Ministry of Manpower widens probe into fraudulent quota inflation in construction firms
Singapore's Ministry of Manpower (MOM) arrested four people last week for suspected employment offences tied to a so-called phantom worker scheme, the ministry said in a release. A further 21 people are assisting with the investigation.
The four arrested comprise two company directors and two company staff from the construction sector, according to a 2 September enforcement operation the MOM conducted against employment-related offences. Independent reporting confirmed the same details, with Yahoo News Singapore identifying the arrests as taking place over "phantom workers." AsiaOne reported the operation involved at least one construction company in Paya Lebar.
Alleged scheme inflated foreign worker quotas
MOM said the two directors are suspected of making fraudulent Central Provident Fund (CPF) contributions to locals who were not under their employment, so that foreign worker quotas looked larger than they were. The companies allegedly used the inflated quotas to bring in additional migrant workers, per the ministry's account.
The scheme exploits Singapore's dependency ratio ceiling, which caps the proportion of foreign work permit holders a company may employ relative to its local headcount. AsiaOne reported the construction and process sectors carry the highest ceiling, at 83.3%, while marine shipyard, manufacturing and services sectors are capped at 75%, 60% and 35%, respectively. HR teams managing foreign workforce planning in these sectors are directly affected by how the ceiling is calculated and enforced.
This is not an isolated case. A separate MOM release from March described a larger, similar operation in which 10 people were arrested, and 41 more were assisting in an investigation into fraudulent work pass applications, including directors and employees from five construction companies. That earlier case also involved companies allegedly making CPF contributions to Singaporeans and permanent residents not under their employment to inflate quotas for hiring foreigners.
MOM said in that release it was also probing the CPF contributions of more than 40 additional people linked to the five companies. The recurrence of similar allegations across enforcement actions this year indicates sustained regulatory attention on the construction sector's use of foreign worker quotas, though MOM has not stated whether the two cases are connected.
Penalties extend beyond employers
Under the Employment of Foreign Manpower Act, MOM said making false declarations in work pass applications carries a fine of up to S$20,000, imprisonment of up to two years, or both, and can result in a bar from employing foreign workers.
Abetting a false declaration by supplying personal details for fraudulent CPF contributions carries the same maximum penalties. Collecting employment-related kickbacks is punishable by a fine of up to S$30,000, imprisonment of up to two years, or both.
Notably, MOM's release extended the warning beyond company management. The ministry said members of the public who accept CPF contributions from businesses they do not work for could themselves be liable for aiding a false declaration offence. For HR and compliance leaders, this signals that individual employees or associates who lend their CPF details, even informally, face personal legal exposure alongside the companies involved.
MOM said it will continue pursuing companies suspected of inflating foreign worker quotas through such arrangements. Investigations into the current case remain ongoing, and no charges have been announced.
