. It is my intention to submit this Bill to a Select Committee. Instead of taking Members through the individual provisions, what I propose to do is to explain how this new law will actually operate and I intend to do this by referring to two past cases which occurred in Singapore.

The first example. The Central Narcotics Bureau last year arrested an opium trafficker. He was found in possession of $5,000 in cash. CNB's investigations under the Misuse of Drugs Act revealed that he had little or no money to his name. From documents seized at his residence, it was found that his wife, who was not employed, owned two bungalow houses and his 17-year-old son owned a new luxury car and had $200,000 in his bank account.

Supposing this law had already been in force then. The prosecution would apply to Court for a search warrant to search the residence and workplace of the arrested drug trafficker. The search might have yielded information on bank accounts, property and other information relating to his assets. With this information, a Production Order would also be obtained from the Court, ordering any financial institution or other Government agencies to produce details of all assets in the name of the drug trafficker or his family members. Through such Production Order, valuable information would also be obtained on the value of these assets and the location of the assets. An application would then be made by the Public Prosecutor to the High Court for a Restraint Order to freeze the cash of $5,000 and $200,000 and also to restrain the car to prevent it from being sold. The Public Prosecutor would also apply to the High Court for a charging order to stop the sale of the two bungalow houses.

After his conviction and on the application of the Public Prosecutor, the Court would require the drug trafficker to show proof of his sources of income leading to the accumulation of these assets which have been uncovered. Prosecution would bring evidence to show that both the drug trafficker and his family members had no regular income or other sources of income and that there was also no evidence of any inheritance from relatives. The Court would therefore assess the trafficker's assets and include $5,000 cash in his possession, the two bungalow houses, the son's car and the $200,000 in the son's bank account. In the absence of contrary evidence, the Court would presume that these assets were the benefits of his drug trafficking activities and issue a Confiscation Order for these assets to be confiscated in the form of a fine equivalent to the value of these assets. If he is unable to pay the fine, the Court would appoint a receiver to take possession of the assets and realise their values.

The second example to demonstrate how this Act could work. I would refer to another CNB case to show how the new offence of money laundering would be investigated. Three years ago, a heroin trafficker was arrested. He was a Director of two companies, one in Singapore and the other in Hong Kong. The Singapore company regularly paid large sums of money to a third company in Malaysia belonging to a business associate of the heroin trafficker for the purchase of electronic components. The Malaysian company in turn remitted money to the Hong Kong company for the purchase of the same electronic components. In actual fact, the business associate of the heroin trafficker was a key member of a drug syndicate and whose role was to launder the drug moneys of the heroin trafficker. The drug moneys would be delivered to this business associate and the same amount remitted to the heroin trafficker through his Hong Kong company. The drug moneys would be used, either for the enjoyment of the heroin trafficker and his family or for further investment in his drug trafficking syndicate.

This, compared to many other complicated situations, is actually a relatively straightforward case of money laundering, which simply means to conceal the origin of moneys derived from drug trafficking activities and to pass it off as legitimate proceeds of lawful activities. Under the new Bill, this business associate would be guilty of assisting the heroin trafficker to launder drug money. Any payments which the business associate receives from the heroin trafficker for assisting him to launder his drug moneys would also be subject to confiscation upon the conviction of the business associate for assisting in this money laundering.

Let me say a few words about the implementation of this new law. A special Financial Investigation Division will be set up within CNB to deal with all such financial investigations into drug trafficking cases. Financial investigations into drug assets and drug money laundering, I would say, are inseparable from investigation into the drug trafficking offences or activities. This is because information gathered in one investigation is often essential to the other investigation. Because of this, the new provisions will provide an additional weapon to detect and curb drug trafficking activities.

Sir, this new law, by confiscating benefits of drug trafficking, would render drug trafficking an unprofitable venture. It will be an additional weapon in the package of deterrents we would have in Singapore to deal with drug traffickers.

I think it is timely to enact this law because there are drug syndicate chiefs who often handle the money only and are very careful in avoiding handling the drugs, the substance itself, because of our very stringent penalties in the Misuse of Drugs Act for those handling the drugs. Now with this law which will make money laundering an offence and provide for the confiscation of benefits from drug trafficking, these people who thought that they can put themselves outside the legal framework by just handling the money, cannot escape the arm of the law. Not only can they be convicted for the offence of money laundering, but they can also have their ill-gotten gains confiscated.

As I mentioned earlier, Mr Speaker, I intend to refer this Bill to a Select Committee so that individuals, organisations, financial institutions and others who have views on the details of its provisions can make representations and for us to take into account these representations before we finally enact the Bill.

Sir, I beg to move.

Question proposed.

Dr Arthur Beng Kian Lam (Bedok GRC): Mr Speaker, Sir, I rise to support the Bill.

Sir, the problem of drug trafficking cannot be over-emphasised. We have been very severe in our dealings with traffickers. We make no apology for imposing the death penalty under certain circumstances. In spite of this, the use of Singapore as a transit point continues. This is simply because drug money is "big money", and traffickers are willing to take the risk.

In the past four years as Chairman of the GPC for Home Affairs and Law, at practically every diplomatic function and when especially overseas, I have been consistently asked as to why "efficient Singapore" is so slow to legislate on an asset seizure law. There was a lack of an attempt to understand what we wanted:

(a) laws that were enforceable;

(b) that we wanted to ensure that the new laws enacted would not hamper the development of our financial institutions;

(c) that we wanted to ensure confidentiality of the banking and other financial institutions;

(d) we are committed to fighting drug addiction and drug trafficking.

It was not a case, and it is not a case, of delay tactics. We wanted a law that works, but a law that will not work against us. In the community of nations, Singapore can be proud that we are amongst the few countries that practise compulsory drug rehabilitation at the State's cost.

This Bill shows how complicated the whole issue of drug asset seizure is. I welcome the Minister's move to send the Bill to a Select Committee. We will be dealing with foreign drug enforcement agencies and local and foreign individuals. Do we entertain all enquiries? How do we even know that the agencies or the officers of the agencies are not interested parties as whole governments are sometimes implicated in the drug trade?

I had a personal experience which I will never forget. A few years ago, I presented a paper on the drug scene in Singapore. One of the suggestions made by the Singapore delegation was the sharing of intelligence information. The next morning, a gentleman, a delegate from another country, joined me for breakfast. He was a Member of Parliament from another country. Over breakfast, we discussed the international drug scene and he brought up the subject of intelligence information sharing. Whilst he agreed that it was a good idea to share intelligence, he told me never to do this with his own country. Why? He felt strongly that the Commissioner of Police of his own country was deeply involved in the drug trafficking trade. I thus agree with the approach of our Government to this Bill; indeed, we must take a very cautious approach.

The main concern of this Bill is in the implementation. Whilst we must do all that we can to ensure that no drug trafficker will benefit from his ill-gotten gains, we must protect the confidentiality of the innocent. We must always be on guard that this Bill is not abused. We must not fall into the trap of allowing third parties to pry into a customer's confidential accounts and transactions with financial institutions. I welcome the safeguard that all foreign requests will be channelled to the Attorney-General who will act in consultation with experts from the Ministry of Home Affairs, Central Narcotics Bureau and the Monetary Authority of Singapore. I am glad to hear from the Minister that a multi-disciplinary team would be formed to meet this new challenge, a team conversant with international law, international banking, and of course specialist narcotic officers. This, however, must also be a team ever aware of the sovereignty, security and other essential interests of Singapore.

Sir, I would next like to turn to the Confiscation Order. In our local context, where home ownership of HDB flat using the CPF mechanism is a cornerstone of our way of life, I would like to seek clarification from the Minister regarding this. Should a HDB flat be in the joint name of the husband and wife, and the husband is found guilty of drug trafficking, maybe, without the knowledge of the wife, what is the status of the flat? Will the whole family be evicted? We know that the HDB home is protected from seizure due to bankruptcy. Will such a similar protection be extended in the case of drug offences?

Finally, Sir, the question of the burden and standard of proof. One is usually presumed to be innocent unless proven guilty. It is the duty of the prosecution to prove that a person is guilty of drug trafficking. However, after conviction, the onus is then placed on the offender to show which of his assets were not derived from drug trafficking. This seems to me to be unusual. While I will not support the guilty, is this not an "overkill"? The Minister must have good reasons for this clause. Can he explain?

Mr Speaker, Sir, in closing, I would like to say that I am glad that this complicated Bill is being sent to a Select Committee.

Prof. Jayakumar: Sir, I wish to thank Dr Arthur Beng for his support for the Bill. May I just comment on the points that he made.

First, his comment on the Financial Investigation Unit. I wish to assure him that this is indeed one aspect of the implementation which we are very mindful of, because the investigation into matters which would lead up to the confiscation of assets and the investigation of money laundering is not going to be easy. Because our discussion with other drug enforcement agencies elsewhere who have had experience in this area is that the drug traffickers are quite skilful and cunning, and have a very complicated mechanism and the network they set up of different financial bodies and companies and branches, in order to achieve money laundering. It is very complicated and it requires quite skilful tracing and investigation in order to uncover this money laundering.

Therefore, we will have to set up, and it is our intention to set up, a special financial investigation unit that must include people who have the competence and ability to go into these areas, which must mean that you have people who have accountancy training and sufficient knowledge about financial affairs to be able to do the necessary investigations. So I wish to assure him that we have this in mind, and this will be done, and the officers will be trained. This is already under-way.

The second point was his concern of seizure of assets like houses. He mentioned HDB flats where the wife may be the co-owner and she may be completely innocent. I would like to assure him, first, that if you examine the provisions in detail, there is a very elaborate provision (I think it is clause 9) which protects the interest of innocent third parties. And if it was true that the wife in that particular case had no knowledge or was innocent, then her rights would be protected under clause 9.

But I want to make a broader point for Members to understand the approach in this Bill. When we examine the models and approaches adopted by different countries, basically there were two different approaches. In one approach, the authority will actually confiscate the physical assets of drug traffickers, sell them off, manage them, and so on. The other approach, which is the United Kingdom approach which we are following, is, in the first place, to avoid physical attachment of all the assets, but to apply to the Court for an order for a confiscation of the benefits. In other words, the Court will make an order that the accused person must pay a confiscation of the benefits or the total sum which the Court assesses to have been derived from drug trafficking. This approach is favoured by us because in some other countries, the authorities have landed themselves in quite big problems, because they have to manage supermarkets, they have got to handle yachts and various other assets. We want to avoid that. So the approach is the Court will assess the value of the assets and the order will be to the accused person to pay that amount. And if he does not pay, he goes to jail. But, of course, in the ultimate analysis, there are provisions for the realising of these profits. But the initial approach is to try to avoid managing these complicated and various assets, some of which may even be located abroad.

So that is an approach which I would like to point out, which is similar to the approach we took for the confiscation of benefits in respect of corruption. I think it is a more practical approach.

The third point the Member raised was concerning the burden of proof, whether is it unusual, and how do I justify. I would justify it, first, on public policy and, second, that if we do not have that presumption, this law is unworkable. Let us take a situation where a drug trafficker is convicted. And investigations then show that he may have a monthly income, all his known sources of income of himself, his wife and the entire family, shall we say, for the past six years have never exceeded, say, $10,000 a month. But he has a million dollars in various bank accounts, he owns a condominium and houses in his name here, and he owns property abroad. Then he has bank accounts abroad, total sum of which, shall we say, is $5 million.

I think it is very reasonable to conclude that since the total sum of his assets is so disproportionate to his known sources of income these cannot be derived from his legitimate income or legitimate work. And since he has been convicted of drug trafficking, who can best explain this? It is well-nigh impossible for the prosecution to prove to the Court that these are derived from drug trafficking. It is just impossible because these are matters within the special knowledge of the drug trafficker. That is why in many countries, including United Kingdom, whose model we are following really, the burden is placed on the accused person.

But in the first place, let me emphasise, there is a preliminary burden on the prosecution. The prosecution must first prove that he ought to be convicted for that particular drug trafficking offence which may trigger off his investigations. After he has been convicted, the burden is on the prosecution to launch investigations for the tracing and recovering of his assets. And the burden is on the prosecution to adduce all these to the Court and to urge the Court that the amounts standing in his name are so disproportionate that the presumption ought to be invoked. But then these are matters within the knowledge of the accused person. And he could say, well, how did it come by such large amounts of money? I think it is reasonable. But more important, or equally important, if we do not have this presumption, it will be just impossible to get at the ill-gotten gains of drug traffickers.

Question put, and agreed to.

Bill accordingly read a Second time.

Resolved,

That the Bill be committed to a Select Committee consisting of Mr Speaker as Chairman and seven Members to be nominated by the Committee of Selection. - [Prof. Jayakumar].