Derrick Ho, a former Operations Manager of a conservancy firm, was jailed 24 weeks for taking kickbacks from 57 migrant workers employed by his company, reported the Straits Times on 14 November 2024. The company, Lian Cheng Contracting, held contracts for cleaning and maintenance of housing estates.

The prosecution said that the company had not sanctioned the taking of money from workers.

According to the news report, the money-making scheme was first devised in 2014 and involved collecting “$1,500 to $3,000 from each worker as a consideration for [the worker’s] continued employment in Lian Cheng Contracting.”

Workers whose Work Permits had to be renewed annually had to pay $1,500 for each renewal, whilst those with two-year permits had to pay $3,000.

To successfully operate the scheme, Derrick Ho roped in his trusted lieutenants among his migrant worker crew. These four men “Rakibul, Shamim, Newton and Rana – who held roles as area supervisors and site managers – have been warned and barred from working in Singapore”, reported the newspaper. Derrick Ho generally kept two-thirds of the monies collected; his lieutenants kept the remainder.

In total, Derrick Ho collected nearly $400,000 over the years. During a raid on his home, $326,305 was found in a safe.

There was one occasion when “he collected $14,000 from a foreign worker so he could be considered for employment here,” said the newspaper, but the details surrounding this demand or whether the worker even got the job are not clear.

Our guy’s police report

TWC2 assisted one of the 57 affected workers. Hasanul (name changed) was employed by Lian Cheng in 2012 and worked under Derrick Ho. From the police report he filed (taking kickbacks is a criminal offence, thus a police report), we see him say:

… every 1-2 years, the company will ask me to pay them about SGD$1500 to SGD$3000 just for me to renew my contract with the company to continue working here. They will always say that if I do not pay them, they will cancel my work permit and send me back to my country.

As I wish to continue working in the company, I had paid the amount every single time they asked for it. The total amount I had paid to them probably adds to SGD$15000+/-.

Hasanul’s passport was also kept by the employer – another violation. It was difficult for him to get his passport back so he could go on home leave to see his family. In any case, after forking out so much money to renew his Work Permit, taking no-pay leave to go back for a while (and buy his own flight ticket) was virtually out of the question.

We don’t have details of Hasanul’s monthly salary on record, but a town council worker like him doing a cleaner’s job would typically earn just a few hundred dollars a month. To have to pay $1,500 per year for the chance to continue working meant that perhaps a quarter of his annual salary was extorted from him.

The net result was that Hasanul had not seen his family for twelve years, from 2012 when he came, till 2024 when he came to us for help.

Kickbacks are small beer compared to…

$400,000 from such profiteering may seem like a big sum, but it is only one manifestation of a far bigger cancer. The ogre in the room is that of agent fees. Even as the Ministry of Manpower declares its commitment to take action against those who profit by taking money from workers, e.g. this from the Straits Times:

Mr Adrian Quek, divisional director of MOM’s Foreign Manpower Management Division, said the ministry will continue to take firm action against errant individuals and companies, including barring them from applying for or renewing work passes.

“We take a serious view of employers demanding patyents from workers as a condition of employment, which is reprehensible and illegal,” he added.

TWC2 does not see a sufficiently robust response to the scourge of agent fees. Our sense is that this scourge – demanding payments as consideration for given jobseekers new employment – affects a far larger number of workers than kickbacks for renewal of permits. The sums involved also tend to be larger, sometimes over $10,000.

At first glance, some might argue that agent fees are a one-time thing whereas kickbacks for renewal are repeated demands every year or two. But we have seen how churn can yield the same annual or twice-yearly windfall to employers and managers.

What is “churn”?

It is when employers decline to renew permits at the end of the one or two years of permits’ lives. Instead of retaining the worker, a new worker is hired. The new worker has to pay an agent fee to get the job, and the fee is shared between the recruiter (agent) and the employer or manager. As batches of new workers are hired every two years or so, it’s as good as taking kickbacks for renewal.

The “great” thing about relying on churn rather than kickbacks for renewal is that payments usually have to be made in workers’ home countries before they come to Singapore. The front-end taker is the foreign agent, with money passing quietly and indirectly to the Singapore side.

The sums involved are not in the hundreds of thousands of dollars, we reckon, but in the millions. Until we get to grips with agent money, just catching people over kickbacks is only a partial victory.

We’d grant that kickbacks are easier to deal with than agent fees, because the former takes place within Singapore whereas the problem of agent fees has a transnational character. But that’s only if we confine our thinking to law enforcement methods. A lot can be done through system change: changing the whole ecology of hiring to squeeze out intermediaries (who are always going to be very hard to police) and bringing onshore as much as possible of the recruitment process. A well-designed architecture leaves little room for those wanting to exploit and game the system.

A mandatory central portal

Over the years, and over many articles on this site, TWC2 has proposed that a direct hiring model be made mandatory – where “direct hiring” permits using the services of a Singapore-licensed employment agency, but never any recruiter or intermediary outside our jurisdiction. There should be a State-supported central portal where all available Work Permit job vacancies are listed and interested jobseekers have to apply through the portal. The whole process of submitting an application and supporting documents, video interviews, exchange and signing of contract papers, have to take place through the portal. Outside parties cannot be allowed log-ins to the portal, so all interactions must, as a consequence, be directly between the jobseeker and the employer (or a Singapore-licensed employment agency). When all transactions must take place through the portal, they are easily monitored and come under Singapore jurisdiction as well.

In the meantime while such a system is built, smaller actions can still improve things.

For example, we have proposed that employers should be steered to hiring foreign workers who are already in Singapore (typically because they have recently lost their jobs) instead of those abroad. We have observed that hiring unemployed foreign workers locally often do not involve agent fees (because employers interview workers directly).

We have argued that MOM should prioritise the soaking up of unemployed foreign workers locally over allowing employers to bring in workers from abroad. A simple fix would be to pause the approval of work permit applications for those abroad until the local pool of unemployed foreign workers has been mopped up. That way, employers will be incentivised to hire locally and directly rather than through shady recruiters in source countries.

System change may not make as celebratory a news headline as sending someone to jail, but it benefits far more people and more sustainably than running around playing cops and robbers.

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