Mr David Gerald”s Opening Address At The 12th Investors” Choice Awards, 27th October 2011, Raffles City Convention Centre, Fairmont Ballroom

Date: October 27, 2011

Mrs Josephine Teo – Minister of State for Finance and Transport

Mr Gan Seow Ann, President, Singapore Exchange

Distinguished guests, ladies and gentlemen,

Welcome to the 12th Investors’ Choice Awards as part of the Singapore Corporate Governance Week. I am pleased to say that during the last two days, we had a very enlightening time discussing the direction for new corporate governance practices.

While SIAS has been recognizing companies for their good corporate governance and transparency, it is worrying that we still have some way to go to ensuring that all investors are protected. Corporate scandals have hit even well run companies and wiping out investors’ entire life savings at times.

Corporate scandals affect investors and investor confidence. Often we hear of corporate scandals. Recently, billions of dollars in share value have been wiped out at Olympus Corporation when the board fired President Michael C Woodford, citing differences in culture. Questions of extremely generous payments made to advisors, lack of transparency and a refusal by the Japanese group to accept questioning relating to past deals, have surfaced. So there is no end to these scandals.

Closer to home, experiences with Singapore-listed Chinese companies, S-Chips and other Listcos, like Sino Environment, Auston International, Citiraya, CAO, DakaDesigns, Informatics, are all fresh in our minds. The lack of transparency and the inability to quantify and verify assets, including cash, in these companies and their subsidiaries, are common knowledge. While many comment that the “culture of doing business” is different in China, it troubles me to see investors lose their hard earned monies, trustingly placed into companies that have passed the listing rules, within a caveat emptor market.
These Chinese companies, with little experience in foreign markets, expand their presence abroad. With complex hierarchies and unreliable accounting, a lack of compliance with rules and limited disclosure makes accessing some Chinese companies a difficult task, commented Lin Yue Qin, a researcher from the Economic Institute of the Chinese Academy of Social Sciences, as reported by The China Daily. Retail investors are usually the last to learn of these scandals and always have to face the dire consequences. In addition, the recent KPMG Singapore Fraud Survey Report 2011 highlighted that fraud hit nearly one in four companies in Singapore. Therefore, investors need effective safeguards.

To ensure better corporate governance and risk management, SIAS would call for all listed companies to have an internal auditor. The importance of an effective internal audit function cannot be overstated. It enhances corporate governance, risk management and assurance to preserve and enhance value to the organization by improving opportunities to achieve operational excellence. They are the additional “eyes and ears” for the CEO, the Board and investors. We need the likes of Cynthia Cooper in our companies.

SIAS, together with the Institute of Internal Auditors (IIA), would call on the authorities to have the Internal Audit function mandatory under the listing rules.Investors, under Singapore’s caveat emptor market, must have this minimum safe guard for their investments. The knowledge that an effective internal audit function is adequately in place, goes a long way in providing comfort to investors and will, no doubt, attract investors to Singapore companies. We should have the internal audit reports published on SGX Net once every half a year.

SIAS, together with IIA and the Singapore Management University (SMU) Sim Kee Boon Institute, have come together to award our first Internal Audit Excellence Award this evening. This is just one way of ensuring that there is no let up in governance and risk management in our listed companies.

One other area to consider in providing safeguards against interference with investments is to broaden our laws to allow class action suits by retail investors against directors and managers guilty of fiduciary duty or who commit criminal acts causing losses to the investors. That would be cost effective and may be affordable to them to seek recourse. Currently, retail investors find legal action very costly. As we open up our financial markets in pursuing our objective to become a global financial centre, then we must do what other leading financial centres like the United States do. SIAS does not wish to encourage our retail investors to be litigious and will continue resolve issues in the boardroom and not in the courtroom but where our investments are interfered with by misconduct then we must be provided with an avenue to pursue the culprits in the civil courts on an affordable basis. However, it should not be allowed to be used as a weapon to injure companies which may have technically violated the law, but not caused any harm.

Whilst we seek these safeguards, investors also must take responsibility and be vigilant with their investments. They must be knowledgeable about the company, attend the general meetings, read the annual reports and announcements, ask clarifying questions and make informed decisions. SIAS strongly believes in the importance of investor education in preparing our retail investors to be smart investors. SIAS has been promoting investor education since 2000, and today over 70,000 people have benefited from our programmes.

In addition, with the growth of online and social media, SIAS continues to reach out to investors, to educate and engage them with more online programmes like videos and regular market updates on our online news magazine – Singapore Investor. Today, the SIAS website attracts over 11 million hits annually.

SIAS would also like to call upon listed companies in building an ecosystem to help build our capital markets. SIAS is pleased to announce that recently, SGX has sponsored all their shareholders to be SIAS Associate Members. This will allow their shareholders to participate in SIAS educational talks and seminars. In doing so, SGX has joined other enlightened companies like CapitaLand, DBS, SMRT, Keppel Corp and ST Engineering in providing their shareholders with SIAS Associate membership to continue to be educated and being informed and protected in their investment journey. I will encourage other listed companies to accord their shareholders this privilege.

Tonight is about excellence: excellence in corporate governance. I applaud the winners for pursuing excellence in corporate governance and transparency, as well as in financial reporting.

I wish to specially thank our Guest-of-Honour, Mrs Josephine Teo, Minister of State for Finance and Transport for kindly agreeing to grace this event, SGX for your unwavering support, our Sponsors, Baker & McKenzie, Wong & Leow, KPMG and RSM for your sponsorship of tonight’s Awards, Endorsers, and most of all, winners of all the categories and friends of SIAS for sponsoring tables.

I would like to record my sincere thanks to a few who have helped me run the association and providing valuable advice during their tenure as part of the SIAS Management Committee – Mr Vincent Chen, Mr Ng Siew Quan, Mr Stanley Ng and Mr Robert Yeo, who have all stepped down at this year’s AGM in September. I would like to extend my sincere gratitude to them for coming forward selflessly to help champion the small investors’ cause. We wish you all well.

I am pleased to welcome our four new Committee Members – Mr CS Siow, Vice-President, Mr Loh Uantchern, Hon. Secretary, Mr Joseph Kwok, Hon. Treasurer and Mr Robson Lee, Asst. Hon Secretary, they bring with them rich experience and professional expertise in their respective fields to assist SIAS in its mission. It is my sincere hope that they will stay and run SIAS for the next 2 decades, at least!

Ladies and Gentlemen, have a great and enjoyable evening.

Thank you.

 

Subscribe to Newsletter

Subscribe to SIAS Mailing List and get updates to all upcoming events and news

By clicking submit, you agree to our privacy statement, collection, use and/or disclosure of your personal data to the extent necessary to provide you with this service.