Corporate Governance of Our Companies

MP Dennis Tan

Mr Dennis Tan Lip Fong (Hougang): Mr Chairman, five years ago, I spoke in this House about the $422 million price settlement for Keppel Offshore & Marine (KOM) for bribery acts in Brazil conducted through its subsidiary in the United States. This is in part due to the conviction of KOM lawyer Mr Jeffrey Chow in US court for his role in the corruption. Chow is given a one-year probation which he could serve in Singapore and $75,000 fine. That may not be a heavy punishment to some, but it is still a criminal conviction.

Almost five years later, in January 2023, CPBI issued stern warnings to six unnamed former KOM senior executives for the same corruption case. Earlier this month, the hon Ms Indranee Rajah told this House that no prosecution was mounted due to the lack of sufficient evidence. 

What is difficult to understand for many Singaporeans is that while the company has admitted liability and paid massive fines, the CPIB could not find a single person working in the company whom they could charge for complicity in the bribery acts even though about $55 million of KOM’s monies were paid out for bribes. How were such moneys allowed to be paid out? And how did they pass through the senior management’s and auditors’ scrutiny? Will any recovery actions be taken against any employees?

Notwithstanding the alleged evidential difficulties, the stern warnings might have inadvertently sent an alarming message that a Singapore-linked company can be involved in a case of serious corruption, but individuals involved may not be dealt with proportionately. This is not good news for the credibility of Singapore Inc, not to mention a GLC which should be leading by example. 

Then, there are other recent cases where aspects of corporate or investment governance involving our GLCs have some under question. 

We learnt that executives at Singapore Press Holdings, now SPH Media Trust, inflated circulation numbers by up to 90,000 daily copies, including by printing and destroying extra copies of newspapers.

Not long ago, there was also the bankruptcy of the crypto currency exhange, FDX, due to massive fraud. Deputy Prime Minister Lawrence Wong informed this House that losses to Singapore’s taxpayers’ monies from Temasek investment in FDX were limited. But the company’s management and owners still allegedly engaged fraud worth several billions of US dollars. Recently, press reports indicated that Temasek may be exposed to companies under the Adnani Group, possibly to the tune of several billion dollars. A shadow of potentially serious financial discrepancies hangs over the Adnani Group.

Sir, back in the Committee of Supply debates in 2018, I mentioned a number of measures where we can improve corporate governance for our companies. I said that it is startling that the existence of bribery contracts and payments somehow seem to have escaped the notice of Keppel’s senior management, board of directors, audit committees and even the external auditors for 14 years. Could this point to the weaknesses in our company and auditing regime?

Among other suggestions, I had asked for the Government to review and enhance company regulations and suggested that the Government should consider having inspections and subject companies, directors and audit committee members to penalties for any non-compliance, and that the Government should review and enhance the requirements for whistle-blowing policies in companies. 

Sir, my remarks here today are less about what specific dollar amounts of exposure or loss or whether individuals received particular types of punishment or not. Rather, I am concerned about the potential rise of a view following recent cases that corporate governance standards in Singapore including Government-linked entities may not be what they used to be – and this should not be the case. 

Following the disappointing outcome on the investigation by CPIB, what steps would the Government take to improve the corporate governance of our companies? Specifically, what are the lessons we learn from how KOM was able to carry out the bribery acts of such magnitude and for so long? What are the measures that Government intend to take to prevent similar cases from happening again? I am referring to the brazen bribery acts as well as the difficulties in prosecuting individuals even though KOM itself admitted liability and paid massive fines to foreign governments.

I hope the Government will take steps to improve corporate governance for our companies and I also hope the Government will ensure that Government-linked companies take adequate due diligence before committing on investment on public monies. 

Prime Minister’s Office
24 February 2023

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