Criminal breach of trust is when someone who is trusted to take care of something, like money or property, uses it for their own personal gain instead of doing what they are supposed to do with it.
For example, let’s say your friend asks you to hold onto their phone while they go to the bathroom. If you decide to take their phone and sell it instead, that would be a breach of trust because your friend trusted you to take care of their phone, not sell it.
Now imagine if someone was in charge of a lot of money, like an accountant or a company executive, and they took that money for themselves instead of doing what they were supposed to do with it. That would be a much bigger breach of trust and a serious crime.
Today we look at an example of criminal breach of trust, beginning with a story about a certain Mr Ewe.
Mr Ewe Pang Kooi, the Accountant Who Committed Criminal Breach of Trust.
This case happened in Singapore, some time back. Mr Ewe Pang Kooi is a Malaysian, and a Singapore permanent resident.
Ewe Pang Kooi, an accountant, stole around S$41 million from different clients for 10 years (from 2002 to 2012). He used the money to fuel his gambling addiction, which started when he was six years old. His early exposure to gambling came from helping his father’s illegal gambling operation.
Ewe’s job as a liquidator, receiver, and agent allowed him to control his clients’ bank accounts and assets. Instead of paying creditors and recovering assets, the man transferred the money to bank accounts that only he could use. He took money from 21 companies, including six Hewlett-Packard subsidiaries, and also stole assets from an individual while working as a receiver.
Ewe was caught in July 2012 after HP group asked about the assets from the liquidation of the companies. Ewe moved the money between different entities to hide his crime.
In March 2019, he was found guilty of 50 charges of criminal breach of trust as an agent. During the trial, his lawyer argued that he wasn’t trusted with the money in the way of his business as an agent, but the judge found him guilty, and he was sentenced to 25 years and 10 months in jail on July 16, 2019. He appealed against the conviction and sentence.
Ewe’s gambling addiction started when he was very young and continued through his adulthood. He bet big amounts of money, up to S$150,000, and used his clients’ money to chase his losses. He also got perks from the Resorts World Casino, like a permanent hotel room and points to sustain a comfortable life.
Prosecutors argued for 30 years in jail, while his defense team argued for 12-18 years, citing his cooperation with the police. He got 25 years and 10 months in jail, taking into account his cooperation with the investigations and returning S$17 million to his clients.
However, S$24 million remained unaccounted for, and the large amount played a role in the judge’s decision to convict him for 25+ years.
In Ewe’s case, the main issue was the breach of trust as a professional accountant and liquidator, which allowed him to misappropriate large sums of money from his clients. His actions caused significant harm to his clients, who had entrusted him with their monies.
Another issue is his long-standing gambling addiction, which he used the stolen funds to fuel. The case (and every criminal breach of trust case) highlights the need for professionals to uphold their ethical duties and for stricter regulations to prevent white-collar crime.
Why is criminal breach of trust wrong?
Criminal breach of trust (CBT) is wrong because it involves betraying someone’s trust and using that trust to steal or misuse someone else’s money or property. It is similar to stealing, but it is considered worse because the offender has breached a relationship of trust with the victim. (Sometimes called a “Fiduciary relationship.”)
Historically, the treatment of CBT has evolved based on different legal systems and cultures. In some countries, CBT was punished very harshly, while in others, it was treated much more leniently.
In England, where Singapore’s legal system is derived from, CBT has been a criminal offense for centuries. The punishment for CBT was originally based on the value of the property that was stolen or misused. This meant that more severe punishments were given for larger sums of money. Over time, the law became more focused on the offender’s level of responsibility and the severity of the breach of trust.
Today, the punishment for CBT depends on the severity of the offense, the level of trust involved, and the amount of harm caused. In the case of Ewe Pang Kooi, he was sentenced to 25 years and 10 months in jail for his CBT offenses because he had betrayed the trust of his clients, misused a large amount of money, and caused significant harm to the companies he was responsible for.
Overall, CBT is wrong because it involves breaking someone’s trust and using that trust to harm others. The punishment for CBT has evolved over time to focus more on the severity of the breach of trust and the harm caused, rather than just the value of the stolen or misused property.
What are some notable CBT cases in Malaysia?
Some notable cases involving criminal breach of trust in Malaysia include:
- The 1MDB scandal, which involved the misappropriation of billions of dollars from a state investment fund.
- The SRC International case, which involved the alleged misappropriation of funds from a former subsidiary of 1MDB.
- The Tabung Haji scandal, which involved the mismanagement of funds at a government-run pilgrimage fund.
- The National Feedlot Corporation scandal, which involved the alleged misappropriation of funds from a government-backed cattle farming project.
- The Felda Global Ventures Holdings Berhad scandal, which involved the alleged mismanagement of funds at a government-linked palm oil company.
These cases have received significant media attention and have led to calls for greater transparency and accountability in Malaysia’s government and business sectors.
Of the cases listed above, the most significant may be the 1MDB case.
The 1MDB (1Malaysia Development Berhad) was a state investment fund established in 2009 by the Malaysian government to promote economic development. However, the fund became involved in a corruption scandal, with allegations of embezzlement and money laundering involving former Prime Minister Najib Razak and other high-ranking officials. The scandal led to investigations in several countries, including the United States, Switzerland, and Singapore. In 2018, former PM Najib Razak was charged with multiple counts of criminal breach of trust, money laundering, and abuse of power related to the 1MDB scandal.
Another notable case involving criminal breach of trust is the SRC International case. SRC International was a former subsidiary of 1MDB, and its funds were allegedly misappropriated by former Prime Minister Najib Razak. In 2018, former PM Najib Razak was charged with multiple counts of criminal breach of trust and money laundering related to SRC International.
Comply comply comply! To prevent CBT.
As a result of cases involving criminal breach of trust and other financial crimes, regulators and lawmakers have implemented stricter rules and regulations for financial institutions and other organizations. These measures aim to prevent similar incidents from happening in the future and to protect individuals and businesses from financial fraud.
This increased scrutiny has led to more stringent compliance requirements that businesses must adhere to, such as the need to conduct regular risk assessments and implement anti-money laundering measures.
Essentially, these regulations ensure that companies are more accountable and transparent in their financial dealings, and that individuals who commit financial crimes can be more easily identified and punished.
A Notice about CBT that You Can Use at Your Company
This is a notice to your employees about CBT, and how your company will not tolerate it. You are free to use this notice at your company.
NOTICE TO ALL EMPLOYEES
Subject: Criminal Breach of Trust
We would like to remind all employees that the company has a zero-tolerance policy towards any criminal breach of trust (CBT) in the course of their employment. Any act of CBT committed by employees will not be tolerated, and will be dealt with seriously.
As defined under Section 408 of the Malaysian Penal Code, CBT is a serious criminal offence that carries severe penalties, including imprisonment and fines. Under the law, any person who is entrusted with property or money, and who dishonestly misappropriates or converts it for their own use, commits the offence of CBT.
The company is committed to maintaining the highest standards of integrity and ethical conduct in all its business activities. As such, we expect all employees to uphold these values and to act with honesty, integrity, and in compliance with all applicable laws and regulations at all times.
We would like to emphasize that any employee who is found to have committed CBT will be subjected to disciplinary action, up to and including termination of employment. Furthermore, the company will not hesitate to report the matter to the relevant authorities, and the employee may be subject to criminal prosecution.
In line with the increasing regulatory focus on CBT, we have implemented strict measures and controls to prevent and detect such activities within the company. All employees are expected to familiarize themselves with the relevant laws and regulations governing their job functions and to report any suspected or actual CBT activities.
We encourage employees to raise concerns, report suspected or actual CBT activities, or seek advice or guidance from the company’s Compliance Officer, the Human Resources Department, or the Legal Department, as appropriate.
We hope that all employees will take note of the seriousness of CBT and the consequences of engaging in such activities. We urge everyone to continue to uphold the highest standards of ethical conduct and integrity in all aspects of our business operations.
We hope you find it useful.
Thanks for Reading
While we appreciate your support, we must caution you that this article was not prepared as legal advice but to provide general information to members of the public. We do accept clients for criminal matters. Your comments on this article are welcome.