Debarment from Participation in Government Contracts

Parliamentary Question by Mr Leon Perera:

To ask the Minister for Finance in respect of the tender awarded by the Ministry of Home Affairs to ST Marine for the construction of 12 aluminium-hulled patrol boats (a) why his Ministry's Standing Committee on Debarment (SCOD) did not extend the disbarment of companies from tendering for government contracts to cases where the companies or their senior executives had been convicted of corruption in private sector contracts; and (b) whether the notice of award was published no later than 72 days after the tender was awarded to ST Marine as required under the Government Procurement Regulations.

Parliamentary Reply by Second Minister for Finance Ms Indranee Rajah:

Corruption is an offence and is dealt with strictly under our laws. Enforcement is by the CPIB and adjudication of liability and the imposition of penalties for breach of the laws is carried out by the courts. Companies or individuals convicted of corruption are thus penalised through the legal system. The penalties apply to cases involving both public and private sector related contracts. The underlying rationale is because society as a whole is harmed by such conduct.  

Debarment from participation in government contracts is a separate and distinct exercise from court proceedings and serves a different purpose. Debarment is an administrative procedure by the Government to protect the Government’s interests as a service buyer, against those who have caused direct harm or losses to the Government. It does not duplicate the courts’ function of adjudication or punishment. 

The grounds on which service providers can be debarred are made known publicly in the GeBiz website and cover a variety of situations where government interests have been harmed. These include, for example, failure of a supplier to meet critical contractual obligations to a government agency, abandonment or termination of a government contract due to contractor default, among others. 

Specifically with regard to corruption, the CPIB can, where appropriate, recommend to the SCOD debarment action after a court decision which establishes that the contractor or any of its employees, directors partners or sole proprietor had bribed a public sector officer or another person in connection with a government agency or contract. 

As can be seen from the above, there must be a nexus to government related contracts before debarment can be applied. The underlying rationale is to protect against suppliers who have caused direct harm or loss to the Government as a service buyer.
In the case involving ST Marine, the Corrupt Practices Investigation Bureau (CPIB) investigations did not reveal any connection with a government agency or contract. Hence the circumstances in which debarment can be recommended under the policy parameters did not arise.

In this case the charges and convictions were against the individuals involved, namely ST Marine’s former group financial controller and 6 other former senior executives. They were convicted in 2017 for offences committed in the period between 2000 and 2011, the most recent act thus being 8 years ago. The individuals involved ceased to be employed by ST Marine since between 2004 and 2014. 

8. The company itself, ST Marine, which is a separate legal entity, did not have any charges or convictions against it.  A new Board of Directors of ST Marine was appointed as of 15 August 2018. The Police Coast Guard tender was awarded in November 2018.

9 The notice of award was published within 72-days from the tender award in accordance with the Government Procurement regulations. In MHA’s reply to the Straits Times on 9 March 2019, MHA had clarified that the contract was awarded to ST Marine on 26 Nov 2018 and the notice of award was published on the GeBiz website the next day on 27 Nov 2018. The date of award of the tender was initially incorrectly shown as 27 Jul 2018 on the GeBIZ website and this has been rectified.