Creative Cheats

Source : The Sunday Times, Mar 9, 2008

SOME Singaporeans are creative - or is crafty a more apt word? - when it comes to cheating the system. The latest scam uncovered involves sellers of Housing Board flats who collude with their buyers to declare a falsely low sale price to the HDB, so that the sellers can pocket extra cash.

A buyer pays the seller the difference between the actual and the declared price in cash, and in return he gets a discount on the market value of the flat.

It is win-win for both parties, as well as the property agent who is often the instigator of the scheme. But the deal is illegal because the seller is indirectly siphoning off money in advance from his CPF account.

Conviction can bring fines of up to $5,000 or jail of up to three years.

But this is not the first time that HDB transactions have been manipulated for extraneous private gain. There was the ‘cash-back’ scheme that came to light in 2001, in which buyer, seller and agent over-declared the agreed price of a flat.

The purpose was to obtain a bigger loan from a bank or the HDB. The extra cash was distributed among the conspirators. These deals were stopped only when the HDB changed the rules to allow only an HDB-appointed valuer to value a flat.

At least one agent was convicted and fined.

The new scam is not easy to detect. Reviewing transacted prices that are unusually much lower than the market profile for a specific period and a specific location is one way.

But getting the evidence that will stand up in court won’t be easy. The HDB nevertheless has to be thorough in its surveillance.

The chief culprit in such cases is often the real estate agent who initiates the scam and drafts the letter of undertaking binding the buyer to pay the seller cash. Obviously, there’s no honour among thieves.

When the deal is done, the document is destroyed. If any party deserves to be punished the most severely, it is the agent.