25 May 2016
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Commitment of Govt critical for rule of law, good governance: CJ

Straits Times
24 May 2016
Selina Lum

Detention case highlights government's compliance with law pronounced by judiciary

A few weeks after the Court of Appeal freed alleged match-fixing kingpin Dan Tan from detention without trial, the Ministry of Home Affairs reviewed its legal position and released three others who had been similarly detained.

Citing the case in a speech he gave recently in the United States, Chief Justice Sundaresh Menon said the apex court released Tan on the ruling that detention is permitted only if the detainee's activities caused harm in Singapore. But the grounds for Tan's detention failed to show how his activities did this.

Tan was later re-arrested and detained on fresh grounds that set out the relevant threat in Singapore.

Noting that the Home Affairs Minister then reviewed the detention of three other detainees and revoked it in the light of the court's ruling, CJ Menon said it is critical to have the commitment of the Government in complying with the law pronounced by the judiciary, to have rule of law and good governance.

In his address to the American Law Institute in Washington, DC last week , he focused on the instrumental role played by the courts in upholding the rule of law. CJ Menon is the only Singaporean to be elected a member of the institute, an independent organisation established in 1923 that produces scholarly work to clarify, modernise and improve the law.

In his speech, The Rule Of Law: The Path To Exceptionalism, he said that despite the vast differences in the legal systems, history and culture of the US and Singapore, both nations share a commitment to the rule of law, although the application could differ in practice.

After taking a broad look at how conceptions of an independent judiciary upholding the rule of law had evolved in the US, CJ Menon turned to the Singapore story.

"If the American republic was born out of a pursuit of high ideals, Singapore was the progeny of an austere and existentialist necessity."

Singapore's founding fathers, he said, understood the need for a clean, efficient and independent judiciary in an environment that sought to attract investment from abroad to drive economic growth.

He noted that Ms Christine Lagarde of the International Monetary Fund had cited Singapore as an example to emulate for its honest and competent public institutions.

CJ Menon said Singapore's fidelity to the rule of law has "coexisted comfortably" with an emphasis on communitarian - involving dialogue, tolerance, compromise and placing the community before self - over individualist values.

In a case in which the Court of Appeal was asked to review a decision by the Commissioner of Labour involving a controversial doctrine, the court made no decision on the doctrine but provided guidance to the Government on the issues to look out for in future cases.

"What underlies this approach is the belief that a court which is respected by the other branches of government can effectively shape the debate and ensure the legality of government actions by setting out its concerns openly and potentially obviating a binary clash between the judiciary and the executive," said CJ Menon.

"Having said that, confrontation may be inevitable and then, the judiciary must stand firm as the last line of defence," he went on to add. "Judicial review is the sharp edge that keeps government action within the form and substance of the law."

The CJ said: "In the final analysis, the robustness of a nation's rule of law framework depends greatly on how the other branches view the judiciary and whether it, in turn, is able and willing to act honestly, competently and independently."


DIFFERENT ENVIRONMENTS

If the American republic was born out of pursuit of high ideals, Singapore was the progeny of an austere and existentialist necessity.

CHIEF JUSTICE SUNDARESH MENON

LAST LINE OF DEFENCE

Judicial review is the sharp edge that keeps government action within the form and substance of the law.

CJ MENON

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Lawyers in Dallas Buyers Club action face punishment

TODAY
17 May 2016
Koh Swee Fang Valerie

Complaint lodged on their conduct in civil claims against illegal downloaders of the movie

SINGAPORE — The Law Society of Singapore (LawSoc) will be going after two former lawyers of the legal firm representing United States film studio Dallas Buyers Club LLC, following a complaint lodged last year on their conduct in civil claims against illegal downloaders of the movie.

In a reply to the complainant Internet Society (Singapore), which TODAY has seen, the LawSoc said an inquiry committee has decided that a formal investigation by a disciplinary tribunal was not necessary, but that the lawyers in question “should be given a warning, reprimand or order to pay a penalty of not more than S$10,000”.

The exact punishment will be decided by the LawSoc council after the lawyers respond to whether or not they wish to be heard on their side of the story in the matter — a procedural requirement under the Legal Profession Act (LPA).

“If a penalty or reprimand is imposed by Council, it will be published in the Government Gazette as required under the LPA,” said the society in a May 11 letter to Mr Harish Pillay, who is immediate past president of Internet Society (Singapore), a non-governmental organisation promoting Internet usage. The LawSoc letter was signed off by its director of conduct and chairman of the inquiry committee K Gopalan.

When contacted yesterday, the society declined to comment. “Under the LPA, the Law Society is required to maintain confidentiality for disciplinary proceedings save for information which the Society is required by law to publish,” said a spokesperson.

In June last year, Internet Society (Singapore) complained to LawSoc that Mr Robert Raj Joseph and Mr Lee Heng Eam, who were both still with Samuel Seow Law Corporation then, had issued letters threatening criminal proceedings to advance civil claims against the film’s pirates. These demand letters to 77 M1 subscribers asking for a written offer of damages and costs had spelt out a maximum fine of S$50,000 or imprisonment not exceeding three years for a conviction under Section 136(3) of the Copyright Act, and a maximum S$20,000 fine and six months’ jail term under Section 136(3A) of the Act.

At that time, Mr Samuel Seow, the firm’s managing director, had said a new batch of letters that were worded differently were sent to StarHub and Singtel subscribers who allegedly downloaded the movie illegally. He had also said Mr Raj, who was the director of the litigation and dispute resolution practice group in the firm, was leaving the firm, but the departure was not linked to his handling of the case.

The Law Society’s Practice Directions and Rulings Guide 2013 states that it is improper for a solicitor to “communicate in writing or otherwise a threat of criminal proceedings in order to achieve a stated objective in any circumstance, for example, to compel a witness to attend at the solicitor’s office to give a statement or to sign a written statement despatched to him”.

Both Mr Raj and Mr Lee could not be reached for comments yesterday. After leaving the firm, Mr Raj set up his own practice in July last year. Mr Lee left after him, and has since become an in-house legal counsel, according to Mr Seow.

Mr Seow added that he had not heard of the latest development from the LawSoc. “It would not be right for me to comment on this,” he said. “We want to take the position that we protect copyright owners. It’s unfortunate, but they are my former employees.”

Copyright 2016 MediaCorp Pte Ltd | All Rights Reserved 

Accused Kelvin Ang in 1MDB case released on bail

Business Times
10 May 2016
Anita Gabriel

[Singapore] KELVIN Ang Wee Keng, who was charged on April 20 with corrupt transactions following an ongoing probe into 1Malaysia Development Berhad (1MDB), was released from remand on Monday with bail set at S$100,000.

At a mention in Singapore's state court on Monday, prosecutors said that investigators have assessed that Ang's further remand was no longer necessary although his assistance was still required as investigations were not complete.

Last week, on May 4, the court had directed that Ang be remanded until May 11. However, on Monday, Singapore's prosecution applied for an earlier mention as it did not seek to remand accused persons for longer than was necessary, according to a statement by the Attorney-General's Chambers (AGC).

The prosecution noted that although the accused was charged under a non-bailable offence, it would not object to bail and had submitted that bail be offered in the sum of S$100,000.

The case has been adjourned for pre-trial conference on June 30.

Ang, 34, was charged for corruptly giving a gratification sum of S$3,000 some time between 2013 and 2014 to research analyst Lee Chee Waiy to expedite preparation of a favourable valuation report to be issued by his equity research firm.

It was reported that Mr Lee had held the position of associate director at NRA Capital between August 2008 and October 2015. He is currently research head at Phillip Securities.

At an earlier mention, prosecutors told the court that Ang had dealt extensively for over two years with another accused in the 1MDB case, ex-private banker of BSI Singapore Yeo Jiawei (who is deemed a "central figure in the investigations") and some others implicated in "improper dealings".

It is widely understood that the dealings are in relation to activities and transactions involving 1MDB which are being probed by Singapore's Commercial Affairs Department in what is deemed the most complex case ever undertaken by the white-collar crime buster.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Motorcyclist who lost lower right leg in accident awarded about S$450,000 in damages

TODAY
24 May 2016

SINGAPORE — A High Court judge has ordered a taxi driver to pay damages amounting to about S$450,000 to a motorcyclist who lost part of his right leg in an accident in 2011.

Mr Kenneth Quek Yen Fei’s right foot was severely mangled and his right leg had to be amputated below the knee. Justice Tay Yong Kwang had ruled in 2013 that the cabbie was 100 per cent liable for the accident.

In a written judgment released this month, the judge awarded Mr Quek S$452,509.41 in damages, inclusive of interest.

On Aug 11, 2011 at around 4am, taxi driver Yeo Chye Huat, who was in his 50s, collided into Mr Quek, then aged 20, who was riding his motorbike along Bencoolen Street in the direction of Fort Canning Road.

In cutting across lanes sharply, Yeo did not pay attention to traffic coming from behind him on his left and did not notice the motorcyclist until the collision.

Mr Quek, who was serving National Service then, was flung off his bike. Apart from the severe injuries mentioned above, he also sustained a fracture to his right collarbone.

In listing the damages, Justice Tay asked that Yeo pay Mr Quek S$80,000 in damages for his amputation, which is higher than the range that the court may order in personal injury cases. The typical range is between $40,000 and $70,000 for amputation of the lower leg. He had factored the pain and suffering Mr Quek endured from surgery and that four years after the accident, he continues to experience phantom limb pain and pain from neuroma (a disordered collection of nerve fibres) at the amputation stump.

Allowance should be made for the suffering that comes from losing a leg at such a young age, the judge added.

He also awarded S$15,000 and S$7,000 in damages respectively for the collarbone fracture and multiple scarring, and Mr Quek is entitled to about S$107,000 for future medical expenses over 18 years.

On top of this, there is a lump sum of S$1,000 for his future transport expenses because he is physically capable of taking public transportation or even travel by motorcycle.

Given that Mr Quek had dropped out of secondary school prior to the accident and did not show a consistent employment history to reflect a particular career path he would have taken, only damages for the loss of earning capacity was awarded — S$162,000 over 18 years — but not the loss of future earnings.

While his present level of education made it difficult for him to find desk-bound work and he is likely to be hired for manual work, Justice Tay added that the accident had also significantly limited the victim’s ability to do manual work since he is unable to stand or walk for long hours.

Copyright 2016 MediaCorp Pte Ltd | All Rights Reserved

Quek Yen Fei Kenneth v Yeo Chye Huat [2016] SGHC 96

Ex-wife of alleged match-fixer on trial over false info

Straits Times
17 May 2016
Rachel Chia

She is accused of knowingly giving CPIB investigator wrong information on laptops

After graft officers took alleged match-fixing kingpin Dan Tan Seet Eng from his home to the Corrupt Practices Investigation Bureau (CPIB) office in June three years ago, his then wife called his alleged accomplice, Eric Ding Si Yang, for advice about two laptops.

Now Guan Enmei, 41, is on trial for knowingly giving false information about these laptops to a senior special investigator of the CPIB.

Guan, a Singaporean from China who is now divorced from Tan, allegedly told the investigator that she had left her house with only a handbag when asked to report to the CPIB office on June 6, 2013.

She denied taking with her a paper bag containing two laptops, a denial which she knew was false, according to the charge.

Testifying on the first day of Guan's two-day trial yesterday, Ding said Guan had called him some time in 2013 while her husband was being investigated for graft, asking what she should do with the laptops.

When asked by the prosecution why Guan had called him, Ding - who is serving a six-year jail term for bribing three Lebanese football officials with prostitutes for fixing future matches, among other offences - said it was probably because he and Tan had used the same network of encrypted phones and laptops to communicate.

Tan, described by Interpol as "the leader of the world's most notorious match-fixing syndicate", is being detained without trial under the Criminal Law (Temporary Provisions) Act.

The prosecution said that on June 6, Tan was asked to report to the CPIB office. Before he left home, he told Guan to take two laptops from the study, place them in a bag and hand him the bag after he was released.

That afternoon, Guan was herself told to report to the CPIB. As her usual limousine driver Alan Chen De Zhan was unable to pick her up from her home, he arranged for another driver, Mr Akbar Abdul Ali, to do so.

When Mr Akbar arrived at her home, Guan placed a white Dior paper bag in the back seat of the car before sitting in the front passenger seat.

On arriving at the CPIB carpark, Guan met Mr Chen, her usual driver, and asked him to safekeep the paper bag for her until she came out of the building.

He then waited for her at a nearby coffee shop, where graft investigators later seized the bag and two laptops.

When questioned about the laptops by the investigator, Guan insisted that she did not know anything about them.

Mr Chen testified in court yesterday that Guan had asked him to pick up a white paper bag from Mr Akbar's car, which he kept for her while waiting to send her home.

He said the bag was heavy and he saw a laptop in it.

If found guilty of knowingly giving false information to a graft investigator, Guan faces a maximum punishment of a $10,000 fine and one year in jail.

Guan will take the stand today.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Study to plug gaps in laws on archaeology

Straits Times
10 May 2016
Melody Zaccheus

One aspect of NHB review involves legal ownership status of artefacts found on private land

A study on archaeology in Singapore is under way to address gaps in laws and regulations in the field.

One area that is being studied is the legal ownership status of archaeological materials unearthed on private land.

Currently, the authorities do not own such items, as only archaeological finds unearthed on state land belong to the state.

The study is conducted by the National Heritage Board (NHB), Minister for Culture, Community and Youth Grace Fu told Parliament yesterday.

She was replying to Non-Constituency MP Daniel Goh, from the Workers' Party, who asked if artefacts excavated in the past five years have been documented properly and reported to the Government.

NHB said yesterday that it had no further details when The Straits Times asked for information on the scope and timeline of the study.

However, it said the board "will work closely with partners such as the Iseas-Yusof Ishak Institute on this, and will also seek the views of our heritage advisory panel and other relevant stakeholders".

Dr Goh, a sociologist at the National University of Singapore, also raised the issue of the fate of archaeological finds discovered in territorial waters or when people discover artefacts during the construction and renovation of their properties.

He asked whether the ministry would consider "imposing legal obligations for stopping work and reporting the finds to the Government".

Ms Fu replied that when commissioning archaeological excavations, NHB requires the agencies doing them to document and submit reports on the finds to the board.

Materials from these digs that support efforts to interpret Singapore's history are also taken into the NHB-managed national collection.

They are documented and conserved at the Heritage Conservation Centre, when not on display. The remaining artefacts may be stored by partner agencies like the Iseas-Yusof Ishak Institute, which is home to Singapore's sole archaeological unit.

On maritime archaeological finds, Ms Fu said these fall under the Maritime and Port Authority of Singapore through the Merchant Shipping Act, and NHB works closely with the authority on them.

As for findings on private land, she said NHB works with stakeholders to identify and protect important artefacts.

Citing artefacts found on the grounds of the Cathedral of the Good Shepherd in Queen Street, she said several are on display at the cathedral's heritage and resource gallery and at the NHB-run Indian Heritage Centre.

Members of the heritage community, in welcoming the news, said the review is "long overdue".

They pointed out that digs here have grown in scale and regularity since the first excavation at Fort Canning Park in 1984. For instance, an NHB-organised excavation in Empress Place last year resulted in the largest archaeological haul in Singapore in 31 years.

Singapore Management University heritage law expert Jack Lee said a modern and comprehensive legal framework is in order to clarify ownership issues.

For instance, some 600 World War II artefacts from a recently concluded seven-year archaeological study of Adam Park are in the hands of private firm Singapore History Consultants, although they were dug up on state land.

He also suggested, among other things, defining the categories of unearthed finds that the public and developers must report to the state.

He added that people should have to apply to the authorities for permits before they can dig in areas likely to have archaeological relics.

"If people can dig without permission, sites can be damaged," he said. "The context of how an artefact is found is important in archaeology."

Dogged by scant resources and lack of interest for years, archaeologists have also asked for greater government investment to pay for more staff and activities. Also on experts' wishlist: standard operating procedures on how to handle, store and protect artefacts.

Dr Terence Chong, head of Nalanda-Sriwijaya Centre at the Iseas-Yusof Ishak Institute, said the review and a strong legal framework will help the centre and local archaeologists in future excavations.

Ms Fu added that the aim of the authorities, in looking at improving laws and regulations, is not to discourage people from taking an interest in archaeology, but to encourage them to cooperate with NHB.

"Ultimately, we share the same common purpose to understand the history of Singapore through archaeology, and that history is really for the public, present and future generations, to appreciate."


SHARED PURPOSE

Ultimately, we share the same common purpose to understand the history of Singapore through archaeology, and that history is really for the public, present and future generations, to appreciate.

MINISTER FOR CULTURE, COMMUNITY AND YOUTH GRACE FU, who said the aim of the authorities, in looking at improving laws, is to encourage people to work with NHB.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Periodic regulatory updates needed for TWC stocks

Business Times
24 May 2016
R. Sivanithy

THE Singapore Exchange (SGX) over the past year has stepped up its efforts to strengthen local corporate governance - its Trade with Caution (TWC) notices now come with more targeted information, it has set up independent committees for listings and disciplinary actions, and last week it announced it will provide updates every six months on latest developments on companies whose shares have been suspended for years.

These are all creditable moves that should strengthen the disclosure-based governance framework in force here. To be sure, more information is always preferable to little or none and the move towards greater independence for important issues such as listings and discipline are necessary to answer critics who have long questioned the exchange's dual role - as a listed profit-driven bourse operator vested with regulatory functions.

However, without concurrent improvements in many other areas relating to governance, there is a danger that SGX's initiatives may end up having only marginal benefits.

Whilst providing updates every six months to shareholders who have been holding on to shares for years that may or may not be worthless is undoubtedly a step in the right direction, it is arguably not critically urgent because trading in these companies ceased a long time ago.

Knowing what efforts and negotiations are underway to rescue or resuscitate these companies will provide encouragement to long-suffering shareholders and offer hope that some of their investments could be recouped, but there is no element of "buyer beware" at stake here. Shareholders stuck with the shares have long come to terms with the hard truth that the shares they bought in such companies had very little going for them, investment-wise.

In contrast, shares of companies that have had a TWC issued or are connected to ongoing official investigations are still trading and in many cases, are actively punted every day.

On Monday last week, for example, several familiar speculatives spiked up for reasons unknown, only to fall back a short while later, possibly because of online trading restrictions quickly imposed by broking firms. As the sudden burst of interest demonstrated, "caveat emptor" is very applicable - there is after all, still active daily buying and selling. Yet, in order for the market to make informed decisions about whether to properly buy or sell, it should have sufficient information on what is happening on the regulatory front. This is currently not the case.

In the case of LionGold, Asiasons (now Attilan) and Blumont which have the dubious honour of triggering the penny crash of October 2013, 31 months have passed but other than speculation and unsubstantiated hearsay that these counters had been gradually ramped by manipulators over the years, the market has received no official updates.

Similarly, over the past 12 months, TWCs or regulatory announcements have been issued on CEFC, IHC, Koyo International and Zhongmin Baihui, all essentially containing the warnings that small groups of connected individuals were responsible for most of daily volume, implying that these stocks had been manipulated.

All these notices also carried the disclosure that SGX is working with other regulators, which suggests that there are probes going on behind the scenes. The big questions are: to what end, and how long will it take before details are known? Without answers to these questions, it is impossible to form any rational investment conclusion regarding any of these counters and the longer this continues, the greater the number of buyers who will have to beware.

At this juncture, it should be acknowledged that official enquiries can take a long time to complete because of legal difficulties and jurisdictional challenges. So it is necessary to cut regulators some slack - for example, trades can be routed through offshore accounts or nominee names, which would make it tough for investigators to unravel accurate pictures of who the beneficial parties are.

But for a disclosure-based regime to function properly, it is important to bear in mind that information has to be released reasonably promptly, and, in the case of the TWC stocks listed above, this is all the more pressing because they are still trading.

There should, therefore, be periodic updates on the status of these stocks, say every six months. If investigations are still ongoing, then that should be said. The alternative is silence that can drag on for years, which runs counter to the imperatives of a disclosure-based market.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Alleged mastermind of $1.4m casino fraud dead, court told

Straits Times
17 May 2016
Elena Chong

Lawyer says Laotian apparently had a heart attack; prosecution mulling over next move

A Laotian businessman who was facing a joint charge of colluding with 13 others to cheat the casino at Marina Bay Sands (MBS) has died, a court heard yesterday.

Sengmanivong Soum's lawyer Shashi Nathan told the court that the 53-year-old died, apparently from a heart attack, some time at the end of last month.

The lawyer, who had a photograph of the death certificate, said he was trying to to get the original or duplicate to be sent over.

Sengmanivong, the alleged mastermind of the syndicate, had been accused of colluding with 13 Thai nationals and other unidentified persons in a fraudulent scheme to obtain cash chips from a game of baccarat at the casino between May 6 and 7 in 2013.

Baccarat is a game in which bets are placed on either the bank or player to have a winning hand of two or three cards.

The prosecution says that the men had knowledge of a sequence of cards to place bets in order to win chips amounting to $1.41 million. The defence argued the games were won fair and square.

Sengmanivong also faced a second charge of helping several of the accused and others to steal a card carrier containing unused playing cards from a cabinet in the Paiza salon at the casino on May 6 that year. Paiza is a VIP salon for high rollers at the resort.

The prosecution said rehearsals for the scheme were conducted in 2013 in Manila, in the Philippines, some time in April, and also at Swissotel here in early May.

All 14 men arrived in Singapore in April. Several of them visited the Paiza salon to check it out and ensure that they could gain access to the locked card cabinet.

After about 100 days of trial, which began in 2014, the prosecution closed its case.

The defence was supposed to have begun its case yesterday when hearing resumed before District Judge Soh Tze Bian.

The prosecution, led by Deputy Public Prosecutors Terence Chua and Marshall Lim, is looking into how to proceed with the trial.

The maximum punishment under the Casino Control Act is seven years' jail and a fine. It is the same for a theft-in-dwelling offence.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Definition of 'animals' in Road Traffic Act to be reviewed

Straits Times
10 May 2016
Audrey Tan

What's in a name? For motorists who run over an animal and do not stop to help it, it could mean a fine or jail time.

The reason is that the Road Traffic Act, enacted in 1963, defines an animal as "any horse, cattle, ass, mule, sheep, pig, goat or dog". It requires motorists to stop and help these animals if they knock them down.

But should a motorist knock down other creatures, such as cats or wild boar, an offence would not be committed under this law. This quaint definition will be reviewed.

Meanwhile, drivers who fail to stop and help an animal can be fined up to $3,000 or jailed up to a year, with repeat offenders fined up to $5,000 or jailed up to two years.

Senior Minister of State for Home Affairs Desmond Lee told the House: "The Ministry of Home Affairs intends to review the definition of 'animals' in the Road Traffic Act, and also consider any amendment in the context of road safety, especially the safety of the motorist and other road users."

Mr Louis Ng (Nee Soon GRC) had asked if the ministry would consider updating and aligning the definition of "animals" in the Road Traffic Act with that in the Animals and Birds Act - a move animal welfare groups have sought.

Mr Lee noted, however, that both laws have different objectives.

The Animals and Birds Act aims to prevent the introduction and spread of diseases through animals, control the movement of animals, prevent cruelty to animals and safeguard the general welfare of animals in Singapore. The Road Traffic Act, on the other hand, seeks to protect the safety of road users, including motorists, cyclists and pedestrians.

Mr Lee said the specific provision in the Road Traffic Act relating to animals had been confined to farm animals of commercial value.

"The original intent of the legislation was to ensure restitution to their owners should an accident occur," he said.

But should all motorists stop if any animal is hit?

"They should stop, if it is safe to do so. If the motorist requires assistance, he can contact the Agri-Food and Veterinary Authority of Singapore or Society for the Prevention of Cruelty to Animals," he added.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Co-founder of Ku De Ta club goes to court in new twist

Straits Times
23 May 2016
Toh Yong Chuan

The former Ku De Ta club, which opened in 2010 at Marina Bay Sands to much fanfare, is at the centre of yet another legal dispute.

Mr Chris Au, a Singapore-based Hong Kong businessman who co-founded the club, since renamed Ce La Vi, has sued his former business partners for conspiring to steal his rightful share of the club.

On Jan 30, 2014, French luxury group LVMH Moet Hennessy Louis Vuitton reportedly paid $100 million for a 51 per cent stake in the swish club on the 57th floor of Marina Bay Sands' SkyPark. The purchase was made through LVMH's investment arm L Capital.

In court papers filed in the High Court last week, Mr Au said he should have received more than $33.7 million from the deal but was denied because of "a conspiracy... designed to deprive (him) of his shareholding and rights in Ku De Ta, a company that he founded and made successful".

He named a staggering 10 defendants in his writ of summons, including four former business partners and L Capital.

The Singapore permanent resident said in court papers that he held 35.5 per cent of Kudeta BVI - which owned the Ku De Ta Singapore nightclub - and that there was an agreement to buy out his interest for $33.7 million using funds from L Capital's acquisition.

But on Jan 29, 2014, a day before the acquisition, Mr Au said his former business partners got the Hong Kong court to freeze his assets without his knowledge.

The court order was served on him only a week later, said Mr Au, adding that he would not have proceeded with the acquisition had he known of the court order.

He said L Capital was aware of the court order to freeze his assets, but "intentionally and wilfully chose not (to) warn or inform" him.

As a result of the actions by his former business partners and L Capital, he said he "has not received a single cent that he is entitled to".

The rift between Mr Au and the club's new owners continued even after the club sale, the court papers showed. For example, he charged that he was wrongfully removed as a board director in July last year after he warned the board of mismanagement of the club. Examples included appointing a chief executive without relevant experience and failure to comply with "basic corporate governance requirements such as holding quarterly board meetings".

He also accused his four business partners of unlawfully conspiring to break into his laptop and hacking into his e-mail account to steal personal and business information.

The lawsuit is the latest twist in a high-profile saga that started in 2014.

Barely after Ku De Ta was taken over by LVMH, shareholders began waging a legal battle in Hong Kong over the distribution of proceeds.

Shareholders Komal Patel - also known as Karl Patel - and Harilaos Apostolides claim in Hong Kong court papers that they each hold 24.17 per cent of Kudeta BVI. They also claim that Mr Au owns the same amount, a figure that Mr Au is challenging.

The Hong Kong trial is set for later this year. But even before the trial, Mr Au already had two run-ins with Justice Kevin Zervos.

In November last year, Mr Au asked that the judge recuse himself because of professional links with Mr Apostolides' brother, but the judge declined.

In August 2014, the same judge said Mr Au had given false evidence in Singapore about his interest in Ku De Ta and it merited referral to the Attorney-General's Chambers (AGC) in Singapore.

But when contacted last week, an AGC spokesman said: "There appears to be no record of a referral from the Hong Kong High Court."


On Jan 30, 2014, French luxury group LVMH Moet Hennessy Louis Vuitton reportedly paid $100 million for a 51 per cent stake in the swish club on the 57th floor of Marina Bay Sands' SkyPark. The purchase was made through LVMH's investment arm L Capital.

In court papers filed in the High Court last week, Mr Chris Au said he should have received more than $33.7 million from the deal but was denied because of "a conspiracy... designed to deprive (him) of his shareholding and rights in Ku De Ta, a company that he founded and made successful".


TIMELINE OF THE SAGA

SEPTEMBER 2010

Ku De Ta Singapore opens at the SkyPark on the 57th storey of Marina Bay Sands. The club, which is a play on the phrase "coup d'etat", was named after a popular Bali beach club. Its $50 cover charge, including one drink, was the priciest in town.

DECEMBER 2010

The owners of the Bali Ku De Ta beach club sued the Singapore club for trademark violation, arguing that one of the partners did not have the right to license the name to the Singapore club.

NOVEMBER 2013

The High Court ruled that the Singapore club can keep its Ku De Ta name. The Bali club owners appealed.

JANUARY 2014

French luxury group LVMH Moet Hennessy Louis Vuitton reportedly paid $100 million for a 51 per cent stake in the Singapore club.

JANUARY 2014 TO NOVEMBER 2015

Multiple lawsuits in Hong Kong among the shareholders over the splitting of sales proceeds.

DECEMBER 2014

The Court of Appeal overturned the High Court decision and ruled that the Singapore licensor does not own the trademark. 2014 The club reportedly generated $43 million in revenues. MAY 2015 The Court of Appeal ruled that the local club cannot use the Ku De Ta name.

JUNE 2015

The club was renamed Ce La Vi.

MAY 2016

Mr Chris Au, co-founder of the club, sues his former business partners and the club's majority owner L Capital in Singapore.


Who's who in the lawsuit

PLAINTIFF

• Mr Chris Au, Hong Kong businessman who is a permanent resident in Singapore and co-founder of Ku De Ta

DEFENDANTS

• Mr Komal Patel, British national, one of the original shareholders of Ku De Ta

• Mr Jason Mark Cohen, Hong Kong resident, one of the original shareholders of Ku De Ta

• Mr Harilaos Apostolides, Australian national, a shareholder of Ku De Ta

• Mr Cheong Yew Kuan, Malaysia citizen, investor in Ku De Ta

• Rocky Cape International, a British Virgin Islands Registration company

• Essence Investments, a Marshall Islands Registration company

• L Capital KDT

• L Capital Asia

• Mr Shantanu Mukerji, managing director of L Capital Asia

• Mr Ravinder Singh Thakran, managing partner and chairman of L Capital Asia

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Man fined $40k for helping eye surgeon hide his earnings

Straits Times
17 May 2016
Elena Chong

Ex-clinic manager conspired with doctor - an ex-national swimmer - to misappropriate a total of $474k

A former manager of The Lasik Surgery Clinic (LSC), who helped an eye surgeon hide his earnings of almost $475,000, was fined a total of $40,000 yesterday.

Felix Huang Keming, 62, who faced 10 charges, pleaded guilty to conspiring with former national swimmer Marc Tay Tze-Hsin to misappropriate a total of $474,124 and two counts of instigating an LSC colleague to falsify accounts in 2005.

Consultant ophthalmologist Tay was supposed to pay the $474,124 to Pacific Healthcare Specialist Services (PHSS) but the money went into his pocket. He was at the time a consultant and director of PHSS.

To cover up the payments to Tay, Huang asked the LSC colleague to make false entries in LSC's chequebook register to show that cheques of between $2,520 and $79,000 were issued to US Imaging Consultancy, a fake entity.

Dr Tay, 55, who was suspended recently from practice for three months, was fined $30,000 in 2014 on three charges of misappropriating a total of $204,325, and another $2,000 for breaching the Companies Act. He had been allowed by PHSS to provide services through third-party healthcare service providers on condition that the work was done for and on behalf of PHSS and that all revenue generated belonged to, and would be paid to, PHSS.

Deputy Public Prosecutor Jiang Ke-Yue said that with the knowledge of PHSS, Dr Tay was invited and accepted Huang's invitation in 2005 to become a visiting consultant of LSC, where he eventually performed Lasik surgery.

Over time, there was an exponential increase in demand for Dr Tay's services at LSC, which led to a corresponding increase in revenue from Lasik surgeries he performed and from Dr Tay's appointment as LSC's principal eye surgeon.

Investigation showed that from December 2005 to December 2006, Huang made cash payments totalling $474,124 to Dr Tay on 11 occasions.

In mitigation, Huang's lawyer Abraham Vergis said his client did not profit from the acts.

He said Huang, who suffers from various health conditions, has been contributing significantly to charitable works.

"Through his home-grown company, Singapore Medical Group (SMG), he has provided much-needed help to the community through its corporate social responsibility schemes,'' he said. SMG is LSC's parent company.

DPP Jiang had submitted that Huang's total fine should be higher than Dr Tay's. Among the reasons were that both men had acted for mutual benefit in conspiring to dishonestly misappropriate money from PHSS.

While Dr Tay was the beneficiary of the money, Huang had acted to incentivise his top-performing surgeon. His overall culpability was enhanced by his additional offences of concealing the illicit payments via false entries in LSC's chequebook register.

Huang could have been jailed for up to two years and fined for abetment of dishonest misappropriation, and jailed up to seven years and fined for falsifying accounts.

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Judges keeping up with the times

Straits Times
09 May 2016
Ng Keng Gene

As the world becomes increasingly complex and the role of judges changes, they need to upgrade their skills to become more effective.

In the Singapore Judicial College's (SJC's) annual report last year, Chief Justice Sundaresh Menon said it "plays a critical role in ensuring that our judges receive relevant and robust continuing education".

Judicial Commissioners Chua Lee Ming and Kannan Ramesh told The Straits Times about the challenges that judges face today, and how the SJC helps them overcome them.

JC Chua said: "We need to be aware of the environment that we operate in because the law does not operate in a vacuum.

"As such, we have to stay in touch with developments outside the law to be more effective judges."

During the opening of the legal year in January, CJ Menon highlighted the need for a more judge-led process in which they proactively direct proceedings, especially in the area of medical litigation.

JC Ramesh said: "CJ Menon's call for active judicial participation in certain cases is a timely reminder that a calibrated approach designed for the needs of the case may be required to achieve the ends of justice."

But that does not change the core values and responsibilities of a judge. "Patience, sound temperament laced with good judgment and firmness remain necessary attributes."

JC Chua said a judge-led process will require stronger case management skills.

"The SJC will include in 2016 a focus on enhancing judicial case management skills, with talks on judge-led processes and effective engagement of litigants-in-person planned."

On handling difficult litigants, JC Ramesh said: "We have institutionalised case management conferences for such cases. This enables the court to review and analyse with the parties the issues in the matter and map the conduct of the trial...

"When litigants are less than cooperative or regarded as difficult, there must be greater vigilance to ensure that the litigant is not disenfranchised..."

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Proprietors of church face suit on alleged breach of $18.5m deal

Straits Times
23 May 2016
K.C. Vijayan & Melody Zaccheus

But pastor and other defendants claim they were 'misled and induced' into property deal

Proprietors of a church who allegedly failed to honour an $18.5 million deal to sell its Bedok premises and lease another site in Eunos are being taken to court for damages and breach of contract.

Legacy Strategies, the buyer of the building that houses Bethesda Community Church, has named the church's pastor Philip Tan and five others as defendants, in seeking to enforce the sale.

The church has also intervened in the case, claiming that the six defendants are not authorised to sell the premises, according to court documents filed.

A High Court pre-trial conference is due next week.

Legacy Strategies, an investment holding company owned by businessman Chaw Chong Foo, had inked the deal to buy the Bedok property in June 2014. The deal also required the sellers to obtain HDB's approval for the sale. It provided for Legacy to buy up the shares of the Newgate Learning Hub, the registered proprietor of the 99-year HDB lease on the property within which the church operates.

Legacy, through lawyers from Lee & Lee, further allege that the transfer of the sale shares was agreed by both parties to be completed by March last year but remains incomplete. They also allege that the defendants failed to seek HDB's clearance for the sale.

Contesting the claims, Pastor Tan and the other defendants, who are church trustees, claim that they were misled by Mr Chaw and induced into the deal. The defendants include Newglobe Venture, the corporate vehicle set up to manage the assets of the church.

They claim the deal was conditional upon the church leasing new premises at 115 Eunos Avenue, which is understood by The Straits Times to be used by three other church groups on the third and fouth levels of the building. The multi-storey complex at 115 Eunos Avenue is owned by Zhaolim Pte Ltd, which is owned by Mr Chaw.

In court documents filed by their lawyer Lawrence Chua, the defendants argue that they are not obliged to go through with the sale as it was conditional on them taking up the tenancy at 115 Eunos Avenue, which they have rescinded. They claim to be justified to rescind the tenancy pact based on the alleged misrepresentation by Mr Chaw. Such issues nullified the initial in-principle agreement by Pastor Tan, after consulting the rest of the church leaders in early 2014, for the sale of the Bedok premises to Mr Chaw, said the defence.

They also added in court documents filed that Mr Chaw had breached a collateral contract in assigning the third floor instead of the promised fourth floor of the building. They further said the terms of the contract were also unfair, which the plaintiff disputes.

The 200-strong church community has also weighed in on the case, with Rodyk & Davidson lawyers led by Senior Counsel Lok Vi Ming filing court papers on its behalf. Among other things, it argues that while Pastor Tan and the other defendants form the church executive committee, they do not have express powers under the church Constitution to sell the property.

It says the Bedok premises was bought with donations and governed by a charitable purpose trust, of which the church is the beneficiary.

It further claims that the $18.5 million sale price was a " substantial undervalue" and the sales pact is voidable at the church's behest.

The church wants the court to void the Newgate share sale.

It is understood that Bethesda leaders have informed church members of the ongoing court case.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Beware less competition in container shipping

Straits Times
17 May 2016
Chris Bryant

Industry becoming dominated by large players, with the top 10 already controlling almost two-thirds of capacity

Airlines long ago cottoned on to the fact that being part of an alliance could save them money and help them offer passengers a greater variety of routes.

Container-shipping companies have taken a little longer to figure this out - but are now copying the strategy wholeheartedly.

Until recently, there were four major container-liner alliances - but that industry structure is now rapidly shifting as dwindling freight rates - the result of the industry ordering too many ships - savage profits.

The latest love-in came last Friday when Germany's Hapag- Lloyd said it would form an alliance with five Asian carriers. AP Moeller Maersk and Mediterranean Shipping, the world's largest container-shipping companies by capacity, are already bosom buddies - their alliance is called the 2M partnership. The next two largest liners, CMA CGM and Cosco, are among a group that last month formed the Ocean Alliance. Like the airlines' code-sharing agreements, these vessel-sharing partnerships help to cut costs and better use spare capacity.

They allow companies to offer more frequent services - without buying more ships or adding new routes. They can instead share space on other alliance members' vessels.

But you need only to look at the profitability of Europe's legacy airline carriers to know that joining an alliance gets you only part of the way. United States airlines are far more profitable than their European peers. The reason? There are fewer of them. Following a wave of consolidation and bankruptcies, just four airlines control more than 80 per cent of US commercial airline traffic.

In contrast, Europe's airline industry is far more fragmented: Lufthansa, Air France-KLM, IAG, Ryanair and easyJet together have less than 50 per cent of the market.

Container-shipping companies are a proud bunch - national or family interests tended to preclude takeovers in the past. But that's started to change.

Cosco and CSCL have joined forces, Hamburg Sued bought CCNI's container-line activities last year, CMA CGM is buying Neptune Orient Lines, and Hapag-Lloyd is talking to United Arab Shipping about a merger.

A once-fragmented industry is becoming dominated by large players, with the top 10 already controlling almost two-thirds of capacity, compared with just over a third 15 years ago.

Fitch Ratings thinks more mergers and acquisitions are "inevitable" as looser alliances can't fully exploit opportunities to boost capacity utilisation and cut costs. Consolidation bodes well for an eventual recovery in industry profitability because smaller players may struggle to compete and bankruptcies would take capacity out of the market.

But less competition in shipping isn't good news for exporters who currently benefit from low freight rates.

Smaller countries may come to rue the wave of consolidation because they may be left with less choice about who transports their goods. Again, the experience of US airlines is instructive. Passengers there now have fewer airlines to choose from at their local airports, and fares have risen.

So while it's tempting to pity the container-shipping industry's current plight, that sympathy may not last forever. Competition regulators should be on alert.

•This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Judicial college draws judges from near and far

Straits Times
09 May 2016
Ng Keng Gene

In just over a year since its inception, the Singapore Judicial College (SJC) has drawn as much attention from abroad as it has locally.

Last year, 200 or so judges and judicial officers from Singapore attended SJC's programmes.

Meanwhile, more than 250 foreign judges and officials, from more than 40 countries, attended at least one of the college's courses.

The outreach to foreign judicial fraternities continued this year. In January and February, the SJC trained 75 judges from abroad, including Guangdong and Oman.

Established on Jan 5 last year, the SJC is the new star in Singapore's judicial landscape.

Its core mission is to provide continual professional training for judges and judicial officers of the Supreme Court, Family Justice Courts and State Courts.

The SJC comprises a local wing, an international wing and an empirical judicial research initiative.

It is the brainchild of Chief Justice Sundaresh Menon, who said at the opening of the legal year in 2015: "Our judges have been at the core of our legal development and they must continue to lead this effort in changing times.

"It is therefore imperative not only that the right people are appointed, but also that they are provided with ample opportunities for continuing education and development.

"When I took office a little over two years ago, one of my early aspirations was to institutionalise and pull together the various judicial education programmes that had been discretely developed."

On the international front, the SJC aims to engage judiciary partners from abroad, to share know-how and build bridges with them.

In March , the SJC signed a emorandum of understanding with the Thailand Judicial Training Institute. This is a first, allowing the Singaporean and Thai fraternities to advance judicial education between the two institutions.

Both sides have extended invitations to their respective judges to attend judicial training programmes scheduled for this year.

The SJC also made presentations to the members of the Omani and Solomon Islands judiciaries - in January this year and October last year respectively - on the implementation of eFiling in Singapore.

The invitations to make the presentations came after an Omani judge and the Chief Justice of the Solomon Islands, Sir Albert Palmer, attended a court technology workshop in Singapore in July last year and were impressed by it.

The SJC became a memberof the Israel-based International Organisation for Judicial Training and the International Consortium for Court Excellence in 2015.

It is now part of an international network, giving it a platform to share best practices, and extend training and development opportunities internationally.

Locally, more than 1,000 judicial training places were taken up cumulatively by judges and judicial officers in SJC's first year, making that an average of five programmes attended each.

The SJC surpasses any previous effort to prepare law professionals here for a judicial career.

One particular highlight of the SJC's achievements in its first year was the introduction of a four-day judiciary-wide induction programme for newly-appointed judicial commissioners and officers.

The firstsuch programme was held in October last year, over and above existing induction programmes held by the respective courts.

Judicial Commissioner Chua Lee Ming said the SJC has helped him to cope better with the changing role of judges, and take on new judicial responsibilities as well.

He said: "The SJC has been established to provide continuing judicial education to better equip our judges to respond to the evolving role of judges.

"SJC's programmes are comprehensive, and I am grateful for such holistic training."

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Nominee directors face difficult balancing act

Business Times
23 May 2016

He must safeguard interests of his appointer and yet still act in the best interests of the company

IT is a truism that a director is required to act in the company's best interests, but a shareholder need only look after his own.

For the nominee director, this raises a troubling conundrum. After all, he is appointed to the board by specific shareholder(s) - usually a parent company, a major shareholder, or joint venture or institutional investor - with the aim of safeguarding their interests. Yet, he must nevertheless ensure that he is acting in the best interests of the company, no different from any other director of the company.

Despite the potential conflict of interest, the law has long accepted the existence of the nominee director. The challenge lies in how a nominee director, his appointer and the company that he serves as director address these conflicts.

Nominee directors

Notwithstanding the nature of his appointment, a nominee director owes the company the same fiduciary duties as any other director. He must act in the collective interests of all the company's shareholders.

This does not mean he is not entitled to take into account his appointer's interests - indeed, he may do so as long as those interests do not conflict with the company's. When an actual conflict arises, he must, as a matter of law, prefer the interests of the company. If a situation arises in which there is a question about whether he can apply an independent mind to the issue at hand, he should abstain from making any decision about it.

Where a director represents the interests of the holding company on the board of a wholly owned subsidiary, there will normally be a considerable coincidence of interests. In fact, the constitution of the subsidiary may expressly allow the director to take into account the interests of the holding company, save in the situation where the subsidiary is insolvent or will become insolvent because of the director's acts.

The Companies Act goes further. It allows a nominee director to disclose the company's information to his appointer if he is authorised by the board to do so. However, he has to ensure that such disclosure is not likely to prejudice the company. The disclosure may be in respect of all or any class of information, or only such information as may be specified in the authorisation.

If the company is listed on the SGX, a nominee director has to consider whether any disclosure is in breach of the SGX Listing Rules which prohibit selective disclosure of "material information".

The extent to which a nominee director may "serve two masters", as it were, depends on the circumstances of each company or transaction.

For that reason, there are advantages to spelling out his mandate - to the extent that it is relevant to his role as a nominee director - in a written instrument and disclosing the terms of his appointment to the board. This would help to identify and define what the company and the nominee director regard as being in the best interests of the company.

A formal instrument will also provide guidance about the extent to which the nominee director may share the company's information with his appointer, and whether he is allowed to seek independent legal advice in carrying out his duties, particularly when there is an actual conflict of interests, and who bears the legal costs of that advice.

In view of the invidious position that a nominee director may face, a nominee director may consider asking the appointer to provide additional directors and officers liability insurance coverage for him.

Companies with nominee directors

A company that has nominee directors should have a policy that articulates its expectations with regard to their conduct.

Matters that should be addressed include the scope and extent of the company's information that may be disclosed by the nominee director to his appointer, requiring the disclosure of any potential conflict of interests between the company and the appointer, and the procedures to be taken when an actual conflict of interests arises.

Appointers

Appointers should also be clear on the arrangements for how it wishes the nominee director to function and their own risk of exerting too much control over such a director.

The Companies Act imposes directors' duties and responsibilities on a de facto director, namely a person who is not formally appointed as a director, but, in fact, acts as a director by exercising the same powers of, and discharging the same functions as, a director.

An appointer who exercises too much control over a nominee director may be imputed with the status of a director himself if a majority of the directors are found to be accustomed to act in accordance with his instructions or directions.

In summary, the uncertainties and tensions surrounding the issue of when a nominee director can duly advance the interests of his appointer without being seen to be undermining the interests of the company may be avoided by establishing certain guiding principles as to the conduct of the nominee director at the time of his appointment.

At the same time, the nominee director should also disclose the mandate between him and his appointer. Such best practices will help all parties to be cognizant of their respective expectations.

The writer is a member of the Governing Council of the Singapore Institute of Directors.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Spring to be 'administering agency' against errant retailers

Business Times
16 May 2016
Lynette Khoo

THE Ministry of Trade and Industry (MTI) has proposed two key amendments to the Consumer Protection (Fair Trading) Act (CPFTA) to ensure greater protection for consumers and strengthen measures against errant retailers that persist in unfair trading practices.

One of the proposed amendments is to appoint Spring Singapore as an administering agency with investigation and enforcement powers to gather evidence, file timely injunction applications and ensure that errant retailers comply with the injunction orders.

Secondly, the courts may impose additional measures on errant retailers as part of injunction orders. These may include the requirement to publicise that they are under injunction and notify consumers prior to any transactions, as well as to inform the administering agency of changes to their entity and/or employment status.

"Taken together, the proposed measures will allow for tougher action to be taken against errant retailers and ensure that Singapore remains an attractive shopping destination for locals and tourists," MTI said in a statement on Sunday.

"The proposed amendments are targeted at the small number of persistent errant retailers who will be subjected to the strengthened measures that may be taken against them."

A review on the existing framework commenced last year amid growing calls from the industry and public for stronger action to be taken against persistent errant retailers.

The unfair practices of some retailers came to the fore when a Vietnamese tourist was captured on social media going on his knees and pleading for a refund late last year in Sim Lim Square, after he was conned into paying an exorbitant sum for an iPhone.

MTI said that it has looked into the legislation in Australia and Hong Kong, which have similar business environments. It also consulted key industry stakeholders such as the Consumer Association of Singapore (Case), the Singapore Retailers Association (SRA), Sim Lim Square Management Committee (SLSMC) as well as individual retailers. Interested parties can provide their views and comments on the proposals by June 15.

"Case, SRA and SLSMC were supportive of the proposed amendments," MTI said. "They will also work closely with Spring, as the appointed administering agency, to deal with errant retailers."

The CPFTA was introduced in March 2004 and provides for civil actions to be taken against errant retailers. The current framework encompasses a spectrum of measures to deal with errant retailers. While Case and the Singapore Tourism Board (STB) can file injunction applications with the courts against errant retailers, they have no investigation and enforcement powers.

Under the proposed changes, Case and STB will remain the first points of contact for consumers and tourists, and assist them to obtain redress or compensation through negotiation, mediation or voluntary compliance agreements (VCA). Retailers who persist in unfair practices will be referred to Spring for further investigations.

As the administering agency, Spring would have the power to enter premises under and without warrant, require the production of documents and seize goods. It may take errant retailers who do not comply with injunction orders to court for contempt of court, which is considered a criminal offence and punishable by imprisonment and/or a fine.

Egregious cases involving criminal offences such as cheating will continue to be handled by the police.

Hailing the proposals, Case president Lim Biow Chuan recalled how the association's "hands were tied two years ago" when it could not take further action against the errant retailers in Sim Lim Square.

There was also a "repetitive cat and mouse game" between Case and errant retailers which, having been sued, closed down their shops and set up another company under a different name, he said. The owners of the new company then repeated the same unfair practices until Case asked them to sign a new VCA or took an injunction against them.

"Case, STB and Spring will work together to ensure that businesses engaging in unfair practices will be dealt with according to law, and that consumers will be able to obtain fair recourse," Mr Lim said. "We will review the proposed amendments to the CPFTA during the public consultation and push for better protection for consumers."

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Developers should be made liable for negligence by subcontractors: Voices

TODAY
09 May 2016

In a recent case brought by The Sea View condominium’s managing body against the property’s developer Wheelock Properties, its architect and its main contractor, the court ruled that the three defendants can claim they were not liable for the negligence of the independent contractors they engaged.

This means the damages claimable could be limited.

This is a legal loophole that should be closed. When disputes over defects arise, the developer should not be allowed to shirk its responsibility. It makes no sense for buyers to go after the subcontractors themselves, as it is a complex and expensive process. Buyers do not sign contracts with a developer’s subcontractors. They sign contracts with the developer, and the developer should be held responsible and go after their subcontractors themselves.

This is something Parliament should examine, and enact any necessary changes to protect buyers while raising the standards in our building and construction industry.

Patrick Tan Choon Hong

Copyright 2016 MediaCorp Pte Ltd | All Rights Reserved

Impact on shareholders when firms are in financial distress

Straits Times
23 May 2016

Most issuers listed on the Singapore Exchange are Singapore-incorporated limited companies, though a number are incorporated in other jurisdictions. An investor who subscribes to shares in an IPO or buys shares on the Singapore stock market would become a part owner of a limited company listed on the SGX.

Shareholders are generally aware of the risks and rewards of share investing. What may be less well-understood is the impact on shareholders when a listed company is in financial distress.

SHAREHOLDERS ENJOY RIGHTS

Shareholders have a bundle of rights, which usually includes the power to vote on major issues concerning the company.

When companies grow, shareholders may enjoy benefits such as dividends, bonus shares and/or capital gains from the rise in the prices of their shares.

Shareholders are not personally responsible for the debts of the company due to the limited liability structure of limited companies. Nevertheless, shareholders should be aware that their rights will rank behind the rights of creditors, such as the company's employees who are owed wages, holders of the company's bonds, lenders to the company and its trade creditors.

This awareness is important when a company is in financial distress, which could mean that the company is, or is threatening to be, insolvent. Insolvency is a situation where the company is unable to pay its creditors when debts are due, or where it has more liabilities than assets.

Options for financially distressed companies When a company is in financial distress, a free-for-all scramble for the firm's assets among creditors may result. Many jurisdictions have legal frameworks in place to address this to ensure that claims on the company are settled in a fair and orderly manner, and for the company's finances to be restructured, if possible, such that it may recover.

How the claims settlement and financial restructuring are carried out depends on the place of incorporation of the company. For example, a company established in Bermuda would be subject to processes under Bermudian law.

Nevertheless, the underlying key principles of the processes in most jurisdictions will largely be similar. This column focuses on the Singapore regime, which is relevant to most issuers listed on the SGX.

The Singapore regime provides for several routes that a company may take to try to revive its fortunes, restructure its finances, or to otherwise find a solution that best serves its creditors and shareholders. These include:

PRIVATE ARRANGEMENT

A company could privately agree with its creditors to ease its finances. This could be by restructuring the debts that the company owes into manageable parts or by extending payment deadlines, for example.

If a private arrangement is successful and the company continues operating as a business, shareholder rights are unlikely to change.

SCHEME OF ARRANGEMENT

A scheme of arrangement is a court-approved restructuring of the debts owed by the company to its creditors.

Although similar to the private arrangement, it avoids the difficulty of obtaining every creditor's agreement. If a simple majority (and 75 per cent in value) of creditors agree and the court approves, the scheme is binding on the company and all of its creditors.

The company would retain its existing management and can continue its business. By allowing the company to continue operating, creditors may get a better return on their claims as opposed to immediately closing down the company.

JUDICIAL MANAGEMENT

Judicial management is another court-supervised process that seeks to rehabilitate potentially viable companies.

The court can order the process if certain criteria are satisfied:

• The company must be unable to pay its debts and a simple majority (and 50 per cent in value) of creditors must agree to the process.

• The process has to be likely to achieve the company's revival, or a compromise with its creditors, or to better realise the company's assets than in a winding-up.

A court-appointed official (called the judicial manager) would take over the duties of the directors. All claims against the company would be frozen once an application for judicial management is filed with the courts. This allows the judicial manager breathing room to revamp the company's affairs without the risk of assets being depleted.

WINDING UP

If attempts to rescue the company fail, the company might look towards cutting its losses and closing down as a final resort. Winding up (or liquidation) is the process by which a company seeks to realise its assets and pay its creditors and, if possible, shareholders. At the end of this process is the closure of the company, also called dissolution.

There are several ways that a company can be wound up:

•If the company is still solvent, shareholders could seek to do so by a special resolution. A declaration of solvency must be filed by the company's board. A provisional liquidator will be appointed by the board to ensure that no creditor benefits unfairly in the interim. A liquidator would subsequently be appointed by a shareholders' ordinary resolution.

•If the company is insolvent, the creditors can voluntarily wind up the company through a creditors' meeting. In such a case, the liquidator may be appointed by the creditors instead.

•A creditor can also petition a court to compulsorily wind up the company in certain circumstances, the most common of which being the company's insolvency. The liquidator is then appointed by the court.

The liquidator takes over the functions of the company's board and seeks to close out the company's affairs and distribute its assets in a fair and efficient manner. Claims over the company's assets are frozen during this period to prevent a depletion of the assets. If the company has any residual assets after paying creditors, they would be distributed among the shareholders.

Impact of financial restructuring processes on shareholders' rights

TRADING HALT, SUSPENSION AND DELISTING

In the midst of any of these financial restructuring processes:

•The company could voluntarily request for trading to be halted or suspended for a longer period of time to afford it time to put its finances in order. If any of the financial restructuring processes successfully resuscitates the company, the business would continue as usual. Share trading can resume if the company shows that it can function as a going concern.

•The SGX could also suspend trading of the company. This could be where the company is, among other things, in significant debt or being placed under judicial management, or where the SGX deems appropriate. Share trading can resume only if the company demonstrates that it can again function as a going concern.

There is also a risk of the company delisting. The likelihood of delisting varies, depending on the company's financial state. For instance, if the company is implementing a scheme of arrangement, a trading halt or longer suspension may suffice to allow it some time to settle matters and disclose material information. On the other hand, if the company is being wound up, delisting (whether at the liquidators' request or by the SGX) is likely inevitable.

The possibility of a trading halt, suspension or delisting applies to companies in financial difficulty, regardless of whether they are incorporated in Singapore or abroad. This is because these are processes governed by the Listing Rules which apply to all SGX-listed companies, and do not fall under Singapore's insolvency regime.

WHAT SHAREHOLDERS SHOULD EXPECT

It is possible that a company may not recover even after restructuring. In such cases, shareholders' expectations would have to be tempered. Shareholders should expect the following:

•When a company is insolvent, creditors' claims rank ahead of those of shareholders. The company's assets are, therefore, first given to its creditors. A shareholder is entitled to his pro-rated share of the remainder only after all creditors have been paid. If the assets are insufficient to satisfy all creditors, shareholders may lose the money they paid for their shares.

•The company may be delisted. Although a listed company is required to make an exit offer to shareholders before delisting, this may not be possible if the company does not have enough assets to satisfy its creditors. The SGX will only allow a delisting without an exit offer in such a scenario.

•Dividends are unlikely to be declared as the company may not have any profits. Further, the shareholder's right to appoint management may in some cases be overridden by a court-appointed official.

Conclusion The limited company structure limits shareholders' liability so that shareholders are not personally responsible for the company's debts. However, in return for this and other benefits, shareholders face the risk that their investment may be lost if the company becomes insolvent.

Shareholders must be aware of such risks when they hold shares in companies that show signs of financial distress. They must be aware of the possible outcomes for the company when making decisions on their investment, including the worst-case scenario where the company has insufficient assets to satisfy its creditors, therefore leading to a delisting without an exit offer.

Tan Boon Gin

Chief regulatory officer

Singapore Exchange

•This is an edited version of the Regulator's Column on the Singapore Exchange website.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Non-payment by firm in govt project raises issue of responsibility

TODAY
16 May 2016
Neo Chai Chin

Questions on corporate responsibility and the low financial requirements of enterprises undertaking government research projects here have been raised in the wake of news that a clean-energy firm has left its sub-contractors high and dry for an uncompleted project at a PUB water reclamation plant here.

Business and corporate governance experts have questioned the conduct of Anaergia, the multi-national firm whose former affiliate, Anaergia Pte Ltd, has not paid more than S$1.2 million to sub-contractors for a project to use food waste to generate more electricity.

The project involved building a co-digestion plant at PUB’s Ulu Pandan water reclamation plant, where food waste would be added to used water sludge to generate more energy for the plant’s needs. It was to have been completed last September but is now expected to be completed by the end of the year. TODAY reported on May 3 that PUB had paid Anaergia Pte Ltd S$3.3 million for about 60 per cent of work done, but Anaergia Pte Ltd’s sub-contractors — Structura Construction and Brilliant Engineering — have been paid only about S$638,000.

While it owed sub-contractors money, Anaergia Pte Ltd was sold last December and no longer has anything to do with Anaergia.

National water agency PUB said this is the first time in 500 research and development projects undertaken since 2002 that a case of non-payment by its contractor to sub-contractors has happened (not all research projects involve sub-contractors).

While minimum paid-up capital of up to millions of dollars applies to contractors of government construction projects, there is no minimum paid-up capital requirement set by the Economic Development Board (EDB) and PUB for research projects, which are to demonstrate effectiveness of a technology and are generally short-term and lower in dollar-value.

This is to “avoid disadvantaging small firms with promising new technologies”, said an EDB spokesperson. PUB said its research projects are mostly less than S$1 million, although demonstration projects like the co-digestion plant could be worth more.

When evaluating proposals, the EDB also looks at the overall financial capacity of a company — including its parent — to complete a project, the spokesperson added.

Ethics and corporate responsibility

Corporate governance expert Lan Luh Luh of the National University of Singapore (NUS) felt Anaergia Pte Ltd’s paid-up capital of S$100 was “too low” for a multi-million dollar grant. There should be a good balance between nurturing tech start-ups on one hand and, on the other, having a sufficient level of financial commitment by the entrepreneurs — getting their skin in the game — and the need for good accountability, as taxpayers’ money is used to fund these projects, she said.

Director of environmental sustainability consultancy Green Future Solutions, Mr Eugene Tay, however, agreed with PUB’s lower financial requirements for tech providers, so as to allow start-ups with limited capital to commercialise their new technology through test-bedding opportunities such as PUB’s. “The Anaergia case is an unfortunate and isolated one, where a rogue company failed to pay its sub-contractors and should not affect the trust in other start-ups,” said Mr Tay. “Nevertheless, PUB can assess its payment process and consider reimbursement of the technology provider only after payment receipts for work done by sub-contractors or equipment bought are verified.”

The EDB said “economic deliverables” are imposed on grant recipients to safeguard public interest. The government can hold back disbursements and require funds to be returned, where necessary, if a recipient fails to fulfil its commitments. Grants are also given on a reimbursement basis, based on actual expenditure, a spokesperson said.

This was not foolproof in the case with Anaergia Pte Ltd.

Brilliant Engineering project director Philip Sheng said his company was told by Anaergia Pte Ltd to issue an invoice of about S$223,000 last year so that Anaergia Pte Ltd could then claim the amount from the PUB. But it never paid Brilliant for the invoice issued, said Mr Sheng.

Besides minimum paid-up capital, government agencies can impose a condition to prevent the original owners who bid for the research grant from disposing their shares to a third party within a certain time frame, suggested Associate Professor Lan. This is to ensure time or cost commitment by the entrepreneur on the project.

According to PUB — which is in talks with another Anaergia subsidiary, Anaergia Singapore Pte Ltd, to complete the co-digestion plant — there was no clause in its contract with Anaergia Pte Ltd to prevent selling of shares or change of ownership of Anaergia Pte Ltd before the plant’s completion.

Asked about opening the project to other companies with co-digestion expertise, PUB said the plant is built to the blueprint of Anaergia’s technology and the multinational has resolved to dedicate Anaergia Singapore Pte Ltd to complete the project.

Strategic management expert Tan Wee Liang of the Singapore Management University said that in general, the underlying motivation behind any processes or procedures is the management of risk. At times, research sponsors might wish to be involved in the appointment of sub-contractors or third parties to the project. Sponsors might also have oversight mechanisms such as forming a committee with the researcher to approve phases and payments for steps in the project, said Assoc Prof Tan.

To NUS corporate governance expert Mak Yuen Teen, however, the Anaergia episode is an issue of ethics and corporate responsibility, and not of tech providers, research and innovation. “I found it odd that (Anaergia) would incorporate S$100 subsidiary here, sell it off without either making sure that the subsidiary’s debts are settled or that the buyer would settle the debt, incorporate another company with almost the same name, and then continue the project with PUB,” he said. “What is there to guarantee that this will not be repeated with Anaergia Singapore Pte Ltd? This is not what a responsible multinational company would do.”

Assoc Prof Mak felt Anaergia had a moral responsibility to the sub-contractors of Anaergia Pte Ltd. “The sub-contractors may have done business with Anaergia Pte Ltd on account of its parentage and the fact that it has the support of PUB ... (Anaergia) washing its hands of the obligations of its S$100 paid-up capital subsidiary raises great doubt in my mind about the company.”

TODAY previously reported Anaergia Singapore Pte Ltd managing director Luca Belli maintaining that Brilliant’s and Structura’s contracts are with Anaergia Pte Ltd, which was “sold back in December 2015 to a third party which bears no relation to the Anaergia group of companies”.

Asked about non-payment for work done by the sub-contractors prior to December, Mr Belli had said to contact Anaergia Pte Ltd. According to latest Accounting and Corporate Regulatory Authority records, Anaergia Pte Ltd was renamed APL Bioengg Pte Ltd on May 5 and has changed directors twice since being sold.

Copyright 2016 MediaCorp Pte Ltd | All Rights Reserved 

Firm fails to lift stay on $8m suit against its trader

Straits Times
07 May 2016
Aaron Low

An appeal to lift the postponement of an $8 million lawsuit brought by a stockbroking firm against one of its remisiers was struck out by Singapore's apex court last month.

Maybank Kim Eng had sought to claim back losses suffered by a client, Ms Wendy Lim Keng Yong, and her husband William Lye Hoi Fong, who was also her trading representative working in Maybank Kim Eng.

Ms Lim made a series of transactions using a financial instrument called contracts for difference (CFDs) to buy 216,600 Apple shares and 105,000 Baidu shares last July.

CFDs allow investors to make a punt on the price movement on the underlying security without actually owning the stock or shares.

Last August, the stock market started to fall and the values of the stocks dropped on Aug 24 - led by a crash on the Chinese stock markets.

Maybank Kim Eng closed the CFD trades, resulting in losses that amounted to more than US$10 million (S$13.6 million).

Both Ms Lim and her husband alleged that the closing of the trades was not authorised by them, but Maybank Kim Eng said it had acted on their orders.

Maybank Kim Eng then proceeded to sue both of them for losses incurred, in a suit worth $8 million.

But the suit against both individuals did not proceed when the High Court ruled that the case against Ms Lim would have to undergo arbitration instead, as the contract she had signed with the firm had an arbitration clause.

The High Court also postponed Maybank Kim Eng's legal proceedings against her husband, pending the results of the arbitration between Ms Lim and the firm.

Maybank Kim Eng then moved to appeal against this decision, arguing that it should be allowed to pursue legal action against Mr Lye independently of the case against Ms Lim. The firm also argued that the earlier decision by the High Court prejudices its case against Mr Lye by depriving it of a summary judgment against him.

But Justice Steven Chong dismissed the appeal with costs of $10,000, noting that a stay on the suit against Mr Lye would not "unduly prejudice" Maybank Kim Eng since it was only temporary.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Maybank Kim Eng Securities Pte Ltd  v Lim Keng Yong and another [2016] SGHC 68

Can Singapore make room and rules for Airbnb and other home-sharing offerings?

Straits Times
22 May 2016
Janice Heng & Yeo Sam Jo

As URA continues to study issue, residents and hospitality players remain divided

From stylish apartments to cheerful single rooms, tourists in search of alternative lodgings in Singapore are spoilt for choice.

The website of Airbnb, a leading player in the home-sharing market here, has options such as a Kallang shophouse for $249 a night, a Tiong Bahru flat for $114 or a room in East Coast with queen-sized bed and balcony for a mere $48.

According to Airbnb, there are about 6,000 properties listed on its website here.

Other home-sharing websites have set up here as well, such as PandaBed and Roomorama.

Yet, it is currently illegal for private and public home-owners to lease their properties for less than six months.

While a few home-sharing site listings are for long-term options, most are for short stays, which means they are breaking the law.

The authorities are still trying to decide if rules should be relaxed for private properties.

From January to April last year, the Urban Redevelopment Authority (URA) held a public consultation to assess if this short-term rental policy for private properties needed to be reviewed.

But last Wednesday, more than a year on, the URA said it needs more time to consider the issue.

In the meantime, enforcement action will still be taken, it added.

Under current rules, private home-owners who lease their units for less than six months can be fined up to $200,000 and jailed for up to a year.

RESIDENTS' WORRIES

For Housing Board flats, there is no plan to review the short-term stay rules, which aim "to pre-empt high turnover of occupants, which could affect the living environment for HDB residents", said the HDB.

Such disruption is also why some private property residents object to short-term rentals. "Some Airbnb users throw their cigarette butts and cause a lot of inconvenience," said housewife Ruth Tiang, 50.

Residents are also worried about safety in general.

When dental assistant Rodelita C. Leng's family members travel, they use Airbnb. Yet, the 38-year-old resident of Vacanza@East in Kembangan would not like the same to happen here.

"If my neighbours register their units under AirBnb, anyone can just go in and out. This is not safe and secure for my two young children," she said.

Those who list their condominium properties on home-sharing sites often offer the use of facilities such as gyms.

Businessman Kenny Tan, 40, said guests are sometimes not as careful as residents.

He said: "We pay a premium for the security and the facilities. The treatment of common facilities by transient tourists will inevitably be worse than the owners'."

In 2013, 2014 and 2015, the URA received 231, 375 and 377 complaints on short-term stays respectively. From January to April this year, there were 161 complaints.

OPEN TO THE IDEA

However, residents at condominiums such as the Soleil @ Sinaran in Novena and Vogx in Dorset Road - both of which have units listed on Airbnb - said they had not noticed disturbances. Others are more open to the idea of home-sharing, especially if the authorities regulate it.

Said 25-year-old housewife Meggie Liu, who lives at Casa Merah condominium in Tanah Merah: "I will support URA legalising it as I feel that owners have the right to make their own choices about their property."

Rules can be included to ensure that landlords take steps to screen their guests, she added.

Mr Yeo Tong Wei, 21, who is waiting to start university, said that welcoming Airbnb will help Singapore be a more immersive cultural hub.

"I think it's a very organic way of learning about the city and its inhabitants, as compared with hotels," he said.

MAINTAINING MARKET STANDARDS

The hospitality industry is another stakeholder whose views have been sought by URA.

The Singapore Hotel Association (SHA), for one, supports the status quo. Private home-owners could become competition for both hotels and serviced apartments, said SHA executive director Margaret Heng.

"Equally critical to the tourism industry in Singapore is how do we ensure safety, security and hygiene standards in private outfits" which are unregulated, she added.

This need to uphold tourism standards was echoed by hotels.

Said Royal Plaza on Scotts general manager Patrick Fiat: "Home-shares are inconsistent in service delivery and cleanliness standards, which will have an impact on the image of Singapore as a travel destination in the long run."

Said Regent Singapore director of marketing Jeff Crowe: "All of us benefit directly or indirectly from Singapore's reputation as a safe destination... Hopefully, (any) upcoming legislation will ensure new entrants are held to the same high standards required of the established hospitality operators."

Still, both high-end hotels and backpacker hostels told The Sunday Times they were not overly worried about direct competition.

"It's a different market that we cater to, where our guests are looking for luxury, as well as unique and special experiences," said a spokesman for Hotel Fort Canning, which offers packages such as a buggy tour in Fort Canning Park.

Shophouse The Social Hostel co-founder Mustaffa Kamal has even turned Airbnb to his advantage, listing some of his rooms there. "There's no point in fighting, so I leverage on it."

TO LEGALISE OR NOT

Ang Mo Kio GRC MP Darryl David compared the rise of home-sharing sites with other "disruptive innovations" such as private-hire services UberX and GrabCar, which have given commuters more transport choices.

Last month, the Land Transport Authority announced it will introduce regulations for these services. These include requiring drivers to apply for a licence.

Mr David, who is in the Government Parliamentary Committee (GPC) for National Development, said home-sharing could also have potential benefits for both tourism and home-owners, but it needs more study.

"Because these are disruptive technologies, we are forced to sit down and see how to incorporate them into our system," he said. "To ban them or to ignore them is not necessarily the best solution.

"You don't want to have this go underground."

GPC for National Development deputy chairman Chong Kee Hiong said that if short-term rentals are allowed down the road, then they should be subject to rules "that ensure equity among all stakeholders". The rules should also address safety and privacy concerns.

What about the fact that home-sharing sites still operate despite the current legal issues?

"My view is that it is not correct to say that since these sites are likely to continue, we should legalise it. This is putting the cart before the horse," replied Mr Chong, who is an MP for Bishan-Toa Payoh GRC.

If the rules against short-term rentals remain, then the authorities should further step up enforcement so owners are aware of the consequences, he added.

• Additional reporting by Clement Yong, Jessie Lim, Aleysa John, Delphine Kao, Timothy Goh


NO TO AIRBNB

If my neighbours register their units under AirBnb, anyone can just go in and out. This is not safe and secure for my two young children.

DENTAL ASSISTANT RODELITA C. LENG, a resident of Vacanza@East who uses Airbnb when she travels with her family but would not like the same to happen here.

YES TO AIRBNB

I will support URA legalising it as I feel that owners have the right to make their own choices about their property.

HOUSEWIFE MEGGIE LIU, resident of Casa Merah condominiun in Tanah Merah.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

How internal auditors can be more effective

Business Times
16 May 2016
Ho Yew Kee

INCREASINGLY, audit committees (ACs) are facing heavier responsibilities as they manage conflicting expectations from shareholders, regulators, and a myriad of stakeholders.

In this demanding context, the AC cannot perform optimally without the support of an effective internal audit function. This was the clear feedback from a majority of AC chairmen of large and small listed companies in a recent study by the National University of Singapore (NUS) and the Institute of Singapore Chartered Accountants (ISCA).

The same respondents also felt that the effectiveness of their companies' internal auditors (IAs) could be improved. Three areas stand out in their views of how this can be achieved: the use of risk-based audits; the judicious use of outsourcing; and ensuring IA independence.

Risk-based auditing is a style of auditing which focuses on the analysis and

management of risks. While the traditional internal audit focuses on documenting the presence and compliance of the relevant internal controls, the risk-based internal audit seeks to identify critical issues with the greatest potential impact on a company. For example, strategic risk analysis may include political, business and social risks such as the potential effect of legislation, and technological and demographic change.

By adding risk considerations to the more traditional compliance audit, ACs are provided with another layer of critical information which may enable them to gain deeper insights that result in more effective decision making. This allows for decisions to be made in recognised high-risk areas and even in complex factual scenarios, and better utilisation of the limited resources available.

Different views

The traditional compliance-based or "box-ticking" internal audit is just not good enough today. Risk-based audits change the way internal auditors think and talk about risk and its impact on the company. It ensures the proper allocation of resources to areas of greater risk. It closes the loop between providing control assurances in business operations to risk assessment in planning for business strategy.

The AC chairmen of small listed companies (market capitalisation of up to S$500 million) and large ones differ in their views of the ideal outsourcing arrangement.

For small listed companies, the AC chairmen preferred the IA to be outsourced.

The concerns that they cited include inadequate manpower for the IA unit, the lack of career progression and succession planning, the reporting line and, in some cases, the independence of the IA.

However, in-house IAs possess more firm-specific knowledge, and their longer tenure can ensure institutional weaknesses are duly fixed. Notably, research documents show in- house IAs are more effective in preventing and discovering fraudulent practices.

While AC chairmen of the large listed companies tend to rely on in- house IAs due to greater control and perceived greater cost-effectiveness, many support some level of outsourcing to obtain specialty skills, fill up peak period requirements, and deal with tasks which require absolute independence.

Outsourced IAs are also perceived as more competent by finance directors. This leads to greater reliance by the AC on the work done by outsourced expertise.

Perhaps the single most important and challenging view AC chairmen shared and documented in empirical studies is the independence of the IA.

The Singapore Code of Corporate Governance specifies that the IA's "primary line of reporting should be to the AC chairman although the IA would also report administratively to the CEO". The SID-SGX Singapore Board of Directors Survey 2015 found that this happened only for 81 per cent of the respondent companies, and in some cases, the IA even reported to the CFO. Further, only 54 per cent of the respondents indicated that the AC or AC chairman decides on the IA's compensation.

For larger listed companies with an in-house IA, the AC chairmen were concerned about the IA's reporting line as its independence may be significantly influenced by management. Some AC chairmen argued for the IA to be protected so the he can properly discharge his varied roles and responsibilities.

Independence

Significantly, both large and small listed company AC chairmen believe that a major argument for outsourcing IA is to ensure IA independence. Research findings point to how outsourced IAs have fewer economic ties with the company, and are often perceived as more objective than an in-house IA.

In its best form, the AC can count on the IA as its most reliable and powerful ally. Strategically, it functions as the key "third line of defence", since its functional reporting is at the AC's full disposal.

Achieving a happy and effective unity of purpose with the IA is a working challenge, but both the AC and management cannot deny that a good internal audit foundation will only advance the shared interests of all parties in problem solving and astute counsel. In this particular role, the internal audit function generates its highest value for the company, the board and management.

The writer is a member of the directorship report committee of the Singapore Institute of Directors.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction. 

More Aussie degrees and qualifications to be recognised

Straits Times
07 May 2016
Amelia Teng

Singapore has agreed to recognise postgraduate medical degrees from the University of Queensland and the Australian National University.

This is in addition to recognising 15 more allied health qualifications in occupational therapy, physiotherapy and speech therapy from a number of Australian universities.

The Republic will also recognise the Juris Doctor (JD) degrees awarded by 10 Australian universities, including the universities of Western Australia and Sydney, whose law degrees are already approved. There were an estimated 10 to 20 Singaporeans pursuing JD degrees in those universities last year, according to the Ministry of Law.

Under a new agreement - announced by the Ministry of Foreign Affairs in a statement yesterday - to strengthen the ties between the two countries, Australia will reciprocate. It will recognise the law and JD degrees of Singapore universities, subject to applicable conditions in the Singapore-Australia Free Trade Agreement. The JD programme is a postgraduate course for students who have a bachelor's degree in another discipline.

The agreement, which will allow both countries to cooperate more closely in other areas such as security and trade, also includes a pilot programme that aims to give 100 Singaporeans studying in Australia more opportunities to work with leading Australian companies.

A new "Work and Holiday Maker Programme" will allow up to 500 young people on each side to work and study for up to 12 months.

The initiative is meant to promote cultural exchange by allowing young people to experience each other's country and take on short-term work to fund their stay.

Ms Christabel Tan, 22, a childcare teacher, said of the scheme: "It's important to see the world, be exposed to what other people are like and also grow connections."

Nanyang Technological University business student Jesmine Tan, 23, who went on a six-week volunteer trip to Brazil last year, said: "I helped out with marketing for an NGO and worked and lived like a local... It broke stereotypes I had of the country. I think it will be quite a cost-effective way to travel while gaining some work experience."

Dr K. Thomas Abraham, chief executive of Sata CommHealth, said that Singapore's recognition of more overseas allied health qualifications will address the acute shortage of staff in the field.

"We really need to recruit more allied health professionals, especially as Singapore is expanding its healthcare sector."

Both countries will also deepen cooperation among their universities that have overseas campuses.

In addition, based on its prevailing policy, Singapore will allow Queensland-based James Cook University to refer to its Singapore campus as "the Singapore Campus of James Cook University" by July.

Ms Belinda Robinson, chief executive of Universities Australia, which represents the university sector there, welcomed the growth in the number of Australian qualifications recognised by Singapore.

"We look forward to continuing to expand this list, in recognition of the depth and breadth of excellence in all Australia's universities."

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Change law on alimony to reflect role of the new-age woman: Forum

Straits Times
22 May 2016

It is clear women are no longer always the victim in a broken marriage ("Having an affair: Who's to blame"; last Sunday).

Marriage is supposed to be an equal partnership between a man and woman joined in union.

However, the law has made it lopsided. Under the current law, women are allowed to get alimony, even if they are the unfaithful party and the men are the victims.

This makes it even more paramount for the Women's Charter to be changed to take the new-age woman into consideration.

The minor amendments to the Women's Charter are not enough to bring equality to a marriage.

It should be changed so that men need not pay alimony if the woman is the one who causes the marriage to break apart.

In fact, in a short marriage, without children, the couple should be allowed to divorce without alimony.

Soh Kar Chiang

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Adultery: It's not just the men

Straits Times
15 May 2016
Theresa Tan

A noticeable number of marriages in Singapore break down because of an unfaithful spouse: the wife.

Twenty veteran family lawyers and private investigators told The Sunday Times that out of every 10 cases they handle in which a spouse cheats, about half are because the wife strayed from the marriage.

A decade ago, only two to three out of the 10 unfaithful parties were the wives. And 20 or 30 years ago, an adulterous wife being cited in divorce proceedings was quite unheard of, they added.

Lawyer and former Member of Parliament Ellen Lee said that back then, divorce was not an easy option as women were financially dependent on their husbands.

Divorce was also less socially accepted. "If a woman committed adultery in the past, she would have been condemned and ostracised by society for breaking up her family and bringing shame to them. The condemnation is not as strong now," she said.

There also appeared to be acceptance of men having a mistress and that this was something wives had to tolerate, she added.

But that has been changing, with more women becoming financially independent, educated, assertive and vocal, said lawyers, private investigators and counsellors.

Counsellor Jonathan Siew said: "In the past, women were expected to sacrifice for their families. But now, there is a greater sense of individualism. Women are less afraid and more willing to pursue their own needs, compared with their mothers' generation."

There are also opportunities to fall for another man at work or through social media, lawyers said of the cases they handled.

And contrary to popular perception, unfaithful wives are not only found among professionals and corporate types, or white-collar or higher-income earners. They come from all walks of life, including housewives and low-wage earners, and many have children.

Lawyer Louis Lim tells of a client, a hawker's assistant in her 40s, who was physically abused by her husband. The mother of two teenage daughters fell for a man who delivered vegetables to her stall and filed for divorce.

While most of the women in divorce cases handled by the private investigators and lawyers were in their 30s and 40s, there were also grandmothers in their 50s who strayed. Private investigator Raymond Lim had such a case. A woman in her 50s, who runs a small shop, had an affair with a businessman. The pair would have meals and check into budget hotels almost weekly.

And there are key differences between men and women when it comes to affairs.

For one thing, an unfaithful woman is more likely than a man to end the marriage, said counsellors and lawyers.

In their opinion, this is because women do not necessarily seek an extramarital affair. They may have been unhappy in their marriage, till someone comes along and offers them the emotional intimacy they find lacking in their marriage.

Said Mr Siew: "When women cheat, they are, to some extent, already thinking of divorce. So they allow themselves to go into the affair, which they see as a long-term commitment."

This is unlike men, who often want to keep the other woman on the side for a variety of reasons.

Lawyer Koh Tien Hua said: "Some men see sex outside of marriage as no big deal and just as a matter of sexual release. Or they may have an emotional attachment - but one that is not strong enough for them to leave their wives."

So it is rare to see women who are "serial" adulterers, unlike some men who have one affair after another, lawyers said.

That is not to say there are no women who "go around shopping for better husbands", lawyer Ellen Lee said.

The wife of one of her clients cheated on him repeatedly. The man forgave her time and again for the sake for their two young daughters. But after her fourth affair, he decided enough was enough and filed for a divorce.

Between 2004 and 2014, based on data from the Department of Statistics (DOS), 1.3 per cent to 2.1 per cent of those who filed for divorce under the Women's Charter cited adultery as the main reason.

Of this group, between 27 per cent and 34 per cent were husbands who claimed their wives had been unfaithful, the DOS explained when asked about data obtained from the Statistics of Marriages and Divorces.

Lawyers said official data from the courts does not reflect the reality of what they observe - which is that between a third and half the divorces they handle involve one cheating spouse.

But few cite adultery as grounds for divorce as that requires evidence of an affair, and the third party must be named in divorce papers.

So most choose to cite unreasonable behaviour instead.

This is also because it can be costly to hire a private investigator to gather evidence. It costs between $5,000 and $8,000 for one week of surveillance.

Adultery is also seen as shameful. So the offending party tends to negotiate with the spouse not to cite adultery as the reason, said lawyer Malathi Das.

 

WHY SOME WOMEN CHEAT

When women cheat, they are, to some extent, already thinking of divorce. So they allow themselves to go into the affair, which they see as a long-term commitment.

COUNSELLOR JONATHAN SIEW

________________________________________

WHY SOME MEN CHEAT

Some men see sex outside of marriage as no big deal and just as a matter of sexual release. Or they may have an emotional attachment - but one that is not strong enough for them to leave their wives.

LAWYER KOH TIEN HUA

 


 

When the third party that causes a marriage break-up is a same-sex partner

 

In this day and age, the third party that causes a marriage break-up may not be the usual "other woman" or "other man".

Family lawyers say they have been seeing more marriages unravel on account of an affair with someone of the same sex.

It is not common, but the 20 lawyers and private investigators that The Sunday Times interviewed say it is a noticeable development.

Many of the lawyers handle one or two such cases a year now. But there were hardly any such cases 10 to 15 years ago. At most, it was just one case every few years.

Lawyers and counsellors say many of the men and women involved may be gay, lesbian or bisexual, but repressed their feelings to conform to social norms or to please their parents by getting married and having children. But with society more open today, more of them are acting on their feelings.

Lawyer Tan Siew Kim said: "I think being attracted to someone of the same sex is not so taboo anymore. So all these people... feel it is now more acceptable to pursue their happiness, if they meet someone of the same sex."

Private investigators say the proliferation of social media and dating websites has made it easier to seek and establish such relationships, especially for gay men.

Lawyer Gloria James-Civetta said one of her clients was suspicious when her husband, a hair stylist in his 30s, became more conscious of his appearance and was frequently out till late. The private investigator the client hired found that her husband often patronised gay clubs. When confronted, he confessed to being gay and told her he wanted to divorce her.

Ms James-Civetta said of the couple, who have two children: "He told her he felt pressure from his parents to marry. She felt deceived, like he did not really love her at all."

According to counsellors, when women get involved with a same-sex companion, it is usually the result of having developed a strong bond with someone who offers them the emotional intimacy they find lacking in their husbands.

Lawyers say some women even decide to end the marriage and leave the children to be with their new partners.

Lawyer Rina Kalpanath Singh, who has handled such cases, said: "They tend to shy away from fighting for custody. They may feel ashamed as same-sex relationships are not so accepted by society yet and they don't want to put their children through living with two parents of the same sex."

Understandably, the discovery that their husband or wife is gay or lesbian is traumatic. And many of these spouses demand a divorce, lawyers say. Ms Singh said: "The betrayal cuts even deeper when they find out the third party is someone of the same sex as their spouse."

Lawyers say adultery is not cited as grounds for divorce in cases of infidelity involving same-sex partners. This is because adultery is legally defined as a sexual relationship between a man and a woman who are not married to each other, but to other people. So these individuals file for divorce citing "unreasonable behaviour".

Lawyer Helen Chia said: "I'm certain this has been going on for some time. It is just that no one talks about it. The world we live in is more accepting, so people now dare to come out and talk about it."

 

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Dhanabalan proposes two-man presidential team

Straits Times
07 May 2016
Charissa Yong

This will be for every third election, with one of the two from a minority

Any change to the elected presidency to ensure minority representation necessarily involves affirmative action of some sort, said former Cabinet minister S. Dhanabalan.

His frank assessment set the tone for the fourth and final public hearing on changes to the elected presidency, held at the Supreme Court auditorium yesterday.

The hearing is before a Constitutional Commission Prime Minister Lee Hsien Loong appointed in February to review three aspects of the elected presidency: candidates' eligibility criteria, the Council of Presidential Advisers and minority representation.

Minority representation had been the issue most hotly debated at the hearings, of which the first three were held last month.

While broadly agreeing on the need for a minority president from time to time, speakers were split on how to achieve it.

Some worried that lowering the bar for presidential candidates on the basis of race would undermine meritocracy, while others argued that minority communities themselves reject affirmative action.

Yesterday, Mr Dhanabalan, 78, acknowledged trade-offs that had to be made and the tension between ideals and reality, saying of his own suggestion: "It's not an ideal solution but we're looking for practical solutions here."

Mr Dhanabalan had suggested that every third election be tweaked to ensure a minority president is elected from time to time.

Under this system, there would be two consecutive elections for a president who would serve a six-year term, followed by an election for a presidency with an eight-year term.

For the eight-year term, two candidates would run on the same ticket, with at least one of them coming from a minority group.

Each would be president for four years at a time, during which the other person would be vice-president.

This slate of minority candidates should be nominated by Parliament, said Mr Dhanabalan.

Chief Justice Sundaresh Menon, who chairs the commission, asked if this could lead to criticisms of affirmative action.

Mr Dhanabalan replied: "There is an element of affirmative action in the approach here.

"And I think the very fact that we're looking for some special way in which minorities can be represented or can become president already is an admission that we need to have something special."

He also pointed out that the criteria would be lowered only "as a last resort" in special situations, like when people who meet the formal eligibility criteria cannot be encouraged to contest.

Professor Chan Heng Chee, a commission member, asked if under that system, a minority candidate would be left open to criticism that he was riding on the coat-tails of his teammate.

Mr Dhanabalan replied that any kind of group representation constituency (GRC) arrangement - where candidates run in teams - cannot escape that, as "that is required for the very nature of electorate".

He said that while he was never in favour of the GRC as he is an idealist, he also has to be a realist and consider "what can actually happen".

"The very fact that we're talking about making such special provisions for minorities to be elected means that we have deviated a little bit from the ideal situation," he said.

"The question is how far do we deviate."

But another group of speakers - National University of Singapore law undergraduates Grace Teo, 20, Carina Kam, 21, and Amelia Chew, 21 - were uncomfortable with affirmative action.

They argued the law should be amended to ensure a candidate is able to unify Singapore's different races and represent multiracialism, instead of needing the person to come from a minority community.

They were the last of 19 individuals and groups invited to give their views at the hearings, along with constitutional law expert Kevin Tan, former Nominated MP Loo Choon Yong, and lawyer Loo Choon Hiaw yesterday.

The commission's report is expected to be submitted by the third quarter of this year.


HARD CRITERIA ESSENTIAL

The PEC (Presidential Elections Committee) as presently constituted is quite small.

The more grey area where you make judgment, the more the scope for controversy and suspicion that not everything is in proper order.

So we should have as much hard criteria as possible, with as little leeway as possible for judgment.

But at the end of the day, it is judgment that is important.

If you set out details, a set of criteria, which elaborates on what the Constitution says, and which you can use to defend your selection, then I think that would be helpful.

But at the end of the day, judgment is key, and therefore the credibility of the panel, the size, the experience, the people on the panel, would be key.

FORMER CABINET MINISTER S. DHANABALAN, arguing for concrete eligibility criteria to be spelt out for presidential candidates, leaving as little room for discretion and argument as possible. He was responding to Public Service Commission chairman Eddie Teo, a member of the constitutional commission, who asked how the PEC could be strengthened.


'Restore former system of Parliament appointing president'

The best way to balance the responsibilities of the elected presidency with the need to ensure that Singapore has a minority president from time to time, is to return to the old system of appointing the president, said a law don and a business leader yesterday.

Constitutional expert Kevin Tan and Raffles Medical Group executive chairman Loo Choon Yong advocated a return to Singapore's pre-1991 system of having Parliament decide who should take up the highest office in the land.

The duo were speaking on the last day of public hearings held by the Constitutional Commission reviewing the elected presidency.

Dr Tan said the decision to turn the presidency into an elected office has made it "extremely difficult" to have an ethnic minority president.

Before that, Parliament could take into account the need for minority representation when selecting appropriate candidates.

It was "no accident" that Singapore's first president was Mr Yusof Ishak, a Malay; followed by a Eurasian president, Dr Benjamin Sheares; then an Indian president, Mr C.V. Devan Nair, he noted.

"Only after that" was there a Chinese president, Mr Wee Kim Wee.

This important symbolic aspect of the presidency "can never be guaranteed under elections", he said. At the same time, the idea of designating electoral cycles for only minority candidates is "odious to public sensibilities" and may run counter to the Constitution.

Dr Tan also argued that the role of the president is largely one of "binary judgments", like whether to draw on past reserves.

Thus, it is more important to raise the criteria for the Council of Presidential Advisers (CPA) than for the presidency itself.

A lowering of the criteria for the presidency will also alleviate the problem of not having enough minority candidates, he added.

Chief Justice Sundaresh Menon, who chairs the commission, asked if it could be problematic for Parliament to appoint a president that has to act as a check on itself.

Lowering the criteria for the elected presidency while raising the bar for his advisers also "shifts the centre of gravity somewhat", said CJ Menon, who asked if such a move would make it harder for the president to "stand up to the CPA".

Dr Tan replied that the "important ingredient" is independence, and that "just because someone is nominated and not elected does not deprive him of his independence".

This is similar to how judges are appointed, but can still serve as a check on the executive, he added.

To this, CJ Menon said judges have a slightly different role as they serve as a check through judicial reviews.

Dr Tan agreed, but said that once appointed president, a person would take on the role of the office and act accordingly.

Dr Loo argued that returning to an appointed presidency is the solution to the tension between two key elements of the office: to be a symbolic head of state and unifier of society, while acting as a check on the Government, particularly on the national reserves and integrity of the public service.

"You want this guy to be the nice guy, unifier, and then you want him to have what it takes to tell a roguish PM, hey, leave our assets alone," said Dr Loo. "I think these (requirements) call for different chemistries."

Making the presidency an elected office has also confused the public, which often thinks the role is to provide checks and balances on all matters of government.

Dr Loo, who made his submission with his brother Choon Chiaw, a lawyer, said a return to an appointed presidency is "returning to the system that has served us well - the Westminster system of government, with all its years of conventions and constitutional norms".

But commission members such as former Speaker of Parliament Abdullah Tarmugi and Professor Chan Heng Chee asked if Singaporeans today can accept a return to an appointed presidency.

"We are in the world of participation now: Individuals want to participate and they want to have a say," said Prof Chan, chairman of the Lee Kuan Yew Centre for Innovative Cities at the Singapore University of Technology and Design.

While it is a reasonable argument that authority can be derived from Parliament instead of through an election, "politics does not deal only with reason - optics matter," she said, referring to public perception of the office.

Commission member Peter Seah, chairman of DBS Group Holdings, pointed to the importance of an election, saying an elected president "holds moral authority... because he is elected by the nation".

LIM YAN LIANG


A WIN'S A WIN

A win is a win. You have a race, a hundred-yard dash, and the winner wins by a neck. He wins and he's declared the winner. You do not require the winner to lead the next person by 50 yards or 10 yards. In fact, it is very respectably accepted that mandates can be on plurality voting, and a lot of Commonwealth countries, including Britain, have adopted this. So have we.

Discussing mandates and what constitutes a mandate can get quite academic, because if you look at situations in Britain and in the United States, not everyone votes. In fact, the President of the United States can be voted (in) by 60 per cent of the country, or 40 per cent of the country. Nobody questions this mandate.

PROFESSOR CHAN HENG CHEE, chairman of the Lee Kuan Yew Centre for Innovative Cities, responding to Dr Kevin Tan's suggestion to have a run-off election when a winning candidate does not secure an absolute majority of the vote. He said winning by a simple majority would not give the president a strong enough mandate to check the Government.

MAIN ADVANTAGE OF NOMINATION PROCESS

When we had the system where we had a nominated president, as opposed to an openly elected president, Parliament could choose and select appropriate members with the view to the fact that we also have to have some form of minority representation ... So you could ensure that the symbolic value of the presidency is maintained through a nomination process. This can never be guaranteed in an election. So this is the main advantage of this (proposed scheme).

DR KEVIN TAN, responding to Chief Justice Sundaresh Menon on what the advantage was in returning to a system of appointing a president.

OVERSIGHT ROLE

Why don't we just have another person or another group of persons to do that oversight and really make our system simpler? Everybody will understand there is a president who is appointed by Parliament... and then you have another group of persons, a Presidential Council for Review, appointed by the PM and so on, and they have one job: to blow the whistle when inappropriate persons are appointed, or when you want to draw on past reserves. These eight persons will say, 'Hey, stop, I delay you'. Sure, you've got a two-thirds (parliamentary majority) you can override, but you can't do it quietly, the whole world will know.

DR LOO CHOON YONG, explaining his call for distinct roles carried out by a president and a Presidential Council for Review


Two speakers urge focus on 'right experience'

In deciding whether a private-sector person is suitable to run for president, the focus should be on whether he has the right experience, said two speakers yesterday at the hearing on the elected presidency.

This experience cannot be determined just by looking at the size of the companies he has run, said former Cabinet minister S. Dhanabalan and executive chairman and co-founder of listed Raffles Medical Group Loo Choon Yong.

Instead, the eligibility criteria for such candidates should be refined to get at the substance of what he did in his corporate role, they said.

Under current laws, a private-sector person must have been the chairman of the board or chief executive officer of a company with a paid-up capital of $100 million to stand in presidential elections.

But Mr Dhanabalan, who is a member of the Council of Presidential Advisers and the Presidential Council for Minority Rights as well as a former chairman of DBS Group Holdings and Temasek Holdings, pointed out that paid-up capital indicates the size but not the complexity of a company.

He suggested taking into account factors such as a company's annual revenue and number of employees.

Dr Loo said shareholders' funds or net tangible assets should be used instead of paid-up capital. He proposed raising the figure to $500 million.

In earlier hearings, some speakers had said that beyond a certain point, a company's size is not relevant in determining a potential candidate's experience.

Dr Loo disagreed, saying the president, as custodian of Singapore's reserves, should have experience in dealing with large- scale financial decisions.

Citing his own experience, Dr Loo, who is also chairman of industrial developer and landlord JTC Corporation, said he "agonised" more when he was faced with decisions involving billions of dollars, compared to tens of millions of dollars.

"If you are not used to making these decisions, when you go through the paper... the numbers have no meaning," he said.

"It's not just how big your company is, it's also how complex and whether you are the one used to making these decisions," he added.

Both men suggested that a company's board chairman, who typically does not run the company day to day, should not automatically qualify, but be considered on a case-by-case basis.

Commission member Eddie Teo, chairman of the Public Service Commission, asked if it would be enough for candidates to declare the scope of their duties to the Presidential Elections Committee.

Mr Dhanabalan said it might suffice, but warned that an impressive curriculum vitae may not be a good reflection of a person's experience.

Dr Loo suggested that the declaration be made under oath. "If later on, it is found... he lied under oath, then there are penal sanctions. That will sober up anybody who wants to make a (false) declaration," he said.

Tham Yuen-C


Key ideas raised at hearings

After four public hearings by the Constitutional Commission reviewing the elected presidency, The Straits Times looks at several proposals on how the office of the president can be changed.

TEAM EFFORT

A team of at least two persons runs for president on the same ticket, with at least one of them being from a minority race.

One candidate will be president and the other, vice-president, with the two switching roles mid-term. The vice-president can double as Speaker of Parliament or a member of the Council of Presidential Advisers.

A committee can be appointed to identify suitable minority candidates with the help of organisations such as civil society groups and unions, similar to how Nominated MPs are selected.

RESERVE OR LEAVE OUT

If there has been no president from a particular minority group for a number of terms, the next election is reserved for candidates from that group.

This provision can have a "sunset clause". It would not be invoked if a minority president is elected in an open election.

Another suggestion is to have candidates of a particular racial group barred from elections when there have been two consecutive terms of presidents elected from the group.

This applies to both majority and minority racial groups.

BEST OF BOTH WORLDS

To avoid the divisiveness of pitting candidates against one another, the system can be tweaked to have only one candidate. A presidential council will identify the candidate in consultation with the prime minister.

The candidate must be approved by Parliament and face a nationwide election, in which Singaporeans would simply vote "yes" or "no".

NO MORE ELECTIONS

By having Parliament appoint a president instead of electing one, minority representation can be assured.

An appointed president can still be a check on the Government, but should receive greater assistance from the Council of Presidential Advisors.

Alternatively, the two key roles of the president - as a check on the Government with regard to reserves and integrity of the public service, and as a unifier of Singapore's multiracial society - can be unbundled.

The president will then play a symbolic role and can be appointed by Parliament, while a council can be set up to safeguard Singapore's reserves and preside over the appointment of key public service positions, among other things.

HIGHER OR LOWER?

One eligibility criterion loomed large - that a private-sector candidate must have run a firm with a paid-up capital of at least $100 million.

Some felt raising the sum was necessary to ensure it remains a suitable proxy for measuring candidates' experience and qualifications, given the amount of money the president will be safeguarding. They suggested various ways of doing it, like coming up with a formula so that it can be changed to suit the times.

Others warned that raising the bar could shrink the pool of potential candidates, especially among minority groups.

ALL THE PRESIDENT'S MEN

A few proposed changes to the role and structure of the six-member Council of Presidential Advisers that advises the president.

One suggestion was to reconfigure the council into three wings that the president can turn to for specialised advice on financial and legal matters, and appointment of key public service members such as the chief justice and auditor-general.

Another suggestion was for two of the six council members to be elected. The six would vote for one of them to be president.

Tham Yuen-C

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S'pore society urged to 'embed mediation in DNA'

Straits Times
21 May 2016
K.C. Vijayan

Singapore's legal profession and other sectors of society here were yesterday urged to "embed mediation in our DNA".

Under changes made to Supreme Court practice directions in January, lawyers are now duty-bound to advise clients planning High Court civil lawsuits to first consider mediation or other options before going ahead to settle spats.

The direction, which provides guidelines for alternative ways of resolving disputes, says that cases ideal for mediation include commercial, neighbourhood and medical negligence disputes. It explains that two popular reasons for suing in court - "a matter of principle" or a "desire for revenge or punishment" - are "better suited for mediation than litigation".

The change is among several moves aimed at spreading the use of mediation in various sectors herethat were cited by Associate Professor Ho Peng Kee, chairman of the Law Ministry's Advisory Committee on Community Mediation. He was speaking yesterday at the Law Society's first mediation symposium, attended by around 250 people

"Taking a Singapore Inc approach, all the stakeholders should further develop their respective strengths to grow the collective pie - not just in terms of the number of cases, which I see is growing in our various centres, but more importantly and strategically, strengthening the eco-system, enhancing the mediation culture, projecting Singapore as an Alternative Dispute Resolution hub," said Prof Ho.

"Indeed, all of us living in compact, urbanised Singapore should embed mediation in our DNA." He called for widespread education to extend mediation's outreach.

The guidelines say that "give and take is infinitely better than all or nothing", adding that few litigants seeking retribution come away from court feeling satisfied. They point out that no matter how bitter the dispute, it is likely to be settled more permanently through mediation than a court judgment.

Senior lawyer Edmond Pereira said: "We also have to advise clients there is a potential adverse costs order against them if they insist on suing in court and the judge finds they have been unreasonable in refusing to consider alternatives like mediation."

Law Society president Thio Shen Yi also weighed in on the issue at yesterday's gathering, saying: "Mediation, with a more collegial, less adversarial approach to problem-solving, is here to stay.

"Conflict resolution does not have to be a zero-sum game involving significant expenditure on acrimonious, long-drawn court processes that result in financial headaches and personal heartaches."

Singapore Mediation Centre executive director Loong Seng Onn told The Straits Times that between January this year, when the new guidelines came in, and last month, there were 99 matters handled through mediation, 14 more than in the same period last year.

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Businessman told to pay $354,000 as security in lawsuit

Straits Times
14 May 2016
K.C. Vijayan

Singapore businessman Chris Au has been ordered to provide HK$2 million (S$354,000) as security in a lawsuit he has filed against a poker rival for alleged debts.

Mr Au, a Singapore permanent resident who used to run the former Ku De Ta nightclub at Marina Bay Sands, is suing Mr Steve Yoon for HK$7.2 million over losses in 33 poker games that the duo took part in back in 2008 with two others.

Hong Kong Registrar Lung Kim Wan, in judgment grounds released last week, held that "there is nothing that appears unjust to make an order for security for costs in favour of (Mr Yoon)".

A defendant who has reasonable concerns that the plaintiff will not be able to pay his legal costs if he (the defendant) wins the case, can apply to the court to order the plaintiff to place a sum prescribed by the court as security before the case is further pursued.

Mr Yoon has denied Mr Au's claims, arguing there was no intention to create legal obligations when the games were played.

He alleges instead that Mr Au and the other two players created a side ledger among themselves to effectively play against him to collect earnings and losses together without his knowledge and consent.

He is also counterclaiming for HK$513,000 against Mr Au - the value of shares and his car which Mr Au took in offsetting his debts.

Mr Yoon filed the application for security for costs last October.

His lawyer argued that Mr Au "ordinarily" lived outside Hong Kong as he moved to Singapore in 2010. Among other things, Mr Au was director of four Singaporean companies and had "tenuous connecttions" with Hong Kong, he said.

Mr Au countered that he worked in Singapore but carried on business in Hong Kong and had plans to expand to other parts of Asia.

The judge noted that the two parties could settle without a trial and pared down Mr Yoon's request for costs from HK$3,999,650 to HK$2,000,000.

Meanwhile in a separate case, Singapore-based tower crane supplier Crane World Asia - which is suing Hong Kong firm Hontrade Engineering for alleged outstanding payments under crane rental agreements - has succeeded in its efforts to avoid paying security for costs before the suit.

Hontrade had sought the security deposit but the court found Crane World had assets in Hong Kong, including two tower cranes with a net value of HK$4.2 million that are currently being leased to Hontrade, which form some limited security should it defeat Crane World's suit.

Madam Justice Queeny Au-Yeung accepted in judgment grounds released on Thursday that Crane World was not resident in Hong Kong and a Hong Kong judgment can be enforced in Singapore under mutual arrangements.

The judge ordered Hontrade to pay HK$90,000 in costs to Crane World for losing the application.

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MDA files police report against news website

Straits Times
07 May 2016
Charissa Yong

A police report was made yesterday by regulator Media Development Authority (MDA) against news website The Middle Ground (TMG) for publishing the results of an opinion survey on the Bukit Batok by-election.

Under the Parliamentary Elections Act, it is an offence to publish the results of any election survey during the election period.

The title of the online article, "BB BE: 50 voters in Bukit Batok," suggested that electors in the by-election were surveyed, the Elections Department (ELD) said in response to media queries. "A significant number of those polled indicated the candidate they would vote for, directly or indirectly," it added.

The ELD also said MDA, on behalf of the Returning Officer, issued a formal notice at 9.30am yesterday asking TMG to remove the article "as soon as possible and no later than 3.30pm". MDA made a police report at 12.39pm. The police are looking into the matter.

ELD defined an election survey as " an opinion survey of how electors will vote at an election or of the preferences of electors with respect to any candidates or group of candidates or any political party or issue with which an identifiable candidate or group of candidates is associated with".

It said a separate TMG article, with its response to the MDA's take-down notice, had stated they asked Bukit Batok voters in the past week how they would vote.

ELD noted that similar action was taken in the past for surveys that contravened the law. For example, a stern warning was issued to The Straits Times and its editor in June 2013 for publishing an article titled "ST poll: More rooting for PAP" after the Writ of Election for the Punggol East by-election was issued.

Said ELD: "ST accepted that there was an internal lapse that led to the publication of the poll results, and it apologised."

Separately, ELD issued a statement noting that several online articles tantamount to election advertising were posted yesterday, the Cooling-Off Day. It reminded people not to post election advertising online or offline yesterday or today.

Charissa Yong

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Convicted murderer Jabing Kho executed after bids to escape gallows fail

Straits Times
21 May 2016
Selina Lum

Following a short-lived reprieve, convicted murderer Jabing Kho was executed yesterday afternoon, hours after a five-judge Court of Appeal rejected his final last-ditch attempt to escape the gallows.

The Singapore Police Force said in a statement that the 32-year-old "had his death sentence carried out" at Changi Prison Complex and that he "had been accorded full due process under the law".

It brought to a close a long-running case in which Kho appeared before the apex court twice in the past two days, even though the court had said in April - when it dismissed his first 11th-hour bid to stop his execution - that the matter should come to an end.

In 2008, the Sarawakian killed a Chinese construction worker while robbing him. The victim, Mr Cao Ruyin, 40, was bludgeoned with a tree branch. The blows shattered his skull. Kho, who was tried for murder in 2009 and convicted in 2010, had at least nine lawyers representing him. He was originally scheduled to be hanged yesterday morning. Two days earlier, lawyer Gino Hardial Singh filed a criminal motion to quash the death sentence. This was rejected on Thursday.

Separately on Thursday, lawyer and opposition politician Jeannette Chong-Aruldoss filed a High Court civil action. Her request for a stay of execution was denied but she filed an appeal by the 11pm deadline, getting Kho a reprieve.

Yesterday morning, the apex court heard arguments from her as well as another lawyer, Mr Alfred Dodwell, who had also filed a civil action but later withdrew it. When the lawyers sought an adjournment, saying they were not prepared to argue, they were chided by the court, which also dismissed the appeal against the temporary stay.

"This case has been about many things. But today, it is about the abuse of the process of the court," said Judge of Appeal Chao Hick Tin.

The court noted that Kho had filed multiple applications and used civil action to "mount a collateral attack" against a court decision on a criminal matter; what was worse was that he had come to court with the same arguments he had raised earlier. The court said "no real issues of any merit have been raised" in the "plainly misconceived" action.

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Driver loses appeal against jail for crash that killed baby

Straits Times
14 May 2016
Amir Hussain, Calvin Yang

A young probationary driver who caused the death of a baby in a car he hit appealed against his four-week jail term, arguing that the death was partly caused by the negligence of the baby's father in not using a child restraint.

Yesterday, Nickson Guay Seng Tiong's appeal for a fine instead of jail was quashed by the High Court.

"In my judgment, the failure to properly secure the deceased in an approved restraint is not a relevant consideration in sentencing since it can have no bearing on the negligence of the appellant," said Chief Justice Sundaresh Menon.

"The fact of the matter remains that the appellant drove into a cross junction without keeping a proper lookout."

Just before 8pm on Oct 20, 2014, Guay, then 21, was driving his Mazda car in the extreme right lane of North Buona Vista Road and failed to stop at the junction before turning right into Ayer Rajah Avenue.

He encroached into the path of motorist Wong Yin Tung, who was travelling straight from the opposite direction.

Guay, who had got his new car for less than a week, did not wait for the traffic light to turn red and for the "right-turn arrow" to appear before making the turn.

Mr Wong, whose wife and child were in the back seat, had the right of way. The baby, 2�-month-old Maxine Sai Wai Wong, was being breastfed by his mother.

After the accident, she flagged down a stranger's car and asked for help to take her and her baby to hospital. Tests revealed that he had a blood clot in his brain but died during the surgery to remove it.

Along with his jail term, Guay was also banned from driving for five years in April last year after he pleaded guilty to causing the baby's death.

CJ Menon made it clear that criminal law does not need to apportion responsibility between all persons involved. Instead, it is concerned with punishment of the offender for his criminal conduct.

He added: "That the deceased was not in an approved restraint is neither here nor there. It... does not in any way impact the assessment of whether the appellant was more or less negligent in failing to meet the standard of care which is expected of all drivers."

The mother, who wanted to be known only as Mrs Wong, yesterday told The Straits Times: "Max was a happy and strong boy, my beautiful son, and he gave me the most amazing memories. Every day he is in our hearts."

She appealed to drivers to be more careful and hopes more can be done to educate them that they are not simply individuals on the road, but part of a community of road users who need to look out for each other.

"Drivers need to feel more responsible for their actions," she said.

The maximum penalty for causing death by negligence is two years' jail and a fine.

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Triple rape Martin Road victim breaks down in court

Straits Times
07 May 2016
Selina Lum

Trial added to her trauma, says DPP in seeking 17 years' jail, 24 strokes of cane

The woman who was raped three times in 20 minutes by a stranger along public roads broke down on Tuesday when she faced her attacker on the first day of his trial, it was revealed in the High Court yesterday.

Prosecutors are seeking at least 17 years' jail and 24 strokes of the cane for rapist Lim Choon Beng, 30, arguing that a deterrent sentence was warranted for his "audacity" in committing the repeated rapes.

"Each time the victim thought that the traumatising experience had ended, the accused shattered her hopes by taking her to a different location and repeating the sexual violence," said Deputy Public Prosecutor Zhuo Wenzhao.

The DPP argued that despite overwhelming evidence against him, Lim chose to claim trial, putting the victim through the trauma of recounting her ordeal in court.

The 27-year-old woman, who was working as a nightclub singer, returned to China after the rape as the attack left her fearful of male strangers. She flew back here for the trial.

Lim raped and sexually assaulted her at three different spots along a stretch from Martin Road to River Valley Close in the wee hours of Feb 9, 2013, the eve of Chinese New Year. He was then 26 and she, 24.

He pleaded not guilty on Tuesday and a trial started with the victim testifying in a cleared courtroom. The next day, he changed his mind and pleaded guilty to four charges, with another four charges to be considered in sentencing.

His lawyer, Mr Anand Nalachandran, assigned to defend him under the Criminal Legal Aid Scheme, said his client claimed trial to find clarity because he had no recollection of his offences as he was experiencing alcohol-induced amnesia.

Lim, who has a history of alcohol abuse, had been drinking with friends the night before.

The last thing he remembered was holding a shot of alcohol. The next thing he knew, he was sitting on a pavement surrounded by police officers.

A blood sample taken eight hours after the rapes found 92mg of alcohol per 100ml of Lim's blood.

Dr Lim Yun Chin, a defence addiction expert, estimated that the alcohol level could be 292mg per 100ml during the rapes. The legal limit for driving is 80 mg per 100 ml.

The lawyer said his client was also concerned about the lack of DNA evidence proving penetration and had doubts about his ability to rape her, given his level of intoxication.

But after hearing the victim's testimony, he decided to accept responsibility for his actions instead of prolonging her agony.

Sentencing is expected next Tuesday.

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Convicted killer gets last-minute stay of execution

Straits Times
20 May 2016
Selina Lum

Appeal by opposition politician-lawyer to be heard this morning, when he was to be hanged

Lawyer and opposition politician Jeannette Chong-Aruldoss succeeded late last night in staving off the execution of convicted murderer Jabing Kho, who had been scheduled to hang this morning.

Earlier in the day, she failed to get a stay before Judicial Commissioner Kannan Ramesh after hours of arguments in chambers.

But she was given an 11pm deadline to file an appeal, which she met. That means that 31-year-old Kho, a Sarawakian, cannot be hanged until the appeal, scheduled for this morning, is heard.

It brought to a close a dramatic day, during which a five-judge Court of Appeal unanimously dismissed a separate bid by Kho to escape the gallows for the brutal killing of a construction worker in 2008. He had bludgeoned Chinese national Cao Ruyin on the head with a tree branch while robbing him, striking the victim several times even as he lay on the ground. Mr Cao, whose skull was shattered from multiple fractures, died in hospital six days later.

Found guilty of murder, Kho was first handed the mandatory death penalty in 2010. His appeal was dismissed in 2011.

In 2013, he was re-sentenced to life imprisonment and caning after the law was changed to give judges the discretion to opt for a life term in certain cases of murder.

The prosecution appealed, and three judges of a five-member bench decided to send Kho to the gallows. In their written judgment last January, the majority said Kho had shown a "blatant disregard for human life", in the light of the "sheer savagery and brutality" of the attack.

In April, a five-judge apex court dismissed one attempt to quash his death sentence.

But on Wednesday, Kho's sister Jumai instructed lawyer Gino Hardial Singh to make "new" arguments to the apex court. Mr Singh contended that the decision to send Kho to the gallows was tainted by apparent bias as Judge of Appeal Andrew Phang had sat both in Kho's 2011 appeal against conviction as well as the prosecution's 2015 appeal against the sentence.

Yesterday, the five-judge Court of Appeal dismissed the appeal. It was highlighted that the "bias" argument had been included in his first attempt to quash the death sentence before being withdrawn. Judge of Appeal Chao Hick Tin, who delivered the decision, said Kho's legal moves were an abuse of court process.

If allowed, this would lead to individuals "prolonging matters ad infinitum by drip-feeding their arguments one by one" through multiple applications.

Even if Kho's argument were completely new, the court would still have dismissed it, he added.

Justice Phang was deciding on completely different issues in 2011 and 2015 - the earlier one was on guilt, and the second on punishment. Justice Chao highlighted that trial judges all over the world routinely decide on the guilt of accused persons and then pass sentence on them. Ending on a sombre note, Justice Chao noted how Kho was arrested in 2008. "Eight years and an innumerable number of legal applications later, he still stands before this court."

But there was still a twist to come. Ms Chong-Aruldoss, also instructed by Kho's sister, separately filed an urgent application to stay the execution. It is understood that she intends to make arguments on points of law relating to the appeal court's 2015 judgment.

The application was dismissed but she was granted an appeal. A hearing has been set for 9am today.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

More boxes to tick for bankers taking firms public

Business Times
14 May 2016
Jamie Lee

BANKS will have to raise their due-diligence standards in bringing listings to the Singapore market, under tightened guidelines set by the Association of Banks in Singapore (ABS) on Friday.

This comes as the Singapore Exchange (SGX) moves to boost oversight of companies listed on the bourse, with its fresh-faced chief regulatory officer saying that more improvements are ahead.

"It is at the point of admission that we have the most control," said Tan Boon Gin at a joint media briefing with ABS.

Emphasising Singapore's disclosure- based regime, he said that issue managers are relied on to ensure that companies are disclosing accurate information to investors.

Taking immediate effect, the guidelines steer investment bankers towards checking off listing aspirants by probing the quality of the board and management, the fiscal and liquidity position, as well as the corporate structure.

The 33 pages of guidelines are not legally binding, but reflect trends that SGX has observed when reviewing listings; over nine months, it has also collected feedback from auditors, lawyers, banks and corporate-finance firms.

ABS director Ong-Ang Ai Boon said: "The improvements made to the guidelines will help Singapore draw more quality listings, and grow investors' trust and participation in our market."

One guideline says that the scope of checks by bankers should extend beyond on-site visits to examining inventory and biological assets such as livestock and crops; this is relevant to Singapore as a listing venue for Asean companies with agricultural businesses. This would address "an area of vulnerability" that SGX has noted, said SGX's Mr Tan.

Bankers should also check on reasons behind recent resignations of management and directors, as well as reasons for restrictions on cash remittances from the potential issuer's overseas subsidiaries to the holding firm.

And amid greater global scrutiny over loopholes for tax evasion and money laundering, the listing guidelines hold IPO (initial public offering) bankers to ensuring that taxable revenue declared in tax filings are checked against the issuer's audited financial statements; they are also to question "unnecessarily complex group structures".

Senior OCBC banker Tay Toh Sin, speaking as the chairman of the ABS listing due-diligence committee, said the stricter guidelines take into account that more companies are dealing with cross-border transactions as well.

SGX is considering ways to put out details on rejected listings – without naming the companies.

Mr Tan declined to detail the average number of IPO aspirants that are rejected when they reach SGX, but pledged greater transparency to boost oversight of listed companies. "You will see more measures. But at this point in time, I can only tell you to watch this space."

Gail Ong, head of WongPartnership's equity capital markets practice, said the amendments are timely, as the guidelines are in line with recent developments of the listing framework: "The key changes introduced formalise due-diligence considerations which many issue managers and underwriters already contemplate and undertake as appropriate in the course of the listing process."

Last year, SGX set up three independent committees to advise the market regulator on listing, disciplinary and appeal matters.

Tan Jeh Wuan, head of capital markets at DBS, said the guidelines will help raise the standard of due diligence for IPOs in Singapore, and increase investors' confidence in the quality of these IPOs.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Former Grabtaxi key exec sues firm for shares

Straits Times
06 May 2016
K.C. Vijayan

Ex-chief technology officer claims it owes him $2.3m in shares after he left last year

The former chief technology officer of ride-booking app Grabtaxi is suing the company, claiming he is owed around $2.3 million in shares following his departure last year.

Mr Zhu Wei claims that, under his departure terms, the company offered to issue him 22,566 ordinary shares in the parent company Grab Inc.

However, he did not accept the offer as the terms also imposed a series of restrictions which he claims were not indicated in his original employment terms. These detailed the compensation package to be given in the event he left before completing four years of service.

At issue in the case is whether there were valid conditions attached to the issue of the shares or whether they were to be given to Mr Zhu unconditionally.

Grabtaxi Holdings is denying the claims in defence papers filed, pointing out the share issue was subject to rules of the Grabtaxi Share Option Plan.

A High Court pre-trial conference was held yesterday.

Grabtaxi, Uber's chief rival in this region, set up a US$100 million (S$136 million) research and development hub here in April last year, armed with the firm's top engineers and data analysts to develop new products and find ways to improve its cab booking service.

Mr Zhu, an American software engineer whose previous experience included heading the Facebook engineering team that developed Facebook Connect, was hired as chief technology officer of the global Grabtaxi group of companies in August 2014.

But he left a year later and while he had no dispute about the monetary compensation as part of the departure terms, he took issue with the conditions attached to the share issue offer that was included as part of the package.

The shares were subject to him signing the Grab Inc 2015 Equity Incentive Plan which required him to forgo his rights to equity compensation under his employment terms. The conditions also required that he vouch to exercise voting rights accruing to the Grab Inc shares in accordance with the instructions of Grabtaxi group chief executive Anthony Tan.

Mr Zhu, represented by lawyer Ronald Choo from Quantum Law Corp, claims in court documents filed that the employment terms did not restrict him in such a manner, arguing he is not obliged to accept the share offer in Grab Inc, and that he is seeking his entitlement in the ordinary shares from the share capital of Grabtaxi Holdings. He wants a court order for the share issue sought and damages from the delay in issue.

Allen & Gledhill lawyer Ramesh Selvaraj, in defence documents filed in March, countered that Mr Zhu was in effect seeking to get the shares free of any conditions despite having agreed to them under the employment terms.

The share option plan is the same as the equity incentive plan referred to by Mr Zhu which was offered to him at the time of departure last August, he added.

The company also indicated that the number of outstanding shares in Grabtaxi was less than when Mr Zhu joined, therefore the amount of shares in dispute is also smaller.

Mr Choo applied last month to amend his statement of claim to clarify this issue and add a second defendant to the suit, among other things.

A High Court hearing on his application is due next week.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Woman sues grandkids for trying to sell HDB flat

Straits Times
20 May 2016
Danson Cheong

She says she paid for it single-handedly while they argue the flat was their inheritance

Madam Tan Teck Soon says, for 26 years, she has paid the Housing Board $277 each month - mortgage instalments for the three-room flat that she lives in.

She paid over $117,000, including upgrading costs and conservancy charges, said the 76-year-old canteen vendor, but she might soon have to leave her home. In March, she said, she learnt her granddaughters were trying to sell the flat.

To stop this, she has sued both Ms Michelle Ng Li Xuan, 26, and Ms Isabella Ng Su Xi, 25.

The case is pending in the High Court, and the two sides met for a pre-trial conference on Tuesday, said lawyer Chia Boon Teck, who is representing Madam Tan pro bono.

Both sisters are registered owners of the flat, which they inherited when their father died in 2009.

But Madam Tan said she had single-handedly paid for the flat since its purchase in 1990. Her granddaughters were only holding it in trust for her, she said. In her affidavit, she said they were trying to sell it and "swallow" the proceeds.

The 10th-storey flat in Bedok South was bought under the name of her son - the sisters' father, Mr Ng King Nguang - said Madam Tan, who was then registered as co-owner of another flat with her older son. The disputed flat has an estimated value of about $330,000 now.

"The flat was registered under Ng's sole name at that time with the understanding between Ng and me that I was the sole owner," she said, adding that she paid the initial sum of $20,000 for the down payment and renovations.

She was registered as an owner of the flat in 1992, after the other flat was sold. But seven years later, Mr Ng chalked up about $100,000 in debts, she said. He then purportedly asked her for help. She said he wanted her to sell him her share of the flat so he could get an HDB loan on the pretext of paying her.

She said she did not get any money from the sale, but lent him $61,000 instead. He used the entire sum to pay creditors, she said.

"I'm not a lawyer. I didn't understand the implications. My son and I understood the flat still belonged to me," she told The Straits Times.

In 1992, Mr Ng divorced his wife, who got custody of Michelle. Isabella, about one then, grew up in the flat with her father and Madam Tan.

In 2009, Mr Ng died after a heart attack. The sisters inherited the flat, along with his mortgage life insurance payout of $40,200.

"I did not understand how (they) could sell the flat and throw me onto the streets when I had paid for the flat entirely single-handedly," Madam Tan said in her affidavit.

Both sisters denied trying to sell the flat without her knowledge.

Ms Michelle Ng disputed that Madam Tan had made all payments for the flat. "What I understand is that my dad was the one doing the payments," she said, adding that she and her sister let Madam Tan live there as it was near Madam Tan's workplace.

Ms Ng said Madam Tan made some payments for the flat after Mr Ng died, but that was because Madam Tan was living there then.

Ms Ng said the flat was an asset passed down to both sisters by their father, which they should be able to sell, and they had offered Madam Tan an alternative place to live - with Ms Isabella Ng at her upcoming BTO flat in Choa Chu Kang.

Said Ms Michelle Ng, a former marketing executive: "I'm not working at the moment. I'm expecting my second child. I'm not taking the money to go and enjoy myself."

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Cheat who posed as Wong Kan Seng's brother gets jail term

Straits Times
14 May 2016
Elena Chong

A self-employed man who conned his victims into believing that he was the brother of then Deputy Prime Minister (DPM) Wong Kan Seng was sentenced to 41/2 years' jail yesterday for cheating them of a total of $520,000.

Wong Kok Keong, alias Wong Kock Khiang, 63, is out on $30,000 bail pending his appeal against the sentence. He had admitted to three cheating charges, with six other charges, mostly for obtaining credit while being an undischarged bankrupt, taken into consideration.

On Sept 27, 2007, he cheated three directors of Manor Construction by deceiving them into believing that he was the brother of then DPM Wong. He induced them to give him $180,000, which was 20 per cent of the "option to purchase'' price for a property in Yung Ho Road.

A month later, he duped them into handing over another $240,000 to buy preferential shares in a company. He has since returned $209,000 to Manor, leaving an outstanding balance of $211,000.

In 2011, he cheated Mr Chiam Teck Hwa, 48, by making him believe that he was DPM Wong's brother and saying he would invest the victim's $50,000 in a company, along with his own money.

Wong has paid Mr Chiam back, as well as a similar sum to one Tan Teik Chin, but this charge was considered during his sentencing.

In Mr Chiam's case, Wong claimed he had a project to set up a company to run dialysis centre units in a hospital group and in Marine Parade. After Mr Chiam handed a cheque for $50,000 to Wong, he found out through a search that there was no record of the company, Grace Asset Management. He also found out that Wong was not related to DPM Wong and asked for his money back.

Deputy Public Prosecutor Hon Yi said the amounts involved were substantial, and that Wong was motivated by personal profit. Calling him a serial cheat, he said Wong resurrected his old methods and perpetrated the same scam on the victims. In 2003, Wong was jailed for 53 months for cheating, dishonest misappropriation and obtaining credit as a bankrupt.

Wong's lawyer Edmond Pereira said his client's ill health in recent years had resulted in increasing medical costs. His finances were crippled because his businesses had failed due to the adverse publicity. He said the father of three was remorseful and had cooperated with the authorities.

Wong could have been jailed for up to seven years and fined for each of the 2007 offences; and jailed for up to 10 years and fined for the 2011 offence.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

A different spirit of the law in OSIM takeover

Business Times
06 May 2016
Cai Haoxiang

YOU own some shares in a company. The founder wants to buy everybody out. You resist, claiming his price is too low.

But you cannot do much if the founder happens to also own such a big chunk of the company that he could - if he is able to quickly gather enough shareholders' acceptances - legally enforce compulsory acquisition at his bid price.

Is this unfair? The OSIM privatisation saga has dragged up a recurring issue in Singapore corporate law on how much power should be given to dissenting minority shareholders in a takeover.

Given the way the law is written now, minority shareholders faced with the prospect of their shares being compulsorily acquired can resist more easily when a corporate is seeking to take its subsidiary private.

It is far harder to resist, legally speaking, if the offeror is the founder-CEO, who already holds a significant individual stake.

Two different cases

To understand the matter, one needs to look at the law under Section 215 of the Companies Act, which states that an offeror can exercise its right to compulsory acquisition once it gets 90 per cent of shares that it and its related corporations did not own.

The emphasis here is "related corporations".

Since Mr Sim was privatising his company while owning OSIM shares as an individual, he only needed to set up a special purpose vehicle (SPV) as the offeror, which would obviously hold zero shares in OSIM when set up. In this case, founder Ron Sim and his family members already owned 69.25 per cent of the company at the time of offer. The compulsory acquisition threshold to acquire all remaining shares in this case is 90 per cent and not 97 per cent [69.25 + (0.9 x 30.75], as many market players wrongly believed, the reason being that the Sim family stake doesn't come under "related corporations".

When Keppel Corp sought to privatise Keppel Land in 2015, it needed to own 95.5 per cent to hit the compulsory acquisition threshold. It started with 54.6 per cent already owned and needed to get 90 per cent acceptances for the remaining 45.4 per cent stake - making it 95.5 per cent in total to hit the compulsory acquisition threshold. In this case, Keppel Corp the parent company was the offeror, not a fresh SPV, as was the case in OSIM. Hence the 95.5 per cent threshold. As it turned out, it did not manage to hit this level despite a sweetened offer in the event that the compulsory acquisition threshold was reached.

To recap, Ron Sim's shares do not count towards being a "related corporation". And since the offeror for OSIM, the newly set-up SPV, effectively started from zero, it needed to get just 90 per cent to hit the minority squeeze-out level. The Sim family's 69.25 per cent stake, held mostly under Mr Sim's name, could be tendered to make up the 90 per cent needed.

Thus Mr Sim, who has not tendered his stake yet, just needed to get another 20-odd per cent to hit the compulsory acquisition threshold. This threshold was effectively reached last week, likely after some big funds capitulated.

Once upon a time, it was the case that companies could set up a subsidiary, which owned nothing, to circumvent the "90 per cent of shares the offeror does not own" requirement.

But in 2002, the government accepted recommendations to supposedly make companies comply with the spirit of the law. Companies executing takeover transactions could no longer set up subsidiaries to circumvent their own holdings.

What is the spirit of the law?

Yet what is the spirit of the law, exactly? The spirit, apparently, does not proclaim that minorities can easily block compulsory acquisition.

As the OSIM example shows, if entrepreneur-CEOs ever want to privatise their firms, they just need to hit 90 per cent, and it is game over for minorities.

There is a different spirit at work here: The spirit of efficiency. We catch a glimpse of this spirit by examining the latest move to change this law.

In 2011, a committee reviewing the Companies Act suggested that "associates" be excluded in calculating the "90 per cent unaffiliated shareholders" compulsory acquisition threshold. This is the approach taken by the UK, a jurisdiction Singapore has looked up to for company law.

Under this new regime, it is not clear if Mr Sim and other founder-CEOs like him holding substantial stakes in their companies would be able to reach the squeeze-out level at the 90 per cent mark.

In any case, the Ministry of Finance in 2012 rejected the suggested change. It cited worries that the UK definition of associate was too wide and could potentially lead to uncertainty.

"Although it is conceptually sound to exclude parties not independent of the offeror in calculating the 90 per cent acceptances, the present provisions have not given rise to any particular concerns," it said.

It said the UK definition of "associate", when applied here, "will make it more difficult for an offeror to obtain full ownership, especially if the offeror already has a substantial shareholding when the offer is made".

"For a healthy functioning financial market, it is important to ensure that our requirements are not overly stringent or make it difficult for companies to restructure. In case of unfairness, dissenting minority shareholders can apply to court under section 215."

So we glimpse the spirit of the law through the government's words. Its arguments, in short, seem to be for the status quo to remain for the sake of efficiency.

And perhaps the same spirit might deem that the 97 per cent mark was too high a bar for Mr Sim to hit.

After all, in every company there could also be a few percentage points of shareholders who are deceased or whose descendents have forgotten they own the stakes. Mr Sim should not have to face too many obstacles in order to squeeze them out.

A tormented spirit

The spirit is somewhat tormented, however. The government did acknowledge that the UK definition was conceptually sound.

And we are still left with a contradiction where a set of laws applies for corporations in a situation like that of Keppel Land and different rules seem to apply for cases of privatisation by founder-CEOs like Ron Sim. There is scope for the law to be tweaked.

Ultimately, the takeaway, for minorities, is a simple and harsh one.

Minorities are minorities for a reason, for their collective stakes often add up to a powerless percentage of a company's shares.

And for the minority among OSIM's minority shareholders today who still think their stake is valued more than what is put on the table, they could have resisted compulsory acquisition only if an insider holding a substantial stake was on their side and refused to tender.

Yet the offer might then close with the public float falling under 10 per cent. This leads to a trading suspension, and an inability to easily offload one's shares.

There is no good way out if few people agree with you.

If you bought OSIM at its highs two years ago, it does seem unfair that you cannot hold on indefinitely in the hope of recouping your investment.

But perhaps taking a sure loss will end up as the better decision, rather than waiting for a gain that might never come.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Ex-AIA agent jailed 8 years for cheating businessman

Straits Times
20 May 2016
Lorna Tan

Former AIA insurance agent Sally Low was jailed for eight years yesterday for cheating a businessman into buying a fake US$5.06 million (S$7 million) policy in 2002.

The former high-flying agent, who faced a total of 21 charges, appeared weak in court yesterday and was supported by her aunt.

Low, 40, pleaded guilty on May 5, the third day of the criminal trial, to three charges of cheating, one charge of fraudulent use of forged documents and one of moving crime proceeds to a bank account in Hong Kong. The other 16 charges were taken into consideration.

It was the second time she had pleaded guilty to selling a fake AIA Thank You policy, after retracting the first guilty plea in June 2014.

The saga began in late 2002, when Mr Ong Han Ling, now 78, was sold a fake policy by Low, then an AIA agent. He and his wife were told by Low that they would receive guaranteed annual fixed returns of 6 per cent on the US dollar component of the plan and 7.5 per cent on the Singapore dollar portion.

After Mr Ong paid the premium, Low used the funds without his knowledge or consent to buy four AIA policies for him, his wife and their daughter.

Midway through the tenure of the fake policy, Low deceived them into giving the insurance proceeds from three of the unauthorised policies to her by use of fabricated computer errors. Low used the funds to buy condominiums in Cairnhill and Sentosa Cove and sent money overseas.

Her scheme came to light in 2008 after Mr Ong learnt from AIA that the Thank You policy was bogus.

He made a police report against Low in January 2010 and sued her for damages totalling US$2.25 million and $2.99 million.

Deputy Public Prosecutor Hon Yi, who had sought a sentence of nine years in jail, told the court that there was premeditation and planning by Low and that substantial sums of money were in play.

Low's lawyer, Mr Sunil Sudheesan, had sought a six-year jail term.

District Judge Shawn Ho said trust is at the heart of the adviser- client relationship and that trust was "ruptured" in this case.

"The accused exploited her expertise to take advantage of her clients' trust in order to reap a fortune. It was an amalgam of ambition and avarice, with probity absent."

The judge noted that Low had changed lawyers several times and had wasted judicial time. He took into account that Low had made voluntary restitution to the Ongs of about $4.33 million.

Mr Ong said: "My family and I are thankful that this criminal trial is now completed. Eight years is a very long time and at our age it is a large part of our lives."

Low, who was made bankrupt by her previous lawyers, had claimed she was a victim of a ploy with Mr Ong to cheat AIA.

She had admitted herself to the Institute of Mental Health but was certified fit to stand trial.

Meanwhile, the Ongs are suing AIA and Motion Insurance Agency for negligence and lack of care. AIA is alleging that the Ongs are in a conspiracy with Low to defraud AIA.

In March, Low appeared as AIA's witness, stating that the Ongs had conspired with her to defraud AIA.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

1MDB execs approved fund transfer to Jho Low associate

Business Times
13 May 2016
Anita Gabriel

Court documents show recipient firm was beneficially owned by Eric Tan, a close associate of Jho Low

KEY executives of scandal-hit 1Malaysia Development Bhd and a linked entity - SRC International (Malaysia) Limited - had authorised a transfer of US$11.95 million to a firm beneficially owned by Tan Kim Loong or better known as Eric Tan, a close business associate of Malaysian tycoon Low Taek Jho, according to documents submitted in Singapore's state court on Thursday.

The transfer of funds to Affinity Equity International Partners Ltd (a firm beneficially owned by Mr Tan) was done through Pacific Harbour Global Growth Fund AA4 - a fund that SRC International Malaysia had subscribed to - which was overseen by 1MDB's executive director of finance Terence Geh and authorised by Nik Faisal Ariff Kamil, managing director of SRC International Sdn Bhd (SRC International) and 1MDB's former chief investment officer, documents submitted by Singapore prosecutors revealed.

Mr Tan and Mr Low, who is better known as Jho Low, had been mentioned in an earlier case related to the 1MDB probe involving Swiss bank BSI's senior private banker Yak Yew Chee. Yak, who was private banker to Mr Low and several 1MDB entities, had in his affidavit said that he believed Singapore's white collar crime buster had frozen nearly S$10 million in his bank accounts due to ongoing investigations into both men. Mr Yak has not been charged but he had filed a motion which was heard in February to unfreeze his assets which was later withdrawn.

These intriguing details which underscored the "massive complexities" of the 1MDB case being probed by Singapore investigators who have been "working round the clock without any breaks" over the past eight weeks emerged during a mention of the case against BSI's former wealth manager Yeo Jiawei during which Singapore's Second Solicitor-General Kwek Mean Luck slapped the seventh charge against Yeo, this time for forgery in order to facilitate the funds transferred into Mr Tan's firm.

Yeo was alleged to have fraudulenty signed a reference letter addressed to Citigroup Inc's Europe, Middle-east and Africa (EMEA) head of anti-money laundering operations with the intention to mislead that the letter was signed by the authority of BSI Bank Ltd, Singapore.

The latest charge is related to an earlier one filed against Yeo for dishonestly concealing from BSI in 2013 that he would receive through Bridgerock Investment (a firm beneficially owned by Yeo) a portion of fees paid to Pacific Harbor Holdings Ltd (PHHL) - the investment manager of Pacific Harbor Global Growth Ltd - and dishonestly inducing BSI to enter into an agreement with PHHL.

Court documents revealed an email forwarded by Mr Geh to Yeo which was copied to Nik Faisal, Yak and several other senior executives of BSI including managing director Yvonne Seah in which Yeo had requested Nik Faisal to sign off and revert on the documents to proceed with the subscriptions into the funds managed by PHHL involving some US$12.2 million.

The documents also included a letter signed by Nik Faisal on behalf of SRC International Malaysia acknowledging that Pacific Harbor Global Growth Fund has advanced US$11.95 million to borrower Affinity Equity. (It was reported last year that Malaysian authorities probing business deals and monies transferred from 1MDB and its related units including SRC International were unable to determine the whereabouts of Nik Faisal who has been barred from leaving the country.)

In a letter to Citigroup's EMEA head of anti-money laundering operations, BSI's Seah and ex-director Yeo had signed a letter declaring that SRC International Malaysia has been the bank's client since 2011 and that the beneficial owner of the company is the Malaysian Government.

This company's name SRC International Malaysia, a British Virgin Islands registered firm, is almost identical to a firm set up by 1MDB in 2010 called SRC International which had borrowed RM4 billion from a government pension fund and a year later was transferred to MoF.

Mr Tan's firm Affinity Equity International Partners also has a similar name as but is unrelated to Affinity Equity Partners, a Hong Kong-headquartered firm deemed one of the largest dedicated Asian private equity firms.

SRC International was at the centre of investigations last year by Malaysia's anti-graft agency following allegations that funds were funnelled from the company into the bank account of Malaysian Prime Minister Najib Razak.

In January this year, the country's Attorney-General Mohamed Apandi Ali cleared Mr Najib of any wrongdoing on the premise of insufficient evidence.

SRC International is also one of several 1MDB-linked entitites being probed by Swiss regulators for possible misappropriation of funds totalling US$4 billion.

The new details that emerged in the court on Singapore's probe into 1MDB show that apart from the troubled firm's controversial Cayman Islands investments which investigators here appear to have zeroed in on as can be inferred through earlier court sessions, regulators here are also scrutinising the 1MDB money trail of SRC International.

"The new charge is significant as it opens up an entirely new front in the investigations," Mr Kwek said.

"It reveals that the investigations have reached a critical stage, with a higher level of urgency and sensitivity...(and) are moving closer to the centre of a complex web of cross-jurisdictional criminal transactions, moving closer to the origins of the money flows and the principals that the accused (Yeo) has been interacting with," he said.

Mr Kwek sought - and was granted by District Judge Christopher Goh - to further remand Yeo who has already been in custody for 26 days.

Over the course of the last eight weeks, 18 witnesses have been interviewed, some on several occasions.

"International money laundering is often hard to detect and even more difficult to prove as those involved take extraordinary measures to conceal their involvement. Singapore as a leading financial centre takes its responsibilities to stamp out and deter money laundering very seriously," Kwek submitted in his argument to further remand Yeo.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Ex-AIA agent pleads guilty again in insurance scam case

Straits Times
06 May 2016
Lorna Tan

Former AIA insurance agent Sally Low pleaded guilty yesterday to five charges of fraud and cheating, including using forged documents to dupe a businessman into buying a fake US$5.06 million (S$6.9 million) AIA Thank You insurance policy in 2002.

This is the second time she has pleaded guilty as she retracted her first guilty plea in June 2014.

Low, 40, faced a total of 21 charges - four for cheating, 11 for fraudulent use of forged documents, four that are under the Corruption, Drug Trafficking and other Serious Crimes (Confiscation of Benefits) Act, one theft of gooseberries and an attempted suicide in 2012.

Yesterday, she pleaded guilty to three charges of cheating, one charge of fraudulent use of forged documents and one of moving crime proceeds to a bank account in Hong Kong. The other 16 charges were taken into consideration. The sentencing is likely to be later this month. Low remains on bail.

The long-awaited criminal trial started last Monday and on the third day, Low's sixth lawyer, Mr Adrian Wee of Characterist LLC, discharged himself from representing her as she had made an allegation against him.

Representing her yesterday was Mr Sunil Sudheesan of Quahe Woo & Palmer LLC. He and his uncle, the late Mr Subhas Anandan, had previously acted for her on the same case.

Deputy Public Prosecutor Hon Yi highlighted in his statement of facts that a forensic scientist had opined that it was unlikely that Low's customer, Mr Ong Han Ling, 78, was the writer of the signatures in the insurance application form which Low submitted to AIA.

The saga has seen many twists and turns since The Straits Times broke the story six years ago.

It began in late 2002, when Mr Ong was allegedly sold a fake policy by Low, then an AIA agent. He and his wife were told by Low that they would receive guaranteed annual fixed returns of 6 per cent and 7.5 per cent on the US dollar and Singdollar components of the plan.

Mr Ong claimed that after he remitted the premium, Low, without his knowledge or consent, used the funds to buy four AIA policies for him, his wife and their daughter.

He alleged that midway through the tenure of the AIA Thank You policy, Low deceived him into giving the insurance proceeds from three of the unauthorised policies to her by use of fabricated computer errors. Her scheme came to light in 2008 after Mr Ong learnt from AIA that the Thank You policy was bogus.

The insurer made a police report against Low and sacked her in December 2009. Mr Ong made a police report against Low in January 2010 for allegedly cheating him of money. He sued her for damages totalling US$2.25 million and $2.99 million.

In May 2011, she was charged with 19 criminal offences, including cheating the Ongs, using forged documents and money laundering.

In December 2013, Low pleaded guilty to two charges of cheating, one charge of fraudulent use of forged documents and one charge of moving crime proceeds to a bank account in Hong Kong, with the other 15 charges taken into consideration.

She retracted her guilty plea six months later. Low also claimed she was a victim of a ploy with Mr Ong to cheat AIA instead.

Low, who was made bankrupt by her previous set of lawyers, had her sentencing date postponed several times. She had previously admitted herself to the Institute of Mental Health but was certified fit to plead and stand trial.

Meanwhile, the Ongs are suing AIA and Motion Insurance Agency for negligence and lack of care. AIA is alleging that the Ongs are in a conspiracy with Low to defraud AIA and has asked Low to be its witness.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Former BSI banker likely to face new charges

Business Times
20 May 2016
Anita Gabriel

[Singapore] SINGAPORE prosecutors are likely to press new charges against former BSI banker Yeo Jiawei, who has already been charged with seven offences ranging from money laundering, forgery and cheating to obstruction of justice, as a result of an ongoing massive probe by authorities here into 1Malaysia Development Berhad, the court here heard on Thursday.

Second Solicitor-General Kwek Mean Luck told the state court that investigators are scrutinising other aspects of the transactions involving criminal offences related to the seventh charge where Yeo has been accused of forging documents to facilitate a transfer of US$11.95 million in 2013 from SRC International (Malaysia) Ltd to a firm beneficially owned by Tan Kim Loong, a close associate of Malaysian businessman Low Taek Jho, better known as Jho Low.

"A further period of remand is necessary as it would allow for ongoing investigation into the new lines of critical enquires that have opened up since the tendering of the seventh charge," said Mr Kwek at the sixth mention of Yeo's case where he said the prosecution is not expected to seek further remand beyond two weeks from now and is instead likely to apply for Yeo to be denied bail.

As in previous mentions, Yeo appeared in court via video link. Mr Kwek reiterated Yeo's key role in the last three years in relation to illicit transactions and money flows in and out of Singapore, pointing out that the investigations (into the 1MDB money trail) were vastly different from other serious crimes such as drug trafficking or murder which often involved a singular transaction or act. This investigation involved multiple, complex, cross-border financial transactions, multiple entities and extensive documentation, he said.

"Indeed, we have just ascertained that the accused has told yet another individual with knowledge of some of these questionable transactions to delete all relevant emails and to make himself unavailable for questioning by the CAD," said Mr Kwek, adding that Yeo may have likely told others as well to "suppress and tailor" information.

"A few new witnesses were interviewed since last week and some witnesses have been recalled for interviews," said Mr Kwek.

Yeo's lawyer Philip Fong of Harry Elias Partnership submitted that there is no further evidence that can be obtained from the accused as he claimed that the prosecution "already has all the evidence they need".

"There is nothing else the accused can say which has not been said already. The accused should be released on bail and be allowed to start preparing his defence in advance of his trial," Mr Fong added.

District Court Judge Christopher Goh ordered Yeo to be remanded till May 24 but said he was unable to say if the court would grant any further remand request and asked the prosecution to prepare its submission to deny Yeo bail at the next mention.

Pointing out that Yeo, 33, has been remanded for one month and four days and that this was the sixth remand application by prosecutors, the judge said the onus on the prosecution to apply to further remand Yeo would be more onerous to ensure a balance is struck between the interest of the state and the accused.

The prosecution also said it no longer objects to providing Yeo supervised access to his wife as investigations on her have "progressed".

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SGX starts half-yearly updates on long-suspended companies

Business Times
13 May 2016
Kenneth Lim

Move aimed at boosting transparency; it's also improving admissions process to boost oversight and mulling use of rejected IPOs as learning tool

[Singapore] THE Singapore Exchange (SGX) has started publishing half-yearly updates on long-suspended counters and will unveil improvements to the admissions process as part of its efforts to enhance its oversight of companies, the market operator announced on Thursday.

SGX is also exploring publishing details on rejected initial public offering (IPO) applicants to improve transparency and as an educational initiative for the market, SGX chief regulatory officer Tan Boon Gin said in a media briefing.

Details about the improvements to the admissions process have not been disclosed, but they will be announced jointly with the Association of Banks on Friday. Market sources have said that updated guidelines for due diligence on IPOs are expected.

"Our oversight of companies occurs at two stages - the first is at the admission stage, when companies are seeking to list on SGX, and the second is when companies are already listed and we regulate their continuing obligations," Mr Tan said. "I believe we can improve on both fronts."

The new report includes notes on the current status of the 20 SGX-listed companies that have been suspended for at least a year.

Of those, 11 are exploring trading resumptions or reverse takeovers. Four are being delisted, of which two are exploring making an exit offer. Three are in the midst of litigation or have been placed under judicial management. Another two have yet to fully respond to SGX's queries.

The median length of suspension for those companies is just under three years. Fibrechem Technologies, which is currently exploring a reverse takeover after being placed under provisional liquidation, has had the longest suspension, dating back to Feb 25, 2009. The shortest suspension is from Golden Energy And Resources, which completed a reverse takeover in 2015 and has until June 30, 2016 to restore its public float. Golden Energy has been suspended since April 23, 2015.

Some of the information in the updates were discovered by SGX through communications with the companies and have not been announced to the market.

For example, in the case of China Sun BioChem Technology Group Co, SGX's report revealed that the company's directors last informed the exchange that the company had no viable business or financial resources to maintain its listing status. The company, which was suspended in March 2009, last made an announcement in 2012.

"In many instances, the companies have been making few, or even no, disclosures in recent times," Mr Tan said. "SGX has therefore decided in these instances to provide updates on our engagement with the companies, so as to make transparent to shareholders our engagement efforts."

Mr Tan added that SGX generally tries to help companies to resume trading or to extract an exit offer for shareholders. It allows delistings without exit offers only when the company is found to have insufficient resources to fund an offer.

Veteran trader Mano Sabnani welcomed the updates.

"Some of these companies have literally stopped announcing anything," he said. "Even if it's a blank, it's good for the stock exchange to say."

David Gerald, president of the Securities Investors Association of Singapore, said: "This report is useful as it improves transparency, provides updates to investors on the progress of investigation, and helps investors keep track of their investments as some companies can be and have been revived in the past."

Corporate lawyer Stefanie Yuen Thio of TSMP Law Corp said it sent a positive signal about the market operator: "The principal benefit of the SGX's update on developments in suspended companies is that it enhances transparency in the stock market and boosts confidence in the exchange. It's heartening to know that 11 out of 20 companies are on the path to possible rehabilitation; hopefully shareholders holding such suspended securities will be able to see a resumption of listing in the near future."

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New estate agents association names its inaugural CEO

Business Times
06 May 2016
Lynette Khoo

MOU also inked with the Singapore Mediation Centre

[Singapore] THE newly minted Singapore Estate Agents Association (SEAA) has appointed real estate veteran Wong Cheong Hong, the former key executive officer of Dennis Wee Realty, as its inaugural chief executive.

As part of the string of common services it is rolling out for members, SEAA also inked a memorandum of understanding (MOU) with the Singapore Mediation Centre (SMC) on Thursday.

Under the pact, the SMC is identified as the preferred dispute resolution channel to provide a mediation platform for disputes between estate agents arising from commission and related agency services, which is currently not under the purview of the Council for Estate Agencies (CEA).

In his first week as CEO since his appointment on Tuesday, Mr Wong told The Business Timesthat many plans are on the drawing board to push the association's agenda of raising professionalism in real estate agency work and providing a unified voice for agencies and their salespeople.

The association is also looking at widening the courses it provides for salespeople, including more WSQ (Workforce Skills Qualifications) courses. It hopes to come up with a non-commercialised property portal for agents to publish property listings and share the database, bearing in mind that property listings are now a major costs for agents.

"We are still working through the details of the MOU for a possible portal partnership," Mr Wong said, declining to reveal further information as discussions are still underway.

SEAA was minted under the Registry of Societies last November with the "blessing" of the CEA. An official launch is targeted in July.

The idea of forming such an industry body came about in 2014 when 24 founding members from a mix of agencies and international property consultancies, as well as the Singapore Accredited Estate Agencies (SAEA) and the Institute of Estate Agents (IEA) came together to form the main committee for the proposed association.

But members of IEA, which also wants to be the "voice of and platform for the real estate sector in Singapore", according to its statement on Thursday, decided not to join the SEAA after IEA members voted for IEA to maintain the status quo in an annual general meeting last week.

BT understands that differences in views on how the executive committee should be structured was a key reason why IEA decided not to join the SEAA.

The SEAA seeks to ensure that its leadership and membership structures are representative of estate agents of varying sizes and the salespeople registered through them, Mr Wong said.

Of the 12 exco members in the SEAA, three are from local large agencies with more than 500 associates, three are from agencies with fewer than 500 associates, three from international property consultancies, and the remaining three are salespeople.

In IEA, however, each of the 600-odd members who are agents has a voting right. IEA president Harry Yeo said that IEA wants to grow the membership size to 2,000 by the end of this year. It will "re-invent itself" to raise membership, expand its training programmes and offer mobile technology platforms for members.

As for the SEAA, it has close to 1,300 members, mostly transfers from SAEA, which has relinquished its operations since the birth of the new association and is now an asset holding company.

Both associations have seen their memberships dwindle in an industry of over 30,000 registered salespeople. According to the CEA, one-third of these salespeople hold another job; of this lot, one-third are inactive in estate agency work.

Mr Wong of SEAA noted that one of the key challenges facing the industry is the muted property market where poor transaction volumes and prices have eroded the earnings of salespeople.

"At the same time, business costs have not subsided and unless there are adequate economies of scale, the boutique-sized and smaller set-ups would face greater financial challenges ahead," he said.

"Also, the increased sophistication of clients given the transparency of data in Singapore means that estate agents and salespersons require more robust understanding of their fiduciary roles and responsibilities," he added.

Real estate salespeople also need to adapt and reposition themselves in view of disruptive technologies. "SEAA will reach out to consumers in the future to highlight the salient advantages of engaging the services of real estate salespersons," Mr Wong said.

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New rules relax prospectus burden for retail bonds from quality issuers

Business Times
20 May 2016
Kenneth Lim

Temasek Holdings says it is 'open' to retail bond issuance and will explore new frameworks

[Singapore]SINGAPORE authorities have launched their latest effort to boost the retail bond market with long-discussed bond seasoning and exemption frameworks taking effect on Thursday that will allow good-quality issuers to sell debt to mom-and-pop investors without a prospectus.

The seasoning framework - which went through public consultations in September and December 2014 - will allow investors to buy wholesale bonds in denominations as small as S$1,000 on the Singapore Exchange (SGX) with only a product highlight sheet.

To mitigate the risk that comes with relaxing disclosure requirements and with providing retail access, the framework requires that only bonds that have been sold to institutional or accredited investors and listed on SGX for at least six months - or seasoned - may then be sold to retail with only a product highlight sheet.

There are also minimum hurdles on the issuers' size, listing history and creditworthiness that must be crossed. Only bonds that bear plain vanilla structures may be sold to retail under the framework.

Re-taps are allowed, in which an issuer offers additional notes under an existing seasoned tranche without the need for a prospectus.

The Monetary Authority of Singapore (MAS) also announced the Exempt Bond Issuer Framework, which allows issuers to offer bonds directly to retail investors at the outset without a prospectus if they meet eligibility criteria that are stricter than those used in the seasoning framework.

"The frameworks will widen the range of fixed income products and enable retail investors to access some of the 1,900 wholesale bonds listed on SGX, Asia's leading bond-listing platform," SGX chief executive Loh Boon Chye said in a statement. "Issuers too will gain from a bigger pool of investors. This initiative advances SGX's efforts to build a dynamic and thriving fixed income market in Singapore."

Temasek Holdings, the Singapore government-owned investment company, said it is open to issuing a retail bond.

"Temasek welcomes today's release of the retail bond frameworks by MAS and SGX. Temasek remains open to a retail bond issue in due course. We will study the details of the frameworks released today."

United Overseas Bank (UOB) head of group investment banking Ronny Chng welcomed the move. "With retail investors in Singapore gaining access to corporate bonds, issuers will be able to benefit from an even more diversified investor base and higher liquidity of their bonds," he said.

"In particular, corporate bond issuers with strong track records will be able to enjoy greater flexibility when tapping the debt capital market for funds as they can now make offers to both institutional and retail investors without additional prospectuses. These measures to increase retail investors' participation would add to the appeal and increase the vibrancy of Singapore's bond market."

Clifford Lee, head of fixed income at DBS Bank, said the reduced disclosure burden on issuers will be positive for supply. "The new regulations will certainly make it easier for corporate issuers to tap the retail bond market as the documentation process is now less onerous," he said.

"We expect to have more discussions with corporate issuers on retail offerings, especially since the retail market has been of interest to them, given the recent spate of successful retail issues."

Financial consultant Sean Cheng of Providend said Singapore investors are generally keen to have more investment alternatives, and would appreciate having more bond offerings.

"There still is a lot of interest in bonds, especially for bonds that are issued by names that people are comfortable with," he said. "Recently, there were a couple of issues, one by Manulife, the other by Mapletree Logistics Trust. Both were oversubscribed."


Who can issue seasoned bonds?

ISSUERS may offer seasoned bonds to retail investors only if they meet at least one criterion under each of the following three tests:

Test 1: Size

• Market cap of at least S$1 billion over the past 180 market days; or
• Net asset of at least S$500 million in the most recent audited financial year and annual average net asset of at least S$500 million over the three most recent audited financial years.

Test 2: Listing history

• Has equity securities listed on SGX or a recognised securities exchange for at least five years; or
• Has listed or guaranteed the issuance of bonds listed on SGX for at least five years

Test 3: Track record

• Has a positive three-year average profit and a positive three-year average net operating cash flow; or
• Has a credit rating of at least BBB for either the issuer or the bonds being offered; or
• Has listed, or guaranteed the issuance of, bonds listed on SGX of at least S$500 million over the previous five years.

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Legislation possible in some areas of the boardroom: Forum

Straits Times
13 May 2016

Mr Sulthan Niaz made valid points on women in boardrooms ("No need for law on number of women in boardrooms"; Monday).

We constantly have people lamenting the "plight" of women in Singapore, as if they have been bypassed and denied opportunities.

The fact that they achieved the highest percentage of chief executive positions in Asia, and the third highest globally, according to the Credit Suisse Gender 3000 report, proves that this is a misconception.

Using the percentage of board representation as a measure of Singaporean women's success is myopic.

In the larger scheme of things, women are very successful.

As Mr Niaz rightly articulated, some women may shun board representation because of other priorities.

The call for legislation on the number of women in boardrooms is retrogressive.

It compromises the attributes of democracy, meritocracy and free choice, which define Singaporean society and set us apart from many other societies.

Not all issues lend themselves to legislation.

Having said that, there are certain areas in boardroom representation where legislation is possible.

First, limit the number of boards an individual can sit on, as it is common for some individuals to sit on multiple boards, some as many as 10 or more.

This begs the questions: Are these all the talents we have? Are they overloaded to the extent that their effectiveness in discharging their roles is affected?

This smacks of the old boys' club syndrome, which should be eradicated.

Capping the number of boards an individual can sit on will ensure effectiveness and will free up opportunities for others.

Second, allow only those who do not hold full-time jobs to be members of boards.

Currently, many board members are holding full-time jobs.

By being board members of other companies, are they not using their companies' time? Shouldn't the time be used solely to serve their employers?

In the most drastic sense, this is tantamount to moonlighting.

There may be merit in confining board membership to retirees, who would have, by then, accumulated a wealth of industry knowledge and technical competence, and who may wish to remain connected and engaged with the corporate world, on their own time.

Lawrence Loh Kiah Muan

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Ex-banker in 1MDB case faces more charges

Straits Times
06 May 2016
Grace Leong

He is accused of cheating former employer BSI, obstructing justice and transferring ill-gotten gains

Three more charges have been slapped on a former private wealth banker caught up in a probe linked to embattled state fund 1Malaysia Development Berhad (1MDB).

Yeo Jiawei, 33, is described by prosecutors as playing a "central role" in the movement of large sums and concealing transactions.

Yeo, formerly with the Singapore arm of Swiss private bank BSI, was charged with cheating the bank in 2013 by dishonest concealment, transferring funds that represented his benefits from criminal conduct and obstructing justice, bringing the total charges against him to six.

In a new twist, prosecutors say investigators suspect "significant sums of money - S$200,000 and US$200,000 (S$271,300) - transferred on Yeo's behalf" to Harry Elias Partnership, the law firm of his lawyer, Mr Philip Fong, "likely constitute proceeds linked to criminal conduct".

Prosecutors already accuse Yeo of trying to obstruct justice, cheating his former employer and money laundering in earlier charges brought on April 16.

Yesterday, Yeo was charged with cheating his former employer in 2013 by hiding the fact that he would receive a portion of fees paid through Bridgerock Investment, a firm he controlled, to Pacific Harbor Holdings, the investment manager of Pacific Harbor Global Growth.

He was also charged with trying to obstruct justice when he asked Mr Kevin Swampillai, a former BSI wealth management services director, on March 27 to lie to police that money Mr Samuel Goh Sze-Wei transferred to Bridgerock Investment and GTB Investment was Mr Goh's investment.

In addition, he was charged with transferring US$500,000 from a Malayan Banking account in Bridgerock Investment's name on Nov 14, 2012, to an OCBC account in the name of Yishun Aquarium. This amount represents his "benefits from cheating".

District Judge Christopher Goh granted the prosecution's application to remand Yeo for another week, but allowed him "reasonable" access to his lawyer, with arrangements to be made by the Commercial Affairs Department.

Second Solicitor-General Kwek Mean Luck, in arguing for Yeo to be further remanded, said he "played a key role and schemed directly with those responsible for this complex web of criminal transactions and activities". Such activities are not limited to money laundering across jurisdictions, which already involves "staggering amounts", he said.

"Yeo himself has received secret profits of about US$4 million from Bridgerock Investment when he was in BSI. It is believed that the total amount he has received from illicit transactions are well in excess of this amount. Further, he has also taken extraordinary steps to cover his involvement and to also disguise the flows of illicit monies to himself and his family members."

Yeo showed "no qualms in asking other witnesses to lie and to interfere with investigations," he added. He said the prosecution has grounds to believe Yeo's wife had "made contact with other witnesses for reasons that may need further probing".

Responding to the allegations that funds transferred to Mr Fong's firm may be proceeds linked to criminal conduct, Mr Fong argued this remains a "bare assertion".

He said he needed access to Yeo to clarify this.

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Acra probing possible SingPost rule breaches

Business Times
20 May 2016
Melissa Tan

Corporate watchdog asked SingPost for joint special auditors' report on corporate governance; stock slides as much as 3.5% to 2 1/2-month low of S$1.525

[Singapore] THE local corporate watchdog is showing its teeth. The Accounting and Corporate Regulatory Authority (Acra) is starting to investigate possible breaches of regulations at Singapore Post's board, the postal and e-commerce group revealed in a bourse filing on Thursday morning.

Acra on Wednesday "required" SingPost to furnish it the joint special audit report on SingPost's corporate governance dated May 3 "as it (Acra) is commencing investigations into possible breaches of the Companies Act as highlighted in the report", SingPost said in its one-liner statement before the market opened.

The announcement sent SingPost shares tumbling in the session. The stock fell as much as 3.5 per cent to a two-and-a-half month low of S$1.525 before recovering slightly to end the day S$0.025 lower at S$1.55 on 11 million shares traded.

The corporate regulator's move comes shortly after SingPost's joint special auditors, Drew & Napier and PricewaterhouseCoopers, said in a summary of their report that former SingPost lead independent director Keith Tay was "arguably in breach of section 156(1) of the Companies Act" for not declaring his interest in the 2013 acquisition of Famous Holdings "as soon as practicable".

The auditors had also found that Mr Tay had breached some fiduciary duties relating to the Famous Holdings deal and SingPost's acquisition of Famous Pacific Shipping (NZ) in 2015. Breaches of fiduciary duties come under the Companies Act, which is under Acra's purview.

SingPost has released only a summary of the report to the public, though it sent the full special audit findings to the Singapore Exchange.

When asked to confirm Acra's launch of a probe and how quickly it aimed to complete it, an Acra spokesman said in an emailed statement: "ACRA is unable to provide further comments as investigations are on-going."

Singapore Exchange head of listing compliance June Sim said over email that the exchange was still reviewing the special audit findings to determine the appropriate course of action, adding: "SGX will refer potential breaches of regulations to the relevant authorities and has referred this matter to ACRA ... Any regulatory action to be taken against the relevant persons will have to be proportionate to the listing rule breach." She reiterated that SGX has told SingPost to get independent confirmation on its implementations of the special auditors' recommendations.

It is unclear whether or how much Acra's investigation will focus on Mr Tay, the man at the centre of the recently concluded corporate governance probe at SingPost which revealed disclosure lapses and weak board controls.

Mr Tay's lawyer Thio Shen Yi, a Senior Counsel and joint managing director of TSMP Law Corp, told The Business Times on Thursday: "One expects the relevant authorities to do their jobs so we consider the request from ACRA for the full report to be relatively routine. We have not been contacted by any of the regulators. Keith is more than prepared to tell his side of the story and to address the issues arising from the report at the appropriate juncture if necessary."

SingPost spokesman Peter Heng said in an email on Thursday that the group has "provided the full report to ACRA for their investigation". He also said the group did not know of any SingPost directors, former or current, who have been asked to assist Acra in the investigation, adding: "We will cooperate with any regulator."

Observers noted that Acra's move to investigate was swift given the amount of detail to comb through in the 47-page summary report, adding that they hoped there would be appropriate enforcement or safeguards to prevent future governance lapses.

"I am pleased that ACRA is following up quickly with further investigations. Timely and effective enforcement is critical to a robust regulatory framework and improving corporate governance standards," said SingPost shareholder and corporate governance specialist Mak Yuen Teen. He added: "In this case, the special auditors' report is a report on the action of the board and certain directors. It is not a case where the board has commissioned a report to investigate management ... If regulators have access to the full report to consider possible action, shouldn't shareholders have access to the full report for the same reason? Why should the board whose actions are in question be allowed to decide not to release the full report without justification?"

Corporate lawyer Robson Lee of Gibson Dunn said: "I believe ACRA needed time to study the rather voluminous summary report that was earlier published to assess if a full investigation is required. That ACRA has now asked for the complete special audit report suggests that the information revealed in the summary report warrants a full investigation by the Authority on the highlighted transactions involving SingPost and/or the conduct of the relevant person(s) who had been involved in the transactions."

Mr Lee said the market "should be informed as soon as possible whether any regulatory enforcement action would be taken against any errant director or management executive for any breach of the law", adding that market participants would ideally also like to know "if the outcome of the investigation reveals only lapses of corporate governance best practices that did not contravene the law, what remedial actions and safeguards has the Authority (Acra) procured the board of SingPost to put in place to prevent a future recurrence of such lapses and misdemeanors".

"This will bring closure to an unfortunate episode of an established institution that has served Singapore very well for many decades."

SingPost commissioned the corporate governance probe last December after admitting it had made an "oversight" in a 2014 deal disclosure. It had wrongly said no directors had an interest in its acquisition of freight forwarder FS Mackenzie - when Mr Tay in fact held 34.5 per cent of Stirling Coleman, which advised FS Mackenzie's seller.

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Stiffer penalties for workplace safety lapses

Straits Times
13 May 2016
Olivia Ho

Companies found lacking in workplace safety and health standards will now face stiffer penalties, including a longer minimum period in which they have to stop work.

Stop-work orders will now last at least three weeks, up from two previously. Companies slapped with a stop-work order or found with a workplace fatality will also risk having their work pass privileges temporarily curtailed, making them unable to hire new foreign workers until they have resolved safety issues.

Announcing the changes yesterday, Minister of State for Manpower Sam Tan said they were in response to the recent spate of workplace deaths: There were 28 in the first four months of this year, six more than in the same period last year.

Mr Tan, who spoke at a surprise construction site inspection in Geylang Road, said a longer stop-work order was a "harsh" financial penalty for companies but stressed that safety remains paramount.

"If companies don't take safety seriously, we can't take their commercial interest as seriously," he said.

For a company hiring a hundred workers, an extra week of a stop-work order could cost tens of thousands in salaries paid, but for no work done - and this does not include damages levelled by the developer for missing deadlines.

The Geylang Road worksite between Lorong 19 and 21 was issued with a stop-work order after the Ministry of Manpower (MOM) visit.

The MOM declined to reveal the name of the company.

New conditions for lifting stop-work orders now include compulsory refresher training on all areas of weakness, as well as a re-evaluation of the site's work safety and health management system by approved external auditors.

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The AGM dilemma: Better late than never?

Business Times
06 May 2016
Mak Yuen Teen & Chew Yi Hong

It may be worthwhile to revisit the four-month deadline in the light of how this may have aggravated clustering of AGMs. There're good reasons to consider allowing another month to hold AGM.

LAST week was another exciting week in Singapore and we are not talking about the opening of the latest Captain America movie. We are of course talking about the busiest week of the year for annual general meetings (AGMs), a week that would have required almost superhuman qualities of shareholders (and some directors) to cope. Like the expected arrival of the latest superhero movie in the last week of April here in the coming years, this "hot April" meeting period is not going away anytime soon - if we do not seriously consider taking steps to address it.

In our second report on shareholder meetings in Singapore titled The Singapore Report on Shareholder Meetings: Shareholders Awaken? published last month, our first recommendation was that our regulators should consider having a public consultation with investors, issuers and other stakeholders on whether to allow AGMs to be held within five months after the financial year-end, rather than the current four months.

This follows our first report in 2015 where we examined clustering of AGMs in a number of Asia-Pacific and global markets and concluded that the clustering of year-ends together with the deadline for holding AGMs after the year-end are important contributors to the clustering of AGMs. Of the G-7 countries of Canada, France, Germany, Italy, Japan, the UK and the United States, only Japan with a three-month deadline has a shorter AGM deadline than Singapore.

Most Japanese companies have a March financial year-end and 75 per cent of Japanese companies reportedly hold their AGMs in the last week of June. Italy has a deadline of four months that can be extended to six months if shareholders approve, while all the other countries have a deadline of six months or more. For other Asia-Pacific countries, South Korea has a shorter deadline of three months, Thailand has the same deadline of four months, Australia allows five months, while China, Hong Kong and Malaysia allow six months. In South Korea and Thailand, where most companies have December financial year-ends, there is severe clustering of AGMs in March and April respectively.

Singapore moved from a six-month deadline to a four-month deadline for listed issuers for financial years commencing on or after Jan 1, 2003, following the recommendation of the Report of the Disclosure and Accounting Standards Committee (DASC) in 2001. Looking at the legislative history of the Companies Act, the initial amendment to the Act actually specified a five-month deadline, but this was changed to a four-month deadline in the final amendment in line with the DASC recommendation.

The DASC made many excellent recommendations that have significantly transformed disclosure and accounting standards here, including quarterly reporting, convergence with international financial reporting standards and auditor independence. However, it may be worthwhile revisiting the four-month AGM deadline in the light of how this may have aggravated the clustering of AGMs. We think there are good reasons to consider allowing issuers an extra month to hold the AGM.

To give a sense of when UK and US companies tend to hold their AGMs, we looked at the most recent AGM dates of 20 UK and 20 US companies. To get a mixture of large and smaller companies, we picked the 10 largest FTSE 100 and 10 smallest FTSE 250 companies in UK and the 10 largest and 10 smallest Fortune 500 companies in US. For the 20 UK companies, nine held their AGMs within four months, with seven being large companies and two being the smaller companies. For the 20 US companies, only five held their AGMs within four months, with two being large companies and three being the smaller ones. Well-known companies that held their AGMs in the fifth month after their year-end include Apple, ExxonMobil, Ford Motor, General Motors and Walmart.

THE SITUATION IN SINGAPORE

While the clustering of AGMs in Singapore in the last five business days in the peak months of April, July and October has improved slightly since 2012 or 2013, the improvement has been marginal. With a four-month AGM deadline, the situation is unlikely to improve significantly in the future.

Based on 2015 AGMs that were held in April, even if we were to spread out those AGMs evenly over the entire month of April, we are still talking about nearly 110 AGMs per week, or about 22 meetings a day. For an issuer with a December year-end, the full-year results have to be announced within 60 days (that is, by the last day of February or the first day of March). By that time, the audit is likely to be substantially but not necessarily fully completed for many issuers. If the issuer aims to hold the meeting at the beginning of April, the notice of meeting (and annual report) will have to be issued by mid-March - about two weeks after the results announcement. Even if some issuers can pull all that off, the problem of clustering is at best half-solved.

Let's first consider the arguments against moving to a five-month deadline in Singapore.

Reduced timeliness of AGMs

The clearest argument against a longer AGM deadline is that this will reduce the timeliness of AGMs. But how much is a one-month difference going to make to timeliness and, more importantly, to how shareholder-friendly our market is perceived to be?

Ten years ago, the Asian Corporate Governance Association (ACGA) published a proxy voting survey covering 11 Asian markets (including Singapore) and three other benchmark markets of Australia, UK and US.

The survey identified 10 impediments to proxy voting from the institutional investors' viewpoint. Lack of timeliness of AGMs did not emerge as an impediment even though, of the 11 Asian markets covered, only Japan, South Korea and Thailand have AGM deadlines that are the same or shorter than Singapore, while the other Asian markets and the three benchmark markets all have longer AGM deadlines. Hong Kong emerged as the "clear leader" in terms of having fewer impediments to proxy voting, even though it has a six-month AGM deadline.

At least three of the impediments identified in the survey are at least partly a function of a shorter AGM deadline - notice of meeting, time to vote before meeting, and clustering of meeting dates. In 2015, average days' of notice for Singapore AGMs was 17.4 days, compared to the global best practice of 28 days cited in the ACGA report. If issuers want to send their full notice together with the annual report and any necessary circular 28 days before the four-month AGM deadline, they will have to do so by around the end of the third month. This will create considerable pressure on other upstream activities such as audit, review of the annual report by the audit committee and board, and printing of the annual report and circular.

Although Singapore still came out second (to Hong Kong) on the first two factors of notice of meeting and time to vote in the ACGA survey, it came eighth on clustering of meeting dates. Japan and South Korea came out at or near the bottom for all three factors - and they have a three-month deadline.

Of course, the cynic may argue that institutional investors generally do not depend on timely AGMs to engage with companies as they can have private meetings. In Singapore, retail investors constitute an important group of investors. But what's the point of more timely AGMs if few shareholders, including retail shareholders, can attend?

On April 28 this year, the first author attended one AGM that had no more than about 30 shareholders present. In fact, one of the directors at that AGM also sit on the board of two other issuers that were holding their AGMs the same day. Meanwhile, the second author had several AGMs to choose from for April 28 and decided to attend the DBS AGM so that he could stay for an hour and then leave early to attend the AGM of Jardine Cycle & Carriage that was being held nearby.

There are of course other ways to ease the clustering of AGMs without extending the AGM deadline. For example, issuers can change their financial year-ends or regulators can require new listings to have a financial year-end other than December. How many issuers will be prepared to change their financial year-ends? Regulators will be hard-pressed to justify compelling issuers to change year-ends or select particular year-ends.

Another possibility is for regulators to impose quotas on number of AGMs per day. Even if they are prepared to do so, how much can regulators realistically compel issuers to hold their AGMs earlier with a four-month deadline? As mentioned earlier, even if we spread out the April AGMs evenly over the entire month of April, we are still talking about nearly 110 AGMs per week.

With the audit crunch in the first couple of months of the year for issuers with December year-ends, the time needed for the audit committee and board to review and approve the annual report and for the printing of the report, and the need to send out the notice of meeting and annual report at least 14 days ahead of the AGM, some issuers will face genuine difficulty in holding their AGMs before the last two weeks of April. Therefore, we can expect that most April AGMs will continue to be held in those two weeks with the four-month deadline.

Some retail investors are against delaying AGMs because this may delay the payment of dividends. In 2015, about 40 per cent of issuers that revealed their detailed poll voting results in our study had a resolution for shareholders to approve a final dividend. We know some retail investors do rely on dividends so we do not want to trivialise a delay in dividends but how critical is a one-month delay in this regard? One mitigating factor is that Reits, which is a common class of investment for those seeking regular income from dividends, conduct their AGMs relatively early and pay out semi-annually and/or quarterly.

From a legal standpoint, who approves the final dividend is a matter for the articles of association, so it is possible for issuers to provide in their articles that the directors approve the final dividend (as they already do for interim dividends). Some issuers declare more than one interim dividend without any final dividend, removing the need for shareholders' approval. The delay in dividend payments can also be partly addressed if issuer start paying interim dividends, or if they already do so, balance out the interim and final dividends more evenly.

A retrograde step

Another argument against extending the AGM deadline is that this would be seen as a retrograde step and would reflect negatively on Singapore. We think that stakeholders should be prepared to reconsider prior decisions in the light of new information and developments. As long as the rationale for doing so is sound and the benefits and disadvantages that will come from relaxing the AGM deadline are considered and debated, we do not think a resulting decision to extend the AGM deadline by a month will be seen as a retrograde step. This is especially so given that we will still have AGMs which are just as timely or timelier than most other markets. The international community can hardly criticise us if we still have AGMs that are just as timely as them after the change. If this allows issuers to give longer notice of meetings and global institutional investors more time to vote, they may even welcome it.

Let's now consider the arguments for extending the AGM deadline.

Reducing the clustering

First, while it may be unreasonable for regulators to impose quotas on number of AGMs per day with the current four-month deadline - and as mentioned earlier, this is unlikely to make much of a dent on the clustering anyway - it is likely to be more palatable to issuers if regulators impose quotas and give issuers more time to hold AGMs. For instance, with a five-month deadline, they can impose a quota of say no more than 70 AGMs a week and no more than 15 per day, which would be a considerable improvement over the current situation.

Improving the quality of financial reporting and audit

Second, with financial reporting standards today being far more complex than when the AGM deadline was shortened from six to four months, there is a possibility that financial reporting and audit quality may have been compromised. The International Auditing and Assurance Standards Board sees tight financial reporting deadlines as a factor impacting the exercise of professional scepticism by external auditors and, therefore, a threat to audit quality. Extending the AGM deadline can also reduce the audit crunch and better smooth out the utilisation of audit resources over the year (including for issuers with March and June year ends, which are the next most common year ends) . . . and perhaps (one can at least hope) ease pressure on audit fees.

Preventive measure against a further increase in clustering

Third, with the introduction of the expanded auditor's report and the inclusion of the section on key audit matters, more time may be spent on the audit and in discussions between the auditors, audit committee and management before the publication of the report. This may cause even more companies to push their AGM to the very last week, worsening clustering with a four-month deadline. Extending to a five-month deadline can reduce this concern.

Longer notice period

Fourth, with a longer AGM deadline, investors can be given longer notice of the AGM and more time to vote, thereby removing or improving two potential impediments faced by institutional investors. Regulators can even consider imposing a longer notice period on issuers, such as 18 or 21 days, something that would be difficult to do with a tight four-month deadline.

Alignment with sustainability reporting

Fifth, Singapore Exchange, which is introducing sustainability reporting on a "comply or explain" basis, has proposed that such reports be published within five months of the end of the financial year. This is to give issuers more time to prepare their sustainability reports, presumably to avoid putting additional pressure on issuers that may already be struggling with the four-month deadline to prepare their annual report and hold their AGM. Extending the AGM deadline to five months may allow more issuers to issue their sustainability reports together with their annual reports, therefore aligning the timing of the two reports, and give shareholders the opportunity to ask questions about both reports at the same AGM.

Improved shareholder participation

Finally, with a longer AGM deadline and limits on number of AGMs per day, shareholders will have better opportunities to attend AGMs and hold directors accountable. This, to us, is the best thing that can come out of extending the AGM deadline.

  • Mak Yuen Teen is an associate professor at the NUS Business School where he teaches corporate governance and ethics. Chew Yi Hong is an active investor and has been involved as project manager and researcher in several corporate governance projects in Singapore and the region.

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Whistleblowing guide for accountants timely

Business Times
20 May 2016
Kang Wai Geat

The International Ethics Standards Board for Accountants has done the right thing by taking the bull by its horns and trying to strike a fine balance for the greater good

THE high-profile Panama Papers episode has taken whistleblowing to a whole new level. The colossal amount of information involved - 11.5 million documents or 2.6 terabytes, equivalent to the storage capacity of about 167 of the common 16-gigabyte thumb drives - the prominent list of notables implicated so far and the massive coordination effort undertaken to investigate the information and release it to the public, is of an unprecedented scale. The saga has given whistleblowing the perfect stage for its moment in the limelight.

In a few months, the International Ethics Standards Board for Accountants (IESBA) is expected to issue new provisions, with elements concerning whistleblowing, to guide accountants (including auditors) in responding to any actual or suspected non-compliance with laws and regulations.

This is by no means a knee-jerk reaction to the Panama Papers. The IESBA has been on this project for many years. Accountants in jurisdictions, including Singapore, who adopt the ethics standards issued by the IESBA will have clearer guidelines to follow regarding whistleblowing, under the requirements of the new standard going forward.

It is still early days to know whether Singapore will adopt the standard. Extensive discussions will be held to assess the likely impact on the Singapore accountancy profession before a decision is taken on the adoption of the standard in Singapore.

In a nutshell, the standard expects accountants who are non-auditors to refer cases of suspected non-compliance with laws and regulations to higher internal levels of authority. If the upper echelons do not take adequate and timely actions to address the non-compliance, the accountants will have to consider whether further action is needed; these may include, inter alia, reporting the matter to an external authority or resigning from the organisation.

CONTENTIOUS TOPIC

Likewise, auditors are subject to similar requirements, except they will broach the issue with the appropriate level of management and if necessary, the board of directors or audit committees of their audit clients.

For example, if an auditor discovers that an Indonesian subsidiary of his client is burning forests and contributing to the haze problem, he may need to report this, even though this is unrelated to the financial statements. This can be very onerous on the auditor, who may be bogged down by an expectation to know a lot more about his client beyond the audit of the financial statements.

Whistleblowing is a contentious topic. Unsurprisingly, the IESBA encountered stern opposition from some stakeholders on its initial set of proposals.

But it believed the project to be of sufficient significance to weather the storm and formulated the latest standard, which is more calibrated in its approach after taking into account the feedback garnered. The standard provides guidance to a quandary which accountants may face. Being a whistleblower can be a very taxing experience and any direction to help accountants navigate through such uncharted waters would be like the beacon from a lighthouse.

Professionally, accountants have a duty not to ignore such instances of non-compliance, especially when substantial harm may be caused to the wider public. More importantly, whistleblowing is gaining traction as one of the more effective means of uncovering illegal activities such as fraud and corruption. From Enron's Sherron Watkins and WorldCom's Cynthia Cooper to the more recent Michael Woodford of Olympus, whistleblowers have made an enormous and lasting impact in some of the major corporate financial scandals that have rocked the world. Riding on such strong tailwinds, whistleblowing has gathered enough momentum to feature more prominently in the code of professional behaviour accountants should embrace.

The promulgation of the standard may be in the public interest, but there are challenging concerns which should be addressed to facilitate the job of accountants. For starters, the standard may adversely impact business and working relationships. The level of trust between accountants and their clients, employers and fellow colleagues could be eroded if accountants are now perceived to be undercover agents on the prowl for wrongdoing.

For auditors, clients will be more wary of what they share with them and may even withhold important information. Not only will this impede the auditor's work, it is unequivocally a hindrance in the pursuit of high-quality audits. For accountants who are non-auditors, their loyalty towards their employers and camaraderie with fellow workers may be cast in doubt. They may be treated as an ungrateful lot who bite the hand that feeds them. This could have repercussions on their career prospects and job security.

In addition, with the new standard, accountants will be caught between the devil and the deep blue sea if they are embroiled in a whistleblowing situation. If they do not blow the whistle, it will constitute non-compliance with the standard; if they do, it will bring about other complications.

In many cases, whistleblowers put their careers, families and even their lives on the line to expose illegal activities. It is not uncommon to hear of whistleblowers being sacked or demoted. They often face persecution and are the subject of reprisals. Yet, their acts of valour may not be reciprocated with legal protection. Not only do whistleblowers run the risk of being sued for breaches of confidentiality, they may have to serve jail time if they are convicted of complicity in the crime they have reported on, despite having cooperated during investigations.

At the moment, the stances on enacting legislations to protect whistleblowers may vary from jurisdiction to jurisdiction. The United States and the United Kingdom, for example, have laws to shelter whistleblowers. But in other jurisdictions, there is resistance to the enacting of whistleblower-protection legislation as a result of historical baggage, cultural differences or business implications, among other reasons. For example, Germany has almost no legal protection for whistleblowers.

WIGGLE ROOM

It is not all doom and gloom for accountants. The new standard does give accountants some room to manoeuvre. One saving grace is that they do not have to disclose the matter to an external authority if doing so violates one or more laws or regulations. Also, before disclosing to an external authority, accountants will have to consider whether:

a suitable authority is in place to receive the information;

sound and trustworthy protection from civil, criminal or professional liability or retaliation afforded by legislation or regulation exists; and

the physical safety of the accountants or other individuals is at risk.

Dissidents would contend that the above factors reduce the robustness and effectiveness of the standard. They would posit that the provisions may be all too conveniently used as an excuse to not disclose information to external authorities.

While there may be some merit to the argument, the IESBA recognises the need to be pragmatic when it comes to applying the standard in practice. By insisting on overly stringent or prescriptive requirements, it may be a tall order to develop and issue a standard which can be operationally practicable across the world.

The IESBA has attempted to strike a fine balance for the greater good. Although the jury is still out there on the effectiveness of the provisions, it has done the right thing by taking the bull by its horns. If the standard achieves its desired objective, it will undoubtedly further elevate the stature of the global accountancy profession and reinforce its position as a key component of an ethical business environment.

The writer is assistant director of technical advisory and professional standards at Institute of Singapore Chartered Accountants

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Ex-DBS exec jailed for cheating clients

Straits Times
13 May 2016
Elena Chong

He took nearly $700k from 11 victims who are either elderly or non-S'pore residents

A former DBS branch relationship manager who cheated 11 victims of almost $700,000 over two years was jailed for 56 months yesterday.

Eng Sze Keat, 32, had admitted to 27 counts of cheating, criminal breach of trust, forgery, transferring property which represented benefits from criminal conduct, and theft. Another 73 charges were taken into consideration.

When part of the sales team at the Royal Brothers Building branch of DBS, his duties included selling unit trusts, insurance policies and foreign exchange products to DBS customers.

He also helped customers to deposit or withdraw cash, and handled office administrative work.

Investigations showed that most of his customers who eventually became his victims were either elderly or non-Singapore residents.

After his customers agreed to buy a product and filled in their personal details on the necessary application forms, he assured them that he would fill in their remaining details later.

He would either slip in a fund transfer request form, a fixed deposit transaction form or an MAS Electronic Payment System application form for the customers to sign, or forge their signatures.

He would then fill in the forms with instructions to transfer the money to his friends' or family's bank accounts, including those of his ex-girlfriend and his mother.

Once the money was transferred, he would either ask them to transfer those funds into his bank account or withdraw the money in cash and pass it to him.

His offences involved a total of $717,226, including cheating DBS customers of $689,173.

His ex-girlfriend reported him to the police in 2011, alleging that he had used her details to apply for credit cards without her authorisation. He has since made full restitution of $28,000 to her for credit card fraud offences.

Four months later, the Commercial Affairs Department received a report from DBS, alleging that Eng had made unauthorised withdrawals from his clients' accounts.

On Aug 12 that year, Eng left for China with a performing artiste from China. He turned himself in four years later when he returned to Singapore last June.

District Judge Lee Poh Choo said Eng, represented by Mr Josephus Tan, exploited his position and had brought disrepute to DBS, a recognised Singapore brand. She noted that the the amount taken was substantial, and Eng had targeted and cheated vulnerable victims.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

SMRT settles lawsuit over escalator fall

Straits Times
05 May 2016
K.C. Vijayan & Pang Xue Qiang

Plaintiff, paralysed after falling into gap at MRT station in 2013, had sought $3m

SMRT has settled a lawsuit brought by a woman who was paralysed from the waist down after falling into an MRT escalator gap more than three years ago.

Ms Azlin Amran, 31, sued SMRT Trains for negligence, and sought about $3 million in damages following the mishap at Tanah Merah MRT Station on Jan 28, 2013.

Neither party disclosed the final payout, if any.

"I miss being spontaneous," said the once-sporty business studies degree holder last night.

She was making her way out of the station that day, when she fell into the escalator shaft on the third step of a descending escalator undergoing maintenance.

Ms Azlin remained trapped in the escalator mechanism for more than 30 minutes until Civil Defence officers rescued her and took her to Changi General Hospital.

She suffered spinal cord damage among other injuries, which has left her a paraplegic and needing to use a wheelchair to get around.

Medical reports from various specialists were tendered to support her claims and attest to her serious condition.

Then an administrative cum operrations executive, she is now severely handicapped in the labour market, according to the suit.

Through lawyer Nadia Moynihan, she alleged SMRT had failed in its duty of care, and sought special and general damages to pay for medical treatment, caregivers and loss of earnings, according to court papers filed in September last year.

SMRT, in defence papers filed by lawyer Anthony Wee, had contested the claims, arguing she had caused or contributed to her injuries by failing to keep a proper lookout, among other things.

A High Court case management conference was held yesterday before Assistant Registrar Janice Wong.

SMRT spokesman Patrick Nathan told The Straits Times the case had been amicably settled out of court. "We deeply regret the injuries that Ms Azlin sustained from the accident," he added.

Mr Nathan said following the incident, station staff have been reminded that safety barricades installed around maintenance areas must be fastened securely and checked regularly.

"In addition, maintenance staff must deploy lookout men on the upper and lower levels of escalators when these undergo maintenance tests. The safety of our passengers will and always continue to be our top priority," he said.

For Ms Azlin, who is now working at SPD, formerly known as Society for the Physically Disabled, as an employment support specialist, the mishap marked a sea change from her previous active and outdoor lifestyle.

She used to trek, swim, cycle and play badminton. Almost daily, she would climb 11 storeys to her flat in Sengkang as exercise and regularly travel abroad with her mother.

She told The Straits Times yesterday that she still takes the MRT to work in Tiong Bahru.

She said: "I still suffer a bit of post-traumatic stress disorder and have bits and pieces of flashback, especially in instances when I fall out of my wheelchair and can't get up. It's a reminder of everything I've lost."

She added: "Now, I have to plan every detail of my life. When I go out, I have to take note of whether the place is wheelchair-accessible.

"In the past, I could take walks and enjoy being in the moment. Now, when I'm taking out in a wheelchair, I have to be careful about a curb or a bump."

In March, SMRT was fined $120,000 after pleading guilty to one charge under the Workplace Safety and Health Act following a probe by the Manpower Ministry.

• Additional reporting by Rachel Chia

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

New panel to make justice accessible to S'poreans

Straits Times
19 May 2016
Ng Huiwen

A new committee to ensure Singaporeans have affordable access to justice was announced yesterday, as part of a broad-based review of the civil justice system.

The eight-member Civil Justice Review Committee is chaired by Senior Minister of State for Law and Finance Indranee Rajah, who announced this yesterday at the Association of Muslim Lawyers Annual Lecture 2016.

Comprising senior members of the Bar and representatives of the judiciary and the Government, the committee will make recommendations to allow judges greater control in managing cases and ensure that legal costs are proportionate to the value of claim.

The committee held its first meeting earlier this month and is expected to complete its work by the end of the year.

"The committee acknowledges the importance of enabling access to justice for all, including individuals who do not have legal representation and small and medium enterprises," said Ms Rajah, whose keynote address focused on the delivery of community justice.

As part of the larger civil justice system, she stressed that community justice has to "facilitate enduring relationships between parties as far as possible".

"You do not want an outcome which leads to continued or greater enmity between members of our society," she said. "In that situation, community justice is not served even if the outcome is legally correct."

The lecture was held at the State Courts Auditorium and attended by some 250 lawyers, judges, legal officers and law students.

Ms Rajah also noted how technological advancements, which create new forms of interaction, may result in novel community disputes in the near future. An example would be the introduction of driverless cars, which would impact the manner and speed at which a pedestrian injured in a motor accident seeks recourse.

She asked: "Who would you sue, the manufacturer or the person who was responsible for placing the driverless car on the road?"

The rise of peer-to-peer services such as Uber and Airbnb, which blur the lines between suppliers and consumers, will also pose a challenge to the civil justice system, she said.

She added that a "one-stop shop" that would have the jurisdiction to handle all types of community disputes could be explored as a possible long-term solution. "This could be preferable to setting up a separate, specialised forum each time a new pocket of community disputes emerges."

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Judge ticks off lawyers for being late in court

Straits Times
12 May 2016
K.C. Vijayan

Lawyers who showed up late for a hearing to admit four practice trainees drew the ire of a High Court judge, who stressed that their lack of punctuality must not rub off on the trainees.

Those four were on time and present in court, but not their supervising lawyers.

The trainees' applications were among 43 heard before Justice Choo Han Teck on Monday for part call, that allows trainees limited audience before courts prior to being fully qualified for the Bar.

The judge dismissed the four applications as their supervising lawyers were absent. All the other applications were dealt with. The four trainees will have to apply again.

"Unpunctuality in such applications also imparts the wrong lesson that the court can be kept waiting," he said in decision grounds released yesterday. He made clear the practice trainees are not to be "faulted" as they were present in court "but they might leave with the impression that they need not be on time in future. That must not be part of their training".

The judge said a lawyer being late is disrespectful to the judge and the court.

Justice Choo further ticked off one of the lawyers, who said he was at a lower court because of a scheduling clash, and said these are usually resolved but if not, the higher court "takes precedence". Yet in this case the lawyer did not even send a replacement to stand in for him in the High Court.

The lawyer's follow-up letter regretting "any inconvenience caused" made the "initial failing even more egregious by the utter lack of contrition", he said. "The best lesson a senior or supervising lawyer imparts to his junior is by being an exemplary role model."

In a separate matter, a Court of Three Judges suspended a lawyer for two months for professional misconduct in borrowing money from a client.

Mr A.P. Thirumurthy had taken two loans in 2012 for a total of $11,000, in a serious breach of a lawyer's fiduciary duty to a client.

Lawyer Melvin Chan for the Law Society argued for a suspension but Senior Counsel C.R. Rajah, representing Mr Thiru, urged the court to impose a fine as there were no aggravating factors.

The court noted Mr Thiru had substantially repaid the sums even before the complaint was made and found he was genuinely remorseful. It ruled a two-month suspension from next month would suffice as punishment and "yet convey the message that such misconduct was not tolerated".

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Re Ang Jian Xiang and others [2016] SGHC 92

Law Society of Singapore v Thirumurthy Ayernaar Pambayan [2016] SGHC 87

SingPost special audit findings may lead to regulatory action

Business Times
05 May 2016
Melissa Tan

Some say entire board should share responsibility; SGX stresses that boards must not abdicate responsibility to professionals

[Singapore] DISCLOSURE failures and alleged breaches of fiduciary duties by Singapore Post director Keith Tay could open the door to regulatory action, following the release of a special audit report on the group's corporate governance late Tuesday night that shone a light on weak controls and lapses at the board.

Regulators told The Business Times that they would take action if needed, with some saying outright that they were reviewing the investigation findings.

Market observers also said they expect the relevant authorities to lay down the law where warranted, adding that there was also the question of whether the entire board should share some responsibility for Mr Tay's disclosure lapses.

The 52-page summary of a joint special audit into SingPost's corporate governance, released Tuesday, painted a picture of a board with potential inaccuracies in its records and no standard processes for evaluating acquisitions or for directors to disclose conflicts of interest.

While regulators declined to say on Wednesday whether they were investigating SingPost or Mr Tay for potential breaches, they suggested they were prepared to mete out sanctions where necessary.

A Monetary Authority of Singapore (MAS) spokesman said that "as a matter of policy, MAS does not comment on our dealings with individual parties". But she added: "Neither will we hesitate to take appropriate action against any individual or entity that flouts any legislation under MAS' purview." The SFA falls under MAS' purview while the Companies Act comes under ACRA's.

An ACRA spokesman said it would "work with the relevant agencies to review the findings from the special audit report to assess if any regulatory action is warranted". "In this regard, ACRA will take into account key considerations such as the sufficiency of public interest, whether any harm has been occasioned by the alleged breach and the culpability of the relevant parties."

On the Singapore Exchange's part, it said it was "reviewing the findings" in the special audit report. "We will take disciplinary action for any breaches of the listing rules and refer breaches to the relevant authorities, if necessary. We will also closely monitor the independent review of the company's implementation of the recommendations set out in the executive summary of the special audit report."

SingPost had disclosed to SGX the full findings of the probe but has thus far resisted calls to release the same to the public, which has been shown only a 52-page summary released via a SingPost bourse filing Tuesday.

SGX's statement on Wednesday came after it had said on Tuesday night that it "has asked SingPost to obtain independent confirmation" that the special auditors' recommendations are implemented, to be released "at the appropriate time taking into consideration the outcome of the CG (corporate governance) review".

SGX also stressed on Tuesday that directors must disclose their interests in transactions under Section 156 of the Companies Act and abstain from voting on such transactions, adding: "The board of a company is ultimately responsible for the announcements made by the company and must not abdicate its responsibility to any professionals especially where matters under consideration are not subjective but factual in nature.

"A company and its board must exercise due care in drafting, reviewing and approving SGXNet announcements. Any error must be promptly escalated to the board's attention for its deliberation and decision."

SingPost said in an email on Wednesday that it "accepted all the recommendations and will incorporate further recommendations that are forthcoming from our ongoing corporate governance review... We have committed to following through on the recommendations of the special audit plus those of the corporate governance review upon its completion". "Regardless of whether it is the incoming or outgoing chairman who will lead this exercise, SingPost, as a company, and our board of directors take corporate governance very seriously," it added.

It declined to confirm whether Singtel chairman Simon Israel was slotted to become its next chairman. The Infocomm Development Authority, which regulates the national postal operator, also told BT: "IDA does not comment on speculation regarding our licensees."

SingPost had commissioned the probe last December after admitting it had made an "oversight" in a 2014 deal disclosure. It had wrongly said no directors had an interest in its acquisition of freight forwarder FS Mackenzie - when Mr Tay in fact held 34.5 per cent of Stirling Coleman, which advised FS Mackenzie's seller.

The joint special auditors, PricewaterhouseCoopers and Drew & Napier, found in their report that Mr Tay was "arguably in breach of section 156(1) of the Companies Act" for not declaring his interest in a 2013 acquisition of Famous Holdings "as soon as practicable".

They also found he had breached some fiduciary duties relating to the Famous deal and SingPost's acquisition of Famous Pacific Shipping (NZ) in 2015. Breaches of fiduciary duties come under the Companies Act.

However, the auditors said Mr Tay's 2015 omission appeared to not have been deliberate, and that although some of Mr Tay's disclosures "may not have been made as soon as practicable, our interviews suggest that the lack of timeliness in the disclosures would have made no difference to the decisions to enter into the Famous acquisitions".

Still, corporate governance specialist and SingPost shareholder Mak Yuen Teen pointed out in a letter to BT that "while the special auditors have concluded that Mr Tay's actions did not appear to have influenced the transactions, something that may be difficult to conclusively determine without full access to all information and evidence, the special auditors are of the view that Mr Tay did breach his duties as a director".

"It is important for the regulators, who have access to the full report and who may be able to undertake further investigations, to determine if further action is needed."

When asked whom the special auditors had interviewed and whether the auditors were satisfied with the interviewees' claims that Mr Tay's lack of timely disclosure would have made zero difference, Drew & Napier's director of dispute resolution Hri Kumar said in an email: "I do not think it is appropriate for the special auditors to respond to your queries, unless SingPost specifically instructs us to. Even if SingPost does so, we would have to ascertain if the questions will in any way affect the special audit. Any statement by the special auditors may be construed as a supplementary report. That should be dealt with in an appropriate manner. "

SingPost told BT: "The special audit was conducted by independent auditors. It is not appropriate for SingPost to make any statements or provide more details to the report that has been presented by the auditors to SingPost and the regulatory authorities."

Aside from Mr Tay, some observers have also wondered whether SingPost's board itself may run into trouble with the SFA for disclosing incorrect deal-related information in a bourse filing, then failing to correct it.

Section 199 of the SFA, for instance, suggests that no one "shall make a statement, or disseminate information, that is false or misleading in a material particular" and is likely to induce people to trade in a stock or affect the share price, if he "knows or ought reasonably to have known that the statement or information is false or misleading in a material particular".

Market watchers said Wednesday that it was not clear whether Mr Tay or SingPost's board breached the Companies Act or the SFA through their disclosure failures, but did not rule it out. Some also suggested that SingPost's board ought to share some responsibility for disclosure failures.

"The duty of a director to disclose his personal interests in any transaction involving the company as soon as he is aware of the relevant facts is a statutory duty that is clearly set out in Section 156 of the Companies Act," Gibson Dunn partner Robson Lee noted. "While the special audit has uncovered instances and has stipulated that Mr Tay appears to have breached his fiduciary duties to SingPost, it is not clear at this juncture whether the lapses in question amount to a statutory breach of the Companies Act that may lead to any regulatory enforcement proceedings against Mr Tay."

Mr Lee said he did not think Section 199 of the SFA was relevant to SingPost's incorrect disclosure in 2014, but added that the special audit findings were "a good case study for all directors who may in their course of discharging their roles and responsibilities encounter situations that require timely due disclosure of any personal interest or any potential conflict of interest".

"The board of directors and every director must be well informed of their joint and several statutory and common law duties to the company. directors should at all times adhere to best practices that are consistent with the spirit and not merely compliance with the letter of the law."

David Gerald, president of investors' lobby Securities Investors Association (Singapore), or SIAS, said it was "for the relevant authority" to "take appropriate action under the relevant laws". "We are confident that, if there are any breaches of the relevant laws, that is what would be done.

"Ultimately, the board is collectively responsible for any lapses in disclosure of any material fact. The question is whether the board should have enquired from Mr Keith Tay whether he had any conflicting interest in the transaction. This has not been addressed in the report."

Mr Gerald said it was the "responsibility of the board, on behalf of the company, to put in place sufficient safeguards to avoid any breakdown of disclosure by any director or manager, of material facts that would affect the interest of shareholders".

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Jabing Kho, due for execution tomorrow, launches appeal again

TODAY
19 May 2016
Amanda Lee Gui Ping & Valerie Koh Swee Fang

SINGAPORE — For a second time, convicted murderer Jabing Kho has launched an eleventh-hour bid to escape the hangman’s noose — his appeal this time being over Judge of Appeal Andrew Phang’s involvement in two stages of his case.

The 31-year-old Sarawakian, who is reportedly set for execution tomorrow, will have his case heard in the Court of Appeal this afternoon, following an urgent application filed by Mr Gino Hardial Singh from Prestige Legal.

Noting that Justice Phang heard Kho’s first appeal in 2010 and again in 2013, in the prosecution’s appeal against the offender being re-sentenced to life imprisonment with the maximum 24 strokes of the cane, Mr Singh will be arguing that apparent bias has arisen.

“The apparent bias arises not from the mere fact that Justice Phang sat twice but because the judges’ perception of the accused’s intention or recklessness arising out of the factual issue of the number of physical blows dealt to the victim was in issue in the conviction appeal and also in issue in the re-sentencing appeal, so in effect, Justice Phang was sitting on an appeal against his own decision on that issue,” the lawyer said yesterday, when contacted.

Mr Singh, who is taking the case on a pro bono basis, said he was briefed by Kho’s sister, Jumai, on Tuesday morning and interviewed the offender at Changi Prison the same afternoon to take his instructions. Various Malaysian media outlets have reported that Kho’s family had been informed that the execution would be carried out tomorrow.

Kho had carried out a fatal robbery with a fellow countryman in 2008 and was sentenced to the mandatory death penalty. Together with Galing Anak Kujat, he had attacked construction workers Cao Ruyin and Wu Jun near Geylang Drive while trying to rob them. Kho struck Cao on the head with a tree branch so hard that the victim sustained 14 fractures in his skull and died six days later.

His roller-coaster court bid began in 2011 when he failed in his appeal against the sentence, only to be spared the hangman’s noose two years later when amendments to the mandatory death penalty regime kicked in. The change gave judges the discretion to impose life imprisonment and 24 strokes of the cane instead in some murder cases. Justice Phang was among the three judges in this appeal.

But the prosecution appealed against Kho’s new sentence, arguing that he had shown “scant regard for human life”. In January last year, Kho was sentenced to death again in a rare 3-2 split decision by the Court of Appeal, with Justice Phang among those in the majority camp.

Kho’s appeal for clemency was turned down in October.

But less than 24 hours before he was to hang, his lawyer then, Mr Chandra Mohan K Nair, secured a stay of execution by raising questions about the evidence presented during the trial.

The appeal was dismissed, with Judge of Appeal Chao Hick Tin ruling that the defence had produced very little new material, let alone compelling material, that would justify the “exceptional recourse” of a review of the death sentence handed down.

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Challenge for banks to get consent to share customer information: Forum

Straits Times
12 May 2016

Banks sharing information on prospective clients is a nice idea to fight money laundering ("Banks in talks to set up system to fight money laundering"; last Saturday).

But will it work? The banks will face two major hurdles. The first is banking secrecy laws in Singapore, and the second is the protection of customers' personal data.

Under the Banking Act, a bank is prohibited from disclosing its customer information unless the customer consents or in cases permitted under the Act.

However, obtaining the written consent of customers will be fraught with challenges and will likely be a prohibitive exercise, in terms of cost and manpower.

DBS Group, OCBC Bank and United Overseas Bank would presumably have hundreds of thousands of existing customers.

How are they to obtain the consent of all these customers? What about customers who do not respond when contacted? Silence does not mean consent.

The best way forward seems to be to legislate consent under the Banking Act.

But is this a fair move? Most customers would not object to their information being disclosed to, say, law enforcement agencies or the Monetary Authority of Singapore.

Sharing their information with another bank is a different matter.

How can customers be assured that their information will not be abused?

This ties in with the Personal Data Protection Act, which also prohibits banks from disclosing the personal data of customers without consent.

Again, the only practical way out of this problem seems to be through legislation.

Tan Sin Liang

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SingPost shares edge up as investors query audit report

Straits Times
05 May 2016
Marissa Lee

Some feel report didn't address concerns like how board arrived at prices paid for purchases

Singapore Post's share price edged up a cent to $1.59 yesterday even as a special audit report released late on Tuesday found that the company has "no prescribed policy, process or procedure" for evaluating and approving merger and acquisition transactions.

Mr David Gerald, president of the Securities Investors Association of Singapore (Sias), said: "Sias is somewhat surprised, especially for a company with a $3 billion market capitalisation, that such important policies or processes were not in place."

The postal group, which has spent recent years sweeping up stakes in logistics firms to grow into a regional e-commerce player, sought the audit last December after it came to light that its board had wrongly disclosed that none of its directors had any interest in the 2014 acquisition of freight forwarder F.S. Mackenzie.

SingPost later revealed Mr Keith Tay, who on Tuesday resigned as SingPost's lead independent director, is a chairman and 34.5 per cent shareholder of Stirling Coleman, which arranged the deal on behalf of the seller of F.S. Mackenzie.

The report by special auditors Drew & Napier and PricewaterhouseCoopers attributed this lapse and another to the carelessness of SingPost staff rather than deliberate attempts to conceal Mr Tay's interests.

But some investors felt the report did not address other concerns, such as how the SingPost board arrived at the prices it paid for the F.S. Mackenzie and Famous Pacific Shipping (New Zealand) purchases that Stirling Coleman advised the sellers on, and what fees Mr Tay earned from these deals - questions that Sias had raised to the board in January.

Mr Gerald said the basis for the investment decision "could have been addressed more thoroughly" to assuage the concerns of shareholders.

Notably, the report never mentioned the amounts SingPost paid for the three acquisitions investigated, although the sizes of the stakes were mentioned. And while the investigation was drawn out for about three months, the auditors said it was only on April 29 that SingPost informed them that one piece of evidence - an exco paper dated Jan 7 last year - might not be accurate. No reason was given.

Adding to the string of questions, the report recorded differing accounts between two company secretaries in January last year on whether they should include a disclosure of Mr Tay's interests in a draft announcement.

The announcement later went public with the paragraph on disclosures omitted. The auditors left it at that, saying only that the final approval of the chief executive was not obtained in this instance as the responsibility had been delegated to the company secretaries. This deviation was not "significant or unusual", the auditors wrote.

When contacted by The Straits Times last month, former company secretary Winston Wong had declined to comment, citing a non-disclosure agreement. He is now at OUE. The other company secretary has also left SingPost.

For now, the Singapore Exchange said it is reviewing the special audit report, and will take disciplinary action for any breaches of the Listing Rules and refer breaches to the relevant authorities, if necessary.


Singapore Post, which has spent the last few years sweeping up stakes in logistics firms to grow into a regional e-commerce player, called for the audit last December after it came to light that its board had wrongly disclosed that none of its directors had any interest in the 2014 acqusition of freight forwarder F.S. Mackenzie.

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S'porean fugitive lived a lie in US as 'lawyer' for years

Straits Times
19 May 2016
Selina Lum

He used real attorney's identity to practise before being caught, jailed and deported

To the people he helped with immigration matters in the United States, he was their lawyer, called to practise law in New York since 2000 and a professional of good standing.

Little did they know that the man they depended on to represent them to the federal authorities had secrets - he was using someone else's name and was not even a lawyer to begin with.

His own name was Ng Chong Lin and he had fled Singapore in June 2003, two days before his appeal against a jail sentence for forgery and other charges was to be heard.

This emerged in the High Court yesterday when that appeal, shelved for 13 years, came up for hearing.

For seven years, Ng, who was then 31, lived a lie in the US. He had at least seven aliases, one of them Daveng Wee, said US court papers. The name appeared to be an amalgamation of Dave Ng, a name he was known by.

His story could have been a movie plot. Ng got down to practising immigration law in New York City, using the name and registration number of a real attorney to file documents to federal authorities on behalf of individuals in various immigration matters between October 2006 and March 2009.

In 2010, Daveng Wee was caught out by the US authorities and jailed for four years for aggravated identity theft in impersonating an attorney, among other things.

His fingerprints, sent to Singapore after he was ordered to be deported in December 2013, revealed his true identity.

All his attempts to overturn his conviction failed and he was deported in May last year, when he was arrested and taken in to custody.

As part of their arguments for the appeal, prosecutors provided details of his offences in the US and succeeded in having the information admitted as fresh evidence.

However, the matter was adjourned and will be heard after the outcome of a new trial against Ng - this one for using a bogus passport when he skipped town in 2003.

In March 2003, Ng had pleaded guilty in a district court to forgery and other charges related to a company in which he was a director.

In April 2003, after he was sentenced to three years and three months' jail, he filed an appeal. He was granted bail and his passport handed to the Commercial Affairs Department.

That June, he applied for a passport and was issued one which bore his photograph but the particulars of one Wee Pui Kee. On June 22, 2003, two days before his appeal was to be heard, he used this passport to leave for New York.

Besides pretending to be a lawyer, he also claimed to have attended schools in New York when he applied for temporary residence in the US in May 2007.

In 2010, he pleaded guilty in the District Court of the Southern District of New York following a plea bargain in which he waived his right of appeal. But he later tried to withdraw his guilty plea and challenged his conviction, even filing a writ to the US Supreme Court.

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Surgeon suspended for misconduct

Straits Times
12 May 2016
Aw Cheng Wei & Calvin Yang

Apex court overturns acquittal after appeal by SMC over handling of injured worker

An orthopaedic surgeon at Raffles Hospital has been convicted of professional misconduct and suspended for six months, after the Singapore Medical Council (SMC) appealed against his acquittal over his management of an injured construction worker.

Dr Wong Him Choon, 51, gave his patient just two days of medical leave after he broke his right hand in a construction site accident - and certified him fit for light duties a day after his operation.

A disciplinary tribunal, which heard the case between June and September last year, acquitted Dr Wong of professional misconduct. Both parties in the case agreed then that the primary factors a doctor should consider before deciding on the type or duration of medical leave include the severity of the illness or injury, the amount of recovery time needed post-treatment, and nature of the patient's work.

Nevertheless, the tribunal acquitted Dr Wong as there was no conclusive evidence to show he had failed to comply with the applicable standards of conduct in managing the patient. SMC then filed an appeal against the decision to the Court of Three Judges.

The court decided that Dr Wong had considered "irrelevant factors" in issuing the medical certificate and disregarded the patient's well-being. It overturned the tribunal's acquittal on Tuesday and ordered Dr Wong to be censured and suspended from practice for six months.

He must also bear the SMC's costs for the tribunal's inquiry and the appeal, and give the council an undertaking to abstain from the same or similar conduct in future.

The accident happened on Sept 3, 2011. Dr Wong performed surgery early the next day and the patient was discharged afterwards.

The tribunal proceedings arose from a complaint from the Humanitarian Organisation for Migration Economics (Home), a group which helps migrant workers.

Its executive director Jolovan Wham said: "The complaint was made because of grave concerns that doctors might be in collusion with companies to discourage workers from taking medical leave, and filing work injury compensation claims, even though the workers were seriously injured." It sees at least 15 workers a year who are not given sufficient medical leave.

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Singapore investigating large number of transactions in cross-border probe

Straits Times
05 May 2016
Grace Leong

The Singapore authorities yesterday said they are investigating a large number of complex transactions in a sweeping cross-border probe believed to be linked to the troubled state fund 1Malaysia Development Berhad (1MDB).

This emerged at a state court hearing yesterday involving Kelvin Ang Wee Keng, who was charged on April 20 with corruptly giving a gratification of $3,000 between 2013 and 2014 to research analyst Lee Chee Waiy to expedite preparation of a favourable valuation report to be issued by his firm.

Ang, 34, the second Singaporean to be charged in connection with the probe, has been in remand since April 20. He is believed to be employed in the finance sector.

Ang is scheduled for a hearing on May 11. The Straits Times understands that he faces the possibility of more charges being brought against him.

The first Singaporean charged was Yeo Jiawei, a former wealth manager at Swiss private bank BSI who was arrested in March and charged on April 15 with an offence under the Corruption, Drug Trafficking and other Serious Crimes (Confiscation of Benefits) Act. Yeo was charged with receiving benefits from criminal conduct, and with cheating and obstructing justice. He is scheduled for a hearing today.

District Judge Christopher Goh yesterday granted the prosecution's application to remand Ang for another week but allowed him "reasonable" access to his lawyer Hamidul Haq, with arrangements to be made by the Commercial Affairs Department (CAD).

Chief Prosecutor Tan Ken Hwee said this would be the prosecution's last request for remand for the purpose of investigations. He said investigations so far have confirmed that Ang has had "extensive dealings over more than two years with Yeo, and some others implicated in improper dealings". He called Yeo "a central figure in investigations".

"There are cross-border elements to these complex and layered transactions involving many shell companies. Unravelling, unpacking and comprehensively analysing all the transactions... will continue to take a significant amount of time," Mr Tan said. The authorities are set to "finalise the position in relation to (Ang) within the next six days".

Mr Haq argued against Ang's further remand as his client "is not the subject of the main investigation that CAD is conducting" and allegedly has a "more peripheral" role.

Meanwhile, Hong Kong bank accounts of several unnamed people have been frozen, and they are being probed by the authorities in nations outside Malaysia, such as Singapore, Bloomberg reported.

The Attorney-General's Chambers yesterday declined comment on this matter. The authorities here said in February that they had frozen "a large number" of accounts in connection with possible money laundering related to the probe.


TIME NEEDED

Unravelling, unpacking and comprehensively analysing all the transactions... will continue to take a significant amount of time.

CHIEF PROSECUTOR TAN KEN HWEE, on the "complex and layered transactions"

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More time needed to study short-term stay: URA

Business Times
19 May 2016
Lynette Khoo

But one key piece of feedback is that any rule change should ensure a level playing field

[Singapore] RESULTS of a public consultation on short-term stays in private residential properties were split, with no clear consensus, said the Urban Redevelopment Authority (URA), adding that more time is needed to study this issue.

An important piece of feedback, however, was that any change in rules should ensure a level playing field.

"Currently, regulated accommodation providers such as hotels and serviced apartment operators are subject to various regulatory requirements to ensure the safety and well-being of occupants. They are also subject to business taxes," URA said.

Comments from URA came in response to queries from the media on the public consultation exercise that started in January 2015 and was concluded in April the same year. But the findings have yet to be released.

On the hotly debated topic of the home-sharing economy, URA had sought feedback from members of the public, and also held separate consultations with stakeholders groups such as management corporations, members of the hotel and serviced apartment industry, and representatives of home-sharing platforms.

Current URA guidelines require that private residential properties be rented out for no less than six months. Private home offenders can be fined up to S$200,000 and jailed for up to a year.

"On one hand, there was acknowledgement of the need to accommodate the demand for short term home-sharing. On the other hand, there was strong endorsement of URA's existing controls on subletting, which are intended to preserve the privacy and sanctity valued by the vast majority of homeowners," URA said of the feedback gathered.

"The issue on short-term stays is complex, multi-faceted, has wide-ranging implications and it warrants a careful and balanced review."

But while the review is ongoing, URA stressed that the existing six months minimum stay duration in private residential premises "must be observed" and it is still continuing enforcement action against misuse.

Articles in The Business Times last month have flagged that even before local listings of residential units for short-term stay became rampant on Airbnb and HomeAway, various accommodation-service providers had long been in business in Singapore, with their property listings of condominium units spanning the island. And many of them allow rentals of less than six months.

Accommodation-service providers typically rent flats from landlords, furnish the units and sublet them, offering limited services that include twice weekly housekeeping.

But these "apartments with services" - which vary in their range of services provided - are not governed by URA's guidelines in the way traditional serviced apartments are. A planning permission from the URA is required to run a residential premise as serviced apartments for lease of seven days or longer.

Evidently, these accommodation-service providers are not part of the 13 registered members under the Serviced Apartments Association of Singapore (SAA). The 13 SAA members have about 28 registered properties with 3,646 apartments as at end-2015, according to SAA president Tonya Khong.

But Franck Boullier, co-founder of LMB Housing Services, felt that there is a missing element in URA's glossary - which he coins as "medium-term housing" for those staying for a few months. Such housing caters not to tourists but to corporate clients who are here for work, which is why Mr Boullier does not see the Sequoia-backed Airbnb as a competitor.

More companies are sending teams on project basis to support the local resources rather than deploying expatriates, he observed. But the traditional serviced apartments are more expensive than corporate housing solutions offered by companies like his. "Because they are working on projects, our customers need to have the flexibility to adjust the end date of their lease," Mr Boullier said of LMB's open-ended contract policy whereby the last date of stay is not indicated in rental contracts.

As a safeguard, LMB's occupants are registered with the condominiums' management office, have resident cards and are contractually required to abide by the by-laws of the condo they are staying in. Mr Boullier felt that future rules and regulations should indeed, ensure the safety and well-being of all occupants and all operators should be subject to business taxes too.

Frasers Hospitality CEO Choe Peng Sum noted that a lot of corporate clients who come into Singapore for one to five months require a host of services as well as fire safety, security and emergency precautions that are found in traditional serviced apartments. "When we deal with multinational companies, especially American and European companies, they are very particular about safety and security."

Those managing agents offering residential apartments with limited services will have to contend with the vast number of rental homes in Singapore and possibly compete on pricing, he said.

Mr Choe opined that these accommodation-service providers and Airbnb should be regulated too, in the same way serviced apartment operators are regulated under URA guidelines.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

NEA gets court warrant against haze-linked firm's director

Straits Times
12 May 2016
Audrey Tan

A director of an Indonesian company suspected of contributing to last year's haze did not turn up for an interview with the authorities here, even though he was served with a legal notice to attend it when he was in Singapore.

But the director, who has since left Singapore, can be detained if he tries to enter Singapore again.

The National Environment Agency (NEA) said yesterday that it has obtained a court warrant against the director to secure his attendance when he enters Singapore. It did not name him or his company, which is believed to have started fires or let its concessions burn.

"This means that if the director enters Singapore, he can be detained by NEA officers for the purpose of investigations," said an NEA spokesman, adding that the move is in accordance with Singapore's Transboundary Haze Pollution Act.

The Act, passed in 2014, was wielded for the first time last year to punish those responsible for causing or condoning fires if burning results in unhealthy levels of haze here. Those found guilty can be fined up to $100,000 a day, capped at a total of $2 million, for causing unhealthy haze, defined as a 24-hour Pollutant Standards Index (PSI) value of 101 or greater for 24 hours or more.

NEA sent six Indonesia-based firms notices under the Act asking them to explain steps they are taking to put out and prevent fires on their land. NEA's latest move comes after Environment and Water Resources Minister Masagos Zulkifli said in April that only two firms had replied. Referring to the same director who missed the interview, Mr Masagos said the director, who is from one of the other four firms, had been served a notice to give information about his company's steps to mitigate fires on its land and prevent a repeat of last year's haze.

Audrey Tan

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Will Singapore shareholders get their say on pay?

Business Times
05 May 2016
Michelle Quah

It's an inevitable development for local market but, when it comes, it has to be managed carefully: global advisory firm

[Singapore] SINGAPORE investors could soon have a greater say on how much the executives of listed companies here get paid; but whether this is necessarily a good thing remains to be seen.

Global advisory firm Willis Towers Watson believes that Say-On-Pay is an inevitable development for the Singapore market - one driven not just by global trends but also by domestic needs.

Say-On-Pay is commonly defined as the ability of shareholders of a company to vote on how and how much executives of the company get compensated. In essence, it divests the power to decide executive remuneration away from the companies and into the hands of investors.

It ranges from binding votes, adopted by jurisdictions such as the United Kingdom, to non-binding, or advisory, votes, seen in the United States. Binding votes allow shareholders a legally binding vote on executive remuneration resolutions, including the company's remuneration framework and targets for the coming year. Advisory votes have shareholders voting on remuneration-related resolutions, merely to express their level of satisfaction with such practices; their votes do not compel the company to act.

Singapore has neither of these systems, nor any form of Say-On-Pay. It adopts a "comply or explain" approach to executive compensation.

The Corporate Governance Code here says that listed companies should disclose, in their annual report, the exact remuneration of each individual director and the CEO, and the remuneration of the top five key management personnel who are not also directors or the CEO in bands of $250,000. It also says companies should disclose information on the link between remuneration paid and performance.

Companies are expected to comply with these guidelines, and - as per Singapore Exchange (SGX) listing rules - to explain any deviation in compliance.

Kevin Ong, director of Executive Compensation Southeast Asia at Willis Towers Watson, believes Singapore's comply-or-explain approach leaves much to be desired. He cites the Singapore Institute of Directors (SID) and SGX Board of Directors Survey 2015, which showed that 55 per cent of companies are still not disclosing remuneration details as recommended by the Code.

"In my discussion with SID members, our view is that the Code does not have teeth. Singapore companies, when talking about pay in their annual report, don't (usually) disclose pay versus performance. They typically have some boilerplate answer. (And) they hide behind reasons of confidentiality," he says.

"With more stringent requirements on pay disclosure, the bigger companies will have to disclose how they pay versus performance.

"We're not saying Say-On-Pay is a must, but Say-On-Pay is one of the things we must seriously consider."

What also needs to be considered is that Say-On-Pay has had both positive and negative consequences.

Mark Reid, Willis Towers Watson's global head of Executive Compensation, says: "It gives disclosure more bite. If shareholders are unhappy with the pay practices that are being disclosed or the detail of disclosure itself - the way it's disclosed - then it gives them more power to express their dissatisfaction."

Say-On-Pay has controlled inflation in countries such as the UK because companies need shareholder permission even to effect a pay increase. In other jurisdictions, the increased disclosure on executive remuneration has had the opposite effect - raising pay levels across the board.

Say-On-Pay has increased shareholders' ability to control the link between pay and performance. It has also meant greater shareholder engagement on the part of companies, but also greater time commitment on the part of the remuneration committee chairman.

Some less than ideal, and unintended, consequences has been a growing conservatism in pay practices, particularly among smaller companies. "If you haven't the time and resources to engage with shareholders, you typically just come up with the pay package that won't get you into trouble, and you all land up having the same thing. Which isn't necessarily a good outcome. You want pay programmes that will drive strategy and performance. Instead, you get a phase when everyone huddles together for safety because no one wants to be an outlier," Mr Reid observes.

He also points out that Say-On-Pay has vested a lot of the voting power into the hands of proxy agencies like ISS or Glass Lewis. "Their voting recommendations are followed by a lot of investors. That's been multiplied recently in the West, because shareholdings have become a lot more international. We see BlackRock or Fidelity investing globally and they might not know what the best practices are there. So, they might outsource the voting recommendation to these proxy agencies. I think, right now, the pendulum has swung too far and the agencies have gotten very powerful and there aren't enough agencies to provide a diverse point of view, so it's driven too much power into one point of view."

As to whether Singapore should adopt Say-On-Pay, Mr Reid says it isn't necessary - for now. "You could argue that the first step is to move away from a comply-or-explain approach to a more legalistic framework (instead, wherein listing rules and the law could mandate pay practices and greater disclosure)."

Still, he adds, "disclosure breeds more disclosure".

"Once you've opened the Pandora's box, everyone wants more - 'you've told us this, but you haven't told us this'. So, it's definitely a one-way street. Once you've accepted the idea of detailed disclosure, Say-On-Pay is inevitable.

"You're probably five to 10 years away from needing it."

If it comes to that, Singapore will likely adopt advisory votes before considering having binding votes. "You would have to do that because neither the corporations nor the shareholders will be sufficiently staffed or experienced to deal with a heavy-duty Say-On-Pay," Mr Reid says.

Mr Ong adds: "Say-On-Pay, if it has to come, has to be managed carefully. Say-On-Pay is not necessarily a bad thing for Singapore. When it comes, people have to be educated on what it means, what it's meant for. And smaller companies might have to be exempted or given a longer time frame to comply."

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India-S'pore tax treaty: anomalies need to be dealt with

Business Times
19 May 2016
Vivek Kathpalia

THESE are taxing times indeed! The global shift on clamping down on base erosion/profit shifting has the recently amended India-Mauritius tax treaty to add to its list. These amendments have created some anomalies in the India-Singapore tax treaty as well. I will deal with these a little later.

For the last 30 years or so, Mauritius has had a fairy-tale tax treaty with India. It exempted investors from capital gains tax when they invested in shares of Indian companies through Mauritius. Like Singapore, Mauritius does not tax capital gains on the sale of shares. After 1991, when India opened up its economy, Mauritius played a very important role in providing a platform for foreign investment to India.

It allayed the concerns of many investors who feared double taxation and lack of credit availability as a result of a difference in source rules of taxation in India and jurisdictions such as the US. The treaty went through its ups and downs, being challenged in courts in India, but was upheld by the Supreme Court of India in a landmark decision.

When Singapore and India were ready to sign the Comprehensive Economic Cooperation Agreement (CECA) in 2005, they too amended their tax treaty to bring it on a par with what India and Mauritius had, albeit with higher standard of substance to be met in Singapore. This has led to Singapore playing a very critical role in the growth of investments into India. Singapore is indeed a "natural hub" for India and can only benefit with India's projected growth trajectory. In fact Singapore emerged as the largest investor of FDI (foreign direct investment) in India in the recent past. But some anomalies have crept into the India-Singapore tax treaty which need to be dealt with urgently.

The last thing the two countries want is a loss in momentum in their burgeoning economic relationship. The changes to the Mauritius treaty with respect to taxation of capital gains basically give the Indian government the right to tax capital gains in the hands of investors who have invested via Mauritius. The Singapore treaty with India had a "co-terminus" provision which states that if there is such a change in the Mauritius treaty in respect of capital gains, the capital gains provisions of the Singapore treaty would cease to have effect. Simple to many, but an interpretation and implementation nightmare to others!

The changes to the Mauritius treaty are quite clear with sensible provisions relating to grandfathering investments in shares till March 31, 2017. Investors want clarity and they seem to have got that as far as Mauritius is concerned. The lack of a similar grandfathering provision in the Singapore treaty means that no such protection may be available to investments made under the India-Singapore DTAA (double taxation avoidance agreement) for investments in shares prior to March 31, 2017. Hence the urgent need for clarity. What is quite clear is that the intention of India and Singapore was that the two treaties should provide almost equal treatment to investors. The news in India suggests that both countries will be speaking soon to formally amend the treaty. My view on what needs to be done with some urgency:

• Keeping in mind the very critical role Singapore is playing in the development of India, the tax treaty should (like the India-Mauritius pact) have clear grandfathering provisions with respect to all investments made by residents of Singapore in the shares of Indian companies till March 31, 2017, and after that, till March 31, 2019, a rate of tax not exceeding 50 per cent of the applicable capital gains tax in India on gains made prior to March 31, 2019, subject to meeting the limitation of benefits conditions in the Singapore-India treaty. This would then be a mirror to the treaty with Mauritius.
• Mauritius tax residents can now lend money to Indian residents and be subject to a lower withholding tax rate of 7.5 per cent in India. The rate applicable to similar debt investments from Singapore is currently 15 per cent (with a reduced rate of 10 per cent for banks). Singapore is a leading financial centre in the world and will undoubtedly be a centre for debt investments into India as well. Therefore a similar withholding tax rate of 7.5 per cent should be negotiated into the treaty. This will encourage the growth of the debt markets in both India and Singapore. Singapore should also look at its domestic law provisions to ensure that investors investing in debt from Singapore are not put to a greater burden than those investing from Mauritius.

I do hope that the two countries take this on as a matter of urgency and continue building on the strategic partnership they have created.

  • The writer heads the law firm Nishith Desai Associates in Singapore.

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ADV: Singapore Basic Compliance & Ethics Academy: Get Certified

Singapore Law Watch
12 May 2016
Society of Corporate Compliance and Ethics

River Valley rape trial: Man changes mind, pleads guilty

Straits Times
05 May 2016
Selina Lum

A day after he pleaded not guilty to raping a woman at three different spots in 20 minutes along a stretch of road, a 30-year-old man changed his mind and admitted his guilt.

Instead of continuing with his High Court trial in what prosecutors describe as a "brazen case", Lim Choon Beng pleaded guilty to two counts of rape, one count of sexual assault and one count of aggravated outrage of modesty. Four other charges will be considered during sentencing.

Deputy Public Prosecutor Zhuo Wenzhao told the court that Lim, who was jobless, was drinking with friends in Robertson Quay before he approached the victim along Martin Road at about 3am on Feb 9, 2013.

The 24-year-old woman from China, who worked as a performer at a lounge, was walking home alone from Havelock Road to her apartment. She slowed down to let Lim walk ahead of her.

After a short distance, Lim, then 26, turned around and spoke to her in English, before asking her in Mandarin if she was a Chinese national and if she liked American men.

Despite her attempts to shake him off, Lim grabbed her and pushed her backwards onto a grass patch in front of the Watermark condominium at about 3.15am.

The woman begged him to let her off, but he paid no heed and raped her.

When some cars passed by, Lim got off the victim. At about 3.25am, he pulled her across Rodyk Street and hit her head against a wall at the Robertson 100 condo.

The woman begged again to be freed but he raped her again.

Thinking that she could seek help from a security guard, the woman suggested that they go to her apartment. Meanwhile, a female security guard at The Inspira condo called the police after seeing Lim on top of the crying victim.

At about 3.35am, when Lim and the victim reached River Valley Close, he pinned her to the ground, forced her to perform oral sex on him and raped her again. This time, she managed to escape.

After running some distance, the victim stopped a car with a woman behind the wheel. She also contacted a friend to call the police.

When the victim returned to River Valley Close, she found police officers at the scene with Lim and immediately pointed him out as the person who had raped her.

The case has been adjourned to tomorrow for sentencing arguments. The maximum punishment for rape and sexual assault is 20 years' jail as well as caning or a fine.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Higher payouts for workers who aren’t re-employed on cards

TODAY
19 May 2016
Louisa Tang

Govt to also help bosses redesign jobs for elderly ahead of upping of re-employment age

SINGAPORE — Older workers who are not offered re-employment when they turn 62 could receive a higher one-off payment to tide them over while they seek new jobs, under revised guidelines issued on Wednesday (May 18).

This sum of money, called Employment Assistance Payment (EAP), should be 3.5 times the released worker’s salary, up from the previous three times. This was recommended by a tripartite committee (Tricom) comprising the Government, employers and unions, which looks at the employability of older workers.

It also proposed that the minimum EAP to a worker be raised to S$5,500 and capped at S$13,000 — the previous recommended range was S$4,500 to S$10,000.

The revised guidelines were made in view of the re-employment age rising from 65 to 67, starting July next year. This means a worker should be offered re-employment when he reaches the statutory retirement age of 62, up to the age of 67, as long as they are medically fit and their work performances are at least satisfactory.

In a joint statement on Wednesday, the Manpower Ministry and the Singapore Workforce Development Agency said: “The revised EAP amounts took into consideration rising wages and... that employers’ re-employment obligations will be extended by two years.”

Tricom also recommended that employers provide re-hired workers with extra Medisave contributions to make medical benefits more portable.

Starting from July 1, the WorkPro scheme, rolled out in 2013 to strengthen the Singaporean core in the workforce, will also be enhanced. It will encourage employers to adopt more age-friendly practices, redesign workplaces for older employees to work safely and easily, and offer flexible work arrangements for all workers.

Companies may receive a grant of up to S$480,000 under the enhanced scheme, through the Age Management Grant, Job Redesign Grant, or Work-Life Grant.

Mr Patrick Tay, assistant secretary-general of the National Trades Union Congress (NTUC), said that unionised companies generally adhere to the guidelines, and some pay even more than the mandated EAP amounts.

NTUC could not say how many companies have followed the guidelines, though Mr Tay said it does track them. “I don’t see major issues of compliance among unionised companies... I’m more concerned about the non-unionised ones — 70 per cent of Singaporean companies are SMEs (small and medium enterprises) and many are not unionised,” he said, adding that the Manpower Ministry would handle such companies should issues arise.

Speaking to reporters on Wednesday during a visit to Lawry’s the Prime Rib Singapore restaurant, Manpower Minister Lim Swee Say said that about 1,800 companies have tapped on the Age Management Grant over the past three years, most of them SMEs.

“The next challenge is to get more companies to... take real action to redesign their workplace. In a way, we’re now in the second phase (of the scheme),” Mr Lim added.

At Lawry’s, its director Kevin Koh said that the fine-dining restaurant has put in place several age-friendly practices, including having trolleys, an anti-slip mat around the kitchen area, a dishwashing machine and automatic knife sharpener to reduce physical strain, and an e-menu system using a portable iPad so that servers need not keep going to the kitchen to check on orders.

It will tap on grants offered under the enhanced WorkPro scheme to fully integrate the e-menu system — including table reservations and customer relationship management.

There are 13 mature workers at Lawry’s Mandarin Gallery outlet, which hires about 55 workers — an increase from just three to four mature workers in 2013. Its oldest employee is Raymond Ong, 68, who has worked as a busser for two months. He finds the trolley useful, having worked in other places where he had to hand-carry trays of heavy crockery to the kitchen.

Both he and Ms Patricia Leong cited Lawry’s flexible working hours as a big incentive. Ms Leong, 60, started work as a cook two months ago, was granted two weeks’ leave a year to work on her own business. She gets to pick her work times and now clocks eight hours a day, five days a week.

“As long as I am fit and healthy, I will continue to work,” she added.

Copyright 2016 MediaCorp Pte Ltd | All Rights Reserved

Panama Papers throw up confusing Singapore names

Business Times
11 May 2016
Siow Li Sen

[Singapore] THE dreaded exposure of the Panama Papers has turned up some household names in Singapore including the three local banks but there is also a fair bit of confusion as some names have been misused.

On Monday, the International Consortium of Investigative Journalists (ICIJ) published online detailed data from the Panama Papers trove on more than 200,000 secret offshore companies.

It is easy to search the database, and find out who's behind almost 320,000 offshore companies and trusts from the Panama Papers and the Offshore Leaks investigations, said the ICIJ.

Last month, the ICIJ said it would be sharing the massive leak of 11.5 million documents from Mossack Fonseca, a Panama-based law firm with offices in more than 35 countries, including Singapore.

The disclosures showed that some world leaders, such as Russian President Vladimir Putin and British Prime Minister David Cameron, and many celebrities including Jackie Chan have links to offshore companies.

The leak has led to the resignations of Iceland's prime minister Sigmundur David Gunnlaugsson, and Spain's industry minister Jose Manuel Soria.

But the data leaked can be confusing because some names don't match up.

For instance, Law Society of Singapore is not The Law Society of Singapore which represents lawyers here. A spokesperson of the Law Society said: "The Law Society of Singapore does not have any overseas accounts, nor has it incorporated any overseas entities. The Law Society's name has obviously been misused and we will be conducting an inquiry into that."

Search DBS and DBS Foundation comes up but a spokeswoman from DBS Bank said that it is not the same entity which was launched in 2014 as part of the group's SG50 celebrations. DBS set up the S$50 million DBS Foundation in conjunction with the nation's Jubilee.

But DBS does have offshore entities such as DBS Trustee and The Development Bank of Singapore Ltd (now known as DBS Bank Ltd), as disclosed in the database.

"The use of professional services providers is common," said the spokeswoman.

"With regard to offshore or trust structures, the law obliges us to take steps to identify ultimate beneficial owners and we do not support the use of concealment techniques. As with any incident, we study all information carefully and take action where required," she said.

UOB Private Banking & Trust also pops up when you search UOB and it states that the data is from Offshore Leaks and that its agent is Portcullis Trustnet. "UOB does not use Mossack Fonseca's office in Panama," said a bank spokeswoman.

Portcullis Trustnet, a Singapore-based company, came under fire in 2013 when its documents were also leaked. ICIJ had previously said Portcullis TrustNet - since renamed Portcullis Group - was helping the rich to use offshore entities to dodge taxes.

OCBC Bank has several offshore entities, according to the database.

Koh Ching Ching, OCBC head of group corporate communications, said high net worth individuals may use the services of various professional service providers, such as accounting firms, corporate secretarial firms and law firms for legitimate purposes, for example, setting up of offshore or trust structures for wealth planning purposes, such as estate planning.

"Offshore structures are also used for other legitimate purposes such as business finance or mergers and acquisitions," said Ms Koh.

OCBC's private bank Bank of Singapore "exercises stringent screening controls to ensure compliance with both internal and regulatory requirements, including anti-money laundering and tax evasion laws, before on-boarding a client", she said.

Foreign banks such as HSBC have several offshore entities on the database like HSBC Trustee (Singapore) Limited.

The regulators here - the Ministry of Finance and Monetary Authority of Singapore - said they "are reviewing the batch of information that was released this morning on the persons and entities identified in the Panama Papers".

"If there is evidence of wrong-doing by any individual or entity in Singapore, we will not hesitate to take firm supervisory and enforcement action," they said in a joint statement.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

3 more defendants named in Keppel Club lawsuit

Straits Times
04 May 2016
K.C. Vijayan

Legal action filed against 10 to recover alleged losses from suspected membership fraud

Keppel Club's bid to recover alleged losses from suspected membership fraud has widened to include three more defendants in its High Court suit against seven other parties.

Among the trio added is retiree Lawrence Ng, the husband of former veteran Keppel staff member Setho Oi Lin, 67, who is the first defendant in the case.

Keppel, Singapore's oldest country club, was rocked in 2014 by revelations of the alleged fraud. It led to the sacking of Ms Setho, who started with the club as a clerk in 1966 and rose to supervise its membership department.

The club is suing Ms Setho, four others and two firms implicated in the alleged membership fraud, said to involve about $37.3 million in lost revenue. A probe in 2014 detected "irregularities" in more than 1,300 membership transfers at the club spanning a decade from 2004.

Among other things, some membership files contained only the records of payment of the food & beverage deposit to the club, not the membership transfer fees.

Keppel, which held its annual general meeting on April 20, notified members it had obtained leave from the High Court last month to include the additional defendants.

The club also obtained orders to freeze the assets of two of the three new defendants, including Mr Ng, which will prohibit them from disposing of or dealing with their assets up to the value of $19 million until the case is resolved.

The club obtained a similar freeze order against Ms Setho and two others last year.

Mr Ng, defended by lawyers Chong Jia Hao and Letchumanan Devadason, is expected to file his defence by next week.

Keppel's lawyers from Lee & Lee allege in court papers filed last month that Mr Ng was an accomplice and wrongful beneficiary of his wife's alleged fraud.

Keppel claims that as her husband, Mr Ng knew of the salaries she earned throughout the years as well as her fiduciary duties.

According to court papers, he was also a spouse member who spent much time on Keppel's premises and knew there were no legitimate reasons she would have large amounts of monies.

Mr Ng is the second family member of Ms Setho implicated in the High Court suit.

Her younger brother Setho Wai Meng, 58, had been earlier named as the fourth defendant when Keppel first filed the suit last year. It alleges he was among others who had received monies and benefited unjustly at the club's expense.

Mr Setho, defended by lawyer Tito Isaac, is denying the claims other than to accept that he did receive cheque payments from 2012 which Ms Setho requested to bank into his accounts. He then remitted the sums to her after the cheques were cleared, keeping some of the amounts, which she decided, as a gift from her.

Keppel alleges he allowed his bank accounts to be used as a conduit for wrongful payments.

One of the 10 defendants, Madam Young Ah Whatt, has died, but Keppel obtained a court order last month to extend the validity of the court papers by another six months, while it determines the appropriate legal representative to serve the papers on so the club can recover sums from her estate.

Updated findings showed she was said to have received over $400,000 from her alleged involvement in the suspected fraud.

Meanwhile Ms Setho, who is denying the claims, has filed a counterclaim against the club for wrongful dismissal and lost wages. Defended by Harry Elias Partnership lawyer Philip Fong, she has hit back at the club in defence documents filed, pointing out that she was not the sole custodian of membership files and highlighting audits that cleared the club's accounts every year.

The run-up to the case is ongoing and the next pre-trial conference is due later this month.

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Coroner seeks further statements from boy's kin

Straits Times
19 May 2016
Seow Bei Yi

The two-day inquiry into the death of 14-year-old Benjamin Lim closed yesterday with State Coroner Marvin Bay highlighting discrepancies in evidence, such as who made the decision to pull the boy from a school camp.

Asking for further statements to be taken from the teenager's mother and sister, he said it was important this "gap" be filled.

This issue has become a point of contention between Benjamin's parents and his school authorities.

After her call with the school counsellor, his mother told him that he would not be attending the camp the next day. Minutes later, he was found dead at the foot of their block. This happened on Jan 26, a few hours after the North View Secondary School student was arrested for the alleged molestation of an 11-year-old in a lift.

School counsellor Karry Lung said she told Mrs Lim of the school's suggestion that Benjamin not attend the camp, but his mother said she was merely informed of the school's decision. Benjamin's family cannot be named due to a gag order.

Yesterday, the Lims' lawyer expressed concern over how witnesses characterised Benjamin's behaviour when he called his mother to say he was to assist in investigations into a case of outrage of modesty.

On Jan 26, police had gone to Benjamin's school to look for a suspect later identified as him. In the principal's office, he called his mother to say the police were taking him to Ang Mo Kio Police Division. Both Inspector Poh Wee Teck, the officer who interviewed him, and Madam Lung suggested that Benjamin, who was calmer before, grew anxious as he spoke to his mother.

With Madam Lung back on the stand yesterday, lawyer Choo Zheng Xi, representing Benjamin's family, said it would be "very upsetting" to suggest the stress the teen appeared to be experiencing was related to his conversation with Mrs Lim, who was described as speaking loudly.

Referring to how she said Benjamin "started frowning and his replies became softer" when talking to his mother, Mr Choo said: "I want to clarify that you are not suggesting here that there was a correlation between Benjamin's mother speaking loudly and the significant stress that you observed".

Madam Lung said she could hear only Benjamin's reaction but not the conversation.

Insp Poh, who took the stand after Madam Lung, said he saw Benjamin cringe in the last exchange he had with his mother. After the teen hung up, Insp Poh saw that he was holding his phone "very tightly" and took the cellphone from him in a bid to relieve his stress. The next mention of the case will be next month.


Teen 'admitted touching girl after denying it at first': Coroner's inquiry into boy's death

Benjamin Lim at first denied touching an 11-year-old girl in a lift because he was scared.

But after being given 20 minutes to think again by the officer interviewing him at Ang Mo Kio Police Division, the 14-year-old confessed and said it was the first time he had touched a girl and knew that it was "wrong".

He also apologised and promised not to do it again.

This was revealed yesterday on the second day of the coroner's inquiry into his death, when the officer who recorded the teenager's statement took the stand.

Senior Investigation Officer (SIO) Mohammad Fareed Rahmat said that at first, Benjamin, who was taken to the station at 11.15am on Jan 26, claimed he was taking a new route to his home after school on Jan 25, which was why he mistook a different block for his own.

But one point gave him away.

While in the lift with the girl, Benjamin pressed the button for the 13th floor, when he lived on the 14th floor.

SIO Fareed said: "It appeared to me that Benjamin was not being truthful. I asked him to take some time to think about what he would like to give as his account of the events."

When he resumed the interview at around 12.15pm, Benjamin said he had noticed the girl as he was walking home from school and found her "cute". So he decided to follow her.

After getting into the lift with her, he told police he came up with a plan to drop his mobile phone so that he could touch her as he stood up. When he picked up his phone, he used his right hand to touch her left back thigh. He denied he touched her left buttock.

When he exited the lift, the girl said something to him but he could not catch what she said. She then said never mind.

"I am sorry for what had happened. I felt regret for what I did. I just felt the urge to touch the girl on that day. I know what I did is wrong," he stated in his police statement.

SIO Fareed also explained that Benjamin appeared calm throughout the interview and as his statement was recorded. The entire process ended shortly after 1pm.

After the confession, Benjamin was arrested. He was released to his mother's custody at around 2.50pm after she posted bail of $2,000. At around 4.30pm, he was found dead at the foot of his block.

Asked by lawyer Choo Zheng Xi, who is representing Benjamin's family, if the teenager overheard that he was going to be arrested, SIO Fareed explained he had used a code word when asking a colleague to prepare the arrest report, calling it the "alpha" report.

He added that he never accused Benjamin of lying, but told him in general that the purpose of the investigation was to find out the truth.

He also said he followed the procedure set for interviewing young suspects, including questioning Benjamin in an open-plan office.

Elena Chong

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Does Singapore need Say-On-Pay?

Business Times
11 May 2016
Michelle Quah

SAY-ON-PAY - in which shareholders get to vote on the remuneration of their company's top executives - is growing in prominence across the globe, as the push to vest shareholders with the power to decide executive compensation becomes greater.

There have been similar calls for Singapore - whose public companies operate in a disclosure-based regime - to do the same. Still, while it is an exciting notion to empower investors here with the right to decide executive remuneration, one needs to ask if Say-On-Pay will necessarily benefit the market.

Say-On-Pay has been adopted to varying degrees in several jurisdictions, most prominently in Europe, Australia and North America. Some jurisdictions have chosen binding votes, while others have made them advisory.

Binding votes, adopted by jurisdictions such as the United Kingdom, allow shareholders a legally binding vote on executive remuneration resolutions: that is, companies are bound by shareholders' votes on matters such as how much an executive is paid; if he's allowed a pay increase; how he's rewarded, according to his performance; and even forward-looking matters such as the company's remuneration targets for the coming year.

Advisory votes, which are non-binding, have shareholders voting on remuneration- related resolutions merely to express their level of satisfaction with such practices; their votes do not compel the company to act. Their votes signal to the company its shareholders' views on its compensation practices and, at most, embarrass the company into adopting certain actions.

Say-On-Pay could be viewed on a spectrum: with investors having no say on executive remuneration on one end, and binding votes on the other. Advisory votes would be somewhere in between.

It was a practice that could be said to be born of the need for greater information about - and greater influence over - executive compensation, springing from concerns about excessive corporate pay.

Say-On-Pay had its genesis about 15 years ago. In 2002, the UK introduced the Directors' Remuneration Report Regulations: legislation which required all British companies listed in the UK, any other EU state, or on the New York Stock Exchange or Nasdaq, to include a detailed report on directors' remuneration in their annual report and to have a shareholder vote of the company's remuneration report at each annual general meeting (AGM).

(Nine months later, GlaxoSmithKline suffered a defeat at its AGM when shareholders made their disapproval of the pharmaceutical giant's CEO package known and voted against its remuneration report.)

Momentum

In the years that followed, various European nations such as the Netherlands, Sweden, Spain, Portugal, Denmark and France adopted similar practices. Australia took up non- binding shareholder votes on remuneration reports.

The US took a little longer to warm to the practice. But momentum built in 2008 and 2009, as institutional investors began pushing for large American companies to put their compensation practices to the vote. The enactment of the Dodd-Frank Act in 2011 required all public companies to hold non-binding votes.

With the bulk of the world's developed economies adopting the practice - along with the perception that it enhances the corporate governance regime of the jurisdiction that embraces it - it is perhaps inevitable that calls have been growing for Singapore to adopt Say-On-Pay as well.

Say-On-Pay has had positive and negative consequences, which Singapore should examine in considering whether to implement the practice.

It divests the power to decide executive remuneration away from the company and into the hands of shareholders.

This should prevent companies from abusing their compensation practices and compel them to act in the interests of shareholders - who, supposedly wanting the best for the company as a whole, should then logically be voting in its best interests and therefore be in the right position to make a decision on executive pay.

But investors are also known for having a short-term time horizon when it comes to investing, and are also prone to self-interest. They will also need to do a fair bit of homework to ensure that they are voting in an educated and responsible manner; they will need to scrutinise and study companies' pay practices up for vote.

The reality is that the vast majority will not undertake the legwork required. Many will simply look to the recommendations put forth by proxy agencies like ISS - which could then have the perverse effect of giving one or two agencies too much influence over such corporate decisions.

And while Say-On-Pay was supposed to keep a lid on excessive compensation, it has instead led to pay inflation at the top-executive level. Greater disclosure on pay practices has meant that companies have been forced to stay ahead of the game, or at least pay market rates, to retain their top talent.

It has also led to less creative pay practices at companies, which do not want their unusually inventive pay packages to come under fire from shareholders. Many choose to tread the tried and tested route.

Say-On-Pay has led to greater engagement with shareholders by companies, which are compelled to explain and sell their pay practices even before they come up for a vote. This has meant a greater understanding between the two parties, even if it has also meant a greater time commitment on the part of the remuneration committee chairman.

Readiness

There are clearly pluses and minuses to adopting Say-On-Pay. Currently, the pressure for Singapore to adopt it is coming from corporate governance advocates who want to boost the level of pay disclosure here and to give that disclosure more bite by letting shareholders vote on it.

The push may increase should Singapore's regional neighbours (such as its closest rival in terms of corporate governance standings, Hong Kong) decide to adopt the practice - or if some scandal or unhappiness develops about a company or certain companies' pay schemes.

If Say-On-Pay is to be adopted, Singapore will need to ensure that it is ready for it; that companies and investors alike are properly educated on the schemes and their consequences, and their own responsibilities.

This writer feels there is no urgent need for Singapore to adopt Say-On-Pay, but that an adoption of some form of Say-On-Pay in the near future should definitely be seriously considered by the administration.

In the current comply-or-explain regime, too many companies are being allowed to get away with not disclosing their top executives' remuneration details as required by the Code of Corporate Governance.

The Code states that companies must disclose the exact remuneration of each individual director and the CEO, and the remuneration of the top five key management personnel who are not also directors or the CEO in bands of S$250,000, or else explain why they aren't doing so. But a 2015 study showed that more than half the listed companies here don't.

Clearly, something has to be done to make the requirement stick.

There also needs to be a greater understanding, on the part of shareholders, of how top executives here are currently being compensated - an understanding that has been hampered, in part, by the aforementioned lack of necessary disclosure by companies.

The Singapore Exchange (SGX) should consider conducting or commissioning a study on the current pay practices and disclosure regimes of listed companies here, covering areas such as: the approach and measures used by companies to evaluate and compensate their executives; the sort of compensation packages used, including the various components in pay packages; how such practices stack up against those of other listed companies here and in other jurisdictions; and how complete and detailed remuneration disclosures are.

This would help shareholders better understand how executive compensation affects their investment, and would lay the groundwork for a meaningful appreciation of current pay practices - and a thoughtful discussion on whether shareholders should have a greater say on them in the future.

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SingPost's disclosure lapses 'made no difference to deals'

Straits Times
04 May 2016
Marissa Lee

But auditors take director to task for delay in disclosing stake in firm advising companies

A long-awaited report has found that the disclosure lapses relating to deals by Singapore Post (SingPost) to buy two freight forwarders made no difference to the company board's ultimate decision to acquire the two companies.

However, the report took director Keith Tay to task for the delay in disclosing his interest in the firm Stirling Coleman, which advised the companies that were being bought by SingPost.

Special auditors Drew & Napier and PricewaterhouseCoopers conducted a corporate governance review at the request of SingPost. Last night, a 47-page summary of the report was issued.

SingPost has been embroiled in controversy after it came to light last December that Stirling Coleman had advised the parties selling the firms to SingPost. This raised various issues, such as whether disclosure of Mr Tay's interest in the deals was properly made and even if SingPost may have overpaid.

In the acquisition of F. S. Mackenzie, the auditors noted that Mr Tay had declared his interest as chairman and 34.5 per cent shareholder of Stirling Coleman to the board.

Stirling Coleman was advising the seller of the freight forwarder.

But the announcement on July 18, 2014, posted on the Singapore Exchange (SGX) website that went out to the public, omitted this information and went unnoticed by the SingPost corporate secretarial team. Mr Tay spotted the omission that night and highlighted it to the SingPost team.

SingPost company secretary Winston Wong asked external lawyer Ng Eng Leng of Rodyk & Davidson if a disclosure should be issued, but Mr Ng advised that it was not necessary. However, Mr Ng told the auditors subsequently that he had not read the incorrect announcement and would have advised SingPost to issue a clarification if he had been aware of its mistake.

The special auditors pinned the incorrect disclosure on what it called "carelessness" in preparation and review by certain SingPost staff.

On the second acquisition of Famous Pacific Shipping (New Zealand) announced on Jan 14 last year, the paragraph on "directors' shareholding and controlling interest", which would have disclosed to the public that Stirling Coleman was advising the firm and that Mr Tay was its chairman, was entirely omitted.

The auditors did not point fingers at any one person for this lapse, although it noted that SingPost's legal team had differing views on whether disclosure was necessary.

They also noted that Mr Tay had disclosed his interest to Famous Holdings, which held Famous Pacific, but not to the SingPost executive committee, which was the approving authority.

But even with these lapses, the special auditors concluded that "there is no suggestion that Mr Tay's vote influenced or otherwise affected the eventual approval of (the) acquisitions."

SingPost's statement last night was swiftly followed by a separate statement from Mr Tay via his lawyers, to say he has resigned as lead independent director with immediate effect, as he sees no further need to remain on the board now that the audit is completed.

Mr Tay said last night: "While there are some factual findings in the report that I disagree with completely, they do not detract from the key point - nothing I did caused the non-disclosures in relation to the acquisition of F.S. Mackenzie and Famous Pacific."

National University of Singapore business school associate professor Mak Yuen Teen, whose letter on these deals last December had sparked the audit, said: "The special auditors were critical of Keith Tay... It would seem that regulators may need to look further into this. I think this point should not be buried by the argument that SingPost would still have made the acquisitions."

SGX reminded companies last night of the rules on transactions that require disclosure of a director's interests. It said a company's board is responsible for the announcements and must not abdicate its responsibility to professionals.

It also wants SingPost to obtain independent confirmation that recommendations set out in the summary are implemented.


How the saga unfolded

JAN 18, 2013: SingPost says it is buying a 62.5 per cent stake in freight forwarder Famous Holdings for $60 million. Mr Keith Tay, non-executive chairman and a shareholder of Stirling Coleman, which arranged the transaction, abstains from voting.

JUNE 23, 2014: SingPost executive committee (exco) meets to approve acquisition of freight forwarder F.S. Mackenzie. Mr Tay, attending via telephone, declares his interest in the deal as Stirling Coleman is advising the seller of F.S. Mackenzie.

JULY 18, 2014: Famous Holdings approves the F.S. Mackenzie acquisition via directors' resolution. No physical meeting takes place. SingPost announces the �7 million (S$13.8 million) deal on the Singapore Exchange (SGX) later. Statement includes an incorrect paragraph: "None of the directors or controlling shareholders of the Company has any interest, direct or indirect, in the Acquisition."

NOV 5, 2014: During a board meeting of Famous Holdings, a SingPost subsidiary, at 10.30am, the board is updated on the progress of the acquisition of freight forwarder Famous Pacific Shipping (New Zealand). Mr Tay declares his interest in Stirling Coleman, financial adviser for Famous Pacific. Later, at noon, a SingPost exco meeting is held in the same room, but there is no recorded disclosure of Mr Tay's interest in the Famous Pacific deal. Mr Tay cannot recall declaring his interest at the SingPost meeting.

JAN 7, 2015: SingPost exco approves acquisition of Famous Pacific Shipping (New Zealand). Mr Tay does not attend as he is in hospital in China. There is no recorded discussion of Stirling Coleman's involvement in the acquisition.

JAN 7-14, 2015: SingPost's legal team discusses if Mr Tay's interest in Stirling Coleman needs to be disclosed in the SGX announcement.

JAN 14, 2015: SingPost announces that it has acquired a 90 per cent stake in Famous Pacific Shipping (NZ) for a total consideration of up to NZ$8 million (S$7.5 million). In its statement, the entire paragraph on "directors' shareholding and controlling interest", where Mr Tay's interest in Stirling Coleman would have been disclosed, is omitted.


RECOMMENDATIONS

• To improve guidelines on the evaluation and approval of merger and acquisition transactions

• To implement standard procedures for the disclosure of directors' interests

• To put into writing the guidelines for preparing and disclosing announcements made to the Singapore Exchange on merger and acquisition transactions

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ADV: LexisNexis - Defamation: Principles and Procedure in Singapore and Malaysia

Singapore Law Watch
19 May 2016
LexisNexis

Rapist gets nearly 17 years' jail and 22 strokes

Straits Times
11 May 2016
Selina Lum

A 30-year-old man who, in 20 minutes, raped a woman at three locations along a stretch of public road in 2013 was yesterday sentenced to 16 years, 10 months and two weeks in jail, and 22 strokes of the cane.

In sentencing Lim Choon Beng, Judicial Commissioner Foo Chee Hock said: "The idea that one can walk safely on the public road in Singapore at any time of the day was shattered by the shocking and brazen acts of the accused on that morning." He said a clear message must be sent that those who commit such offences will be punished with "the full force of the law".

Prosecutors had sought at least 17 years' jail and the maximum 24 strokes of the cane for Lim, pointing to the "audacity" of his repeated rapes of the woman, a stranger.

Lim initially pleaded not guilty to raping the woman, then a 24-year-old nightclub singer from China, who was walking home alone in the wee hours of Feb 9, 2013.

The woman, now 27, returned to Singapore to give testimony on how Lim, who was then drunk, had raped her along Martin Road outside the Watermark condominium, then outside the Robertson 100 condominium, and finally near lamp post number 16 along River Valley Close.

A day after the trial started, Lim decided to plead guilty to two charges of rape, one charge of sexual assault and one charge of aggravated outrage of modesty.

The court heard that the woman begged Lim to let her go but he threatened to beat her if she resisted. After the third rape, she escaped.

Lim was arrested after the victim returned to River Valley Close and pointed him out to police, who had been called in by a security guard.

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HDB tightens rules for transfer of flat ownership

Straits Times
04 May 2016
Yeo Sam Jo

Previous rules allowed some to avoid paying ABSD; transfers now granted only under special circumstances

Housing Board flat owners who wish to transfer their ownership to a family member are no longer allowed to do so except under six special circumstances including divorce and financial hardship.

Previously, owners were not bound by such restrictions when transferring their flat to a spouse or immediate family member.

Having done so and given up their ownership, HDB dwellers could then purchase a private property without incurring the Additional Buyer's Stamp Duty (ABSD).

This duty of 7 per cent of the purchased property price applies to Singaporeans buying any second residential property here.

Under newly tightened regulations which took effect on April 1, changes in flat ownership are allowed only on grounds of marriage, divorce, death of an owner, financial hardship, renunciation of citizenship and medical reasons, said an HDB spokesman yesterday in response to queries. This would include those who need help from family members in servicing the mortgage, or who have a chronic illness and wish to bequeath the flat.

She stressed that HDB did not make the change to target the loophole that allowed buyers to avoid paying the ABSD, but as part of a regular policy review. Those who do not fall under the new guidelines will be reviewed on a case by case basis.

Property observers said flat transfers done to avoid the ABSD have been an open secret and a common practice in the real estate circle.

Termed as "decoupling", it often involves one spouse legally giving up his or her co-owner status to become an authorised occupier.

"Agents were going around teaching people how to do this and it was all above board," said Mr Chris Koh, director of estate agency Chris International.

The practice caught on after January 2013, when Singaporeans had to start paying ABSD from their second property, instead of the third, as a measure to cool a heated market.

On average, about 6,000 applications for ownership transfers were approved each year from 2012 to last year, mainly due to marriage, divorce, death of an owner and financial hardship, HDB said.

R'ST Research director Ong Kah Seng said the latest move by HDB would help ensure that buyers are not financially overstretched.

Real estate lawyer Lee Liat Yeang, a partner at Dentons Rodyk & Davidson LLP, agreed.

"Decoupling is not all that rosy. It may not be easy for a single income to support a loan for a private property," he said. "It could also be the seed of future dispute as you are selling off your interest in the flat."

Mr Koh noted there is a considerable transfer fee and the spouse left with the flat would have to pay the other's Central Provident Fund mortgage instalments with interest.

While the Government said as recently as last month that it is too early to unwind property cooling measures, experts said it might be time to consider easing the ABSD.

PropNex Realty chief executive Ismail Gafoor said: "A second property should not be seen as excessive and Singaporeans should not be penalised for it."

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Putting the Panama Papers in perspective

Business Times
19 May 2016
Anita Gabriel

THESE days, it seems no two words can conjure up perceptions of malfeasance, tax dodging, money laundering or fraud better than "offshore companies".

Suitably piqued, many in Singapore combed the online searchable database released last week from the confidential documents dubbed the "Panama Papers", expecting familiar names to jump out on their screens.

Within the over 360,000 names of people and corporations behind secret offshore structures across 21 jurisdictions, a search by country yielded 5,869 offshore entities, 6,116 officers, 1,315 intermediaries and 5,728 addresses, some involving well known, and well-regarded, corporations in Singapore.

Think Boustead Singapore and Singapore banking stalwarts DBS Group, OCBC and UOB. Even GIC turned up in the list, although that was a result of an earlier leak three years ago.

All have since cleared the air on the matter.

Amid the public furore and suspicion that these revelations may have stirred up, one should take note of the dry but necessary disclaimer from the International Consortium of Investigative Journalists (ICIJ): that there are legitimate uses for offshore companies and trusts and that it does not intend to suggest wrongdoing.

To label as black hats all corporations or individuals that have set up offshore structures would be simplistic and unfair. It would also undermine the gargantuan work the ICIJ has done in crunching a leaked trove of over 11.5 million financial and legal records from Panamanian law firm Mossack Fonseca. After all, it is hoped that this will ultimately spark a global move towards better governance with the overarching goal of combating corruption.

Morgan Lewis Stamford lawyer Daniel Chia puts it succinctly: "It's more the politics of it all that has caught the imagination and is damaging to those associated with offshore structures."

Indeed, Singapore's Ministry of Finance and Monetary Authority of Singapore have said they will review the information and will not hesitate to take action if there is evidence of wrongdoing by any individual or entity. This due process needs to take its course before any conclusions are drawn.

But beyond the shadow play that offshore tax havens have come to be associated with, there are valid and legitimate factors that drive the appeal of such offshore structures.

Chief among them are the financial, tax or legal benefits. Tax avoidance is quite a world apart from tax evasion.

Singapore's low taxes - it has one of the lowest effective tax rates in the world - suggest that there are other (perfectly valid and legal) reasons offshore structures are sought by Singaporean corporations and individuals. These include the facilitation of acquisitions, easier disposal or liquidation of firms, wealth planning, asset protection, business risk mitigation and so forth.

Post-global financial crisis and with intense lobbying and rising awareness, there is now an enormous shift globally to crack down on tax havens and financial secrecy.

Most significantly, tax authorities are banding together to swap data to detect tax evasion or crimes carried out through cross-border holdings. Singapore, which is ranked fourth in the world on the 2015 financial secrecy index by an independent British lobby group - after Switzerland, Hong Kong and the US - plans to begin sharing financial account information by 2018 under the framework of the Common Reporting Standard (CRS), which has so far drawn commitment from over 100 countries, including Switzerland and Panama.

Indeed, the days of concealing identities through offshore structures aided by a huge network of professional service providers may be coming to an end. And with that, what will be left will be genuine reasons for creating offshore firms.

Till then, one should be careful about tarring all offshore account holders with the same brush.

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Proposed Bill changes to empower MAS to give grants to IMF

TODAY
10 May 2016

Amendment to Bretton Woods Agreements will allow central bank to lend, give grants above standard contribution

SINGAPORE — Parliament yesterday introduced legislative amendments to allow the Monetary Authority of Singapore (MAS) to enter into arrangements with the International Monetary Fund (IMF) to give grants or other financial assistance on behalf of the Government of Singapore.

The Bretton Woods Agreements (Amendment) Bill was tabled for first reading by MAS board member Lawrence Wong, who is also National Development Minister. With the amendment of the Bretton Woods Agreements Act, Singapore will be able to contribute its share of IMF’s profit from gold sales — amounting to a grant of US$20 million (S$27.3 million) — to the fund’s concessional lending vehicle, the Poverty Reduction and Growth Trust (PRGT).

“The grant is subject to Parliament’s approval. Any future grant to the IMF will also require Parliament’s approval,” an MAS spokesperson said in response to TODAY’s queries.

MAS already has powers to provide loans and interest-free deposits to the IMF. The proposed amendments will empower the MAS to lend, or provide grants or other financial assistance, in excess of the standard membership contribution provided by Singapore to the IMF. This will allow the MAS to participate in the IMF’s initiative to strengthen PRGT resources.

The Bill will also empower the MAS to buy or sell Singapore’s Special Drawing Rights (SDR) in order to carry out its obligations under any Fund arrangement or Fund programme. The SDR is an international reserve asset, created by the IMF to supplement its member countries’ official reserves, and can be exchanged for freely usable currencies.

The amendments also set out safeguards for any financial assistance, including loans and grants, by the MAS to the IMF. First, any financial assistance can only be provided pursuant to a specific request from the IMF. In addition, MAS will only agree to a request for financial assistance where there is a collective and broad-based response among IMF members. Second, the Minister-in-charge of the MAS must also publish in the Gazette a statement containing key information about the agreement to extend financial assistance. This statement shall contain a description of the nature and terms of the agreement, and the maximum amount that the MAS has agreed to grant, lend or give other financial assistance to the IMF.

As an additional safeguard, the provision of grants to the IMF will be subject to Parliament’s approval. This is because grants are treated as expenses whereas loans will be repaid at maturity and are recorded as assets on MAS’ balance sheet.

As part of a strategy aimed at making its low-income lending sustainable, the IMF in February 2012 approved a first distribution of about US$1.1 billion of reserves from windfall gold sales profits, subject to assurances by members that at least 90 per cent of the amount would be made available for the PRGT. In September 2012, the IMF approved a second distribution of about US$2.7 billion of reserves from windfall gold sales profits, subject to the same assurances as the first one.

To date, IMF members whose shares represent 95 per cent of the amount distributed, including Singapore, have pledged to transfer their shares in the two tranches to the PRGT, according to the fund.

Gold sale profits are part of the IMF’s general resources available for the benefit of the entire membership and cannot be placed directly in the PRGT. The funds are distributed to countries in proportion to their IMF quota shares on the expectation that members would direct the IMF to transfer these resources to the PRGT as subsidy contributions.

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Ex-CFO of Sinomem to pay S$316,000 penalty to MAS for insider trading

Business Times
04 May 2016
Jamie Lee

THE Monetary Authority of Singapore (MAS) on Tuesday said that it has taken civil penalty action against Pu Weidong and Triumpus Assets Management Pte Ltd (Triumpus) for insider trading in the shares of Sinomem Technology. They will pay S$316,000 as a civil penalty.

Mr Pu, the sole shareholder of Triumpus, was the chief financial officer in Sinomem in 2009. Between March 2 and March 27, 2009, Mr Pu and Triumpus bought 4.6 million Sinomem shares when Mr Pu possessed confidential price-sensitive information concerning a proposed share buyback offer by Sinomem, MAS said. The share buyback offer was announced on March 27, 2009, and the insider trade translated to a profit of S$49,542.

In the same year, between Aug 25 and and Aug 31, Mr Pu and Triumpus separately sold 14.2 million Sinomem shares when Mr Pu possessed knowledge of confidential, price-sensitive information on a proposed placement of shares by Sinomem. The share placement was made public on Sept 9, 2009. No profit or loss was made on these trades.

Mr Pu and Triumpus have admitted to contravening sections of the Securities and Futures Act. On top of the civil penalty of S$316,000, Mr Pu and Triumpus must pay S$61,610.75 for the legal costs and disbursements incurred by MAS for the civil penalty action.

Mr Pu will not be a company director or be involved in the management of a company for a period of one year from July 3, 2016.

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Claims lodged against Jason Holdings, subsidiary

Straits Times
18 May 2016
Wong Siew Ying

Letter of demand from ANZ and claims from contractors; Jason Parquet also asked to vacate Kaki Bukit premises

New problems have flared up on two fronts at timber flooring firm Jason Holdings and its subsidiary Jason Parquet Specialist (Singapore).

It has received a letter of demand from a third bank over missed payments while legal action is looming over several claims by contractors for late payments.

And the landlord of dormitory units in Kaki Bukit Road is ejecting Jason Parquet from the premises, the company said yesterday.

The latest blow came in the form of a letter from lawyers of the local branch of ANZ to Jason Parquet, Jason Holdings and its executive directors Jason Sim Chon Ang and Sim Choon Joo demanding the full repayment of $1.69 million. The sum comprises a $1.64 million principal and $52,000 in interest under the facilities granted by ANZ to Jason Parquet and guaranteed by Jason Holdings and the two directors.

Last month, DBS Bank cancelled certain banking facilities granted to Jason Parquet and demanded repayment of about $7.29 million - a sum guaranteed by Jason Holdings. Earlier this month, Maybank demanded an immediate repayment of $1.7 million that is owing under the banking facilities it granted Jason Parquet.

Jason Holdings said Jason Parquet also faces claims from five contractors threatening legal action if repayments are not made within stipulated deadlines. The deadlines for four repayments have lapsed.

SAC Freight asked for the repayment of $12,000 by April 27, Bostik Findley (Malaysia) demanded about $32,000 by April 29, Blue Star Engineering & Construction about $174,000 by May 13 and Nidhi Engineering & Construction for about $61,000 by May 11.

Jason Holdings said the fifth contractor, Safeplux Electrical Engineering, has obtained an order from the Small Claims Tribunals requiring Jason Parquet to pay about $1,000 by June 6.

Separately, Jason Parquet will need to vacate domitory units in Kaki Bukit Road by May 22 after landlord Labourtel Management Corporation terminated the tenancy agreement "with immediate effect". Reasons were not provided.

Alternatively, Jason Parquet can move out by May 31 if refurbishment work is needed to restore the units to their initial condition, the firm said.

In addition, Soil-Build, the main contractor of a sub-contract entered into with Jason Parquet, has sent demand notices to Etiqa Insurance, the statement said. Etiqa issued a performance bond executed in favour of Soil-Build last November in connection with the sub-contract. Soil-Build has demanded an immediate repayment of about $100,000 from Etiqa that is due under the terms of the performance bond.

On May 3, the company announced that an application to wind up Jason Parquet was under way, with a court hearing scheduled for Friday. Jason Holdings shares last closed at 6.2 cents on Jan 5 before a trading halt was called.

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Fight against tax evasion to get wider powers

Business Times
10 May 2016
Chuang Peck Ming

Wider Approach allows financial firms to collect, retain Common Reporting Standard data for all non-S'pore tax residents

PARLIAMENT has given the green light for changes to be made in the tax laws to pave the way for Singapore to join the international fight against tax evasion - changes that will also empower financial institutions in Singapore to report on all foreign money parked here.

"The set of amendments allows Singapore to implement the Common Reporting Standard (CRS), an internationally agreed standard for automatic exchange of financial account information (AEOI)," Senior Minister of State for Finance Indranee Rajah told Parliament on Monday when she tabled the Income Tax (Amendment No 2) Bill for its second reading.

The AEOI is meant to detect and deter tax evasion. The CRS sets out the financial account information to be swapped, the financial institutions required to report, the different types of accounts and taxpayers covered as well as the customer due diligence procedures which financial institutions must follow.

The current international effort to tackle tax evasion got its start in 2014, when the Global Forum on Transparency and Exchange of Information for Tax and G-20 major economies agreed to push AEOI under the CRS as a global standard. Over 90 economies, among them major financial centres such as Dubai, Hong Kong, Luxembourg and Switzerland, have endorsed it and committed to 2017 and 2018 implementation timelines.

Singapore also gave its backing but it will exchange information only bilaterally with countries that it has signed Competent Authority Agreements. And this would be on three conditions: There must be a level playing field among all major financial centres; Singapore's AEOI partners must have a strong rule of law and can ensure confidentiality; and there has got to be reciprocity in the trade-off.

Ms Indranee said that the changes in the income tax law would allow financial institutions here to install the necessary processes and systems to collect CRS information from Jan 1 next year to meet Singapore's timeline to commence the first exchange of information in 2018.

Financial institutions will be given the power to collect and retain CRS information for all non-Singapore tax residents, not just tax residents of jurisdictions which Singapore has an AEOI agreement with.

This is known as the "Wider Approach", which Ms Indranee said is an effective approach that financial institutions here prefer because it removes the need to repeatedly review the accounts every time Singapore signs a new AEOI agreement.

She pointed out that the Wider Approach has been adopted by many countries, including the UK, Sweden, Japan and South Korea.

But Ms Indranee, who is also the Senior Minister of State for Law, said that while financial institutions are empowered to collect and retain information for all non-Singapore tax residents, they need only report to the Inland Revenue Authority Of Singapore (IRAS) on those from countries that Singapore has an AEOI agreement with.

With the changes made on Monday, the provisions introduced in 2013 to accommodate the Singapore-US Foreign Account Tax Compliance Act Intergovernmental Agreement (FATCA IGA) are also extended to any other AEOI agreement that is in accordance with the CRS. "This will enable Singapore to sign Competent Authority Agreements with other jurisdictions to implement AEOI under the CRS," Ms Indranee said.

The 2013 provisions gave IRAS the necessary information gathering powers to fulfil Singapore's role in facilitating FATCA-compliance under the IGA. The powers include the routine collection and transmission of relevant information as well as enforcement powers to sanction non-compliance.

Monday's Parliament session also saw Murali Pillai, the PAP candidate who won in last Saturday's by-election at Bukit Batok, sworn in as a Member of Parliament.

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Data Register pleads guilty to breaching Companies Act

Straits Times
04 May 2016
Marissa Lee

The company which calls itself Data Register and misled 1,056 firms into paying it a $490 "subscription fee" in November 2013 pleaded guilty yesterday to 500 charges of breaching the Companies Act.

The charges were for failing to state its name and registration number on its business letters. Data Register, which created the impression that it was a government entity, also admitted to another 604 charges which will be considered in sentencing, at a later date.

The case will be mentioned again on May 25.

Each breach under Section 144 of the Companies Act carries a maximum fine of $1,000. The Accounting and Corporate Regulatory Authority (Acra), which brought the case to court, has called for a $400 fine for each charge, or a total fine of $200,000. Data Register is asking for a total fine of $50,000.

"These charges represent a mere fraction of the potential offences committed by the issuance of the letters," Acra chief executive Kenneth Yap told a district court, but the accused had already strained Acra's resources and it decided not to pursue the matter further.

Between last month and November 2013, Acra received an unprecedented 7,884 complaints and inquiries concerning Data Register, and incurred a sum of $59,135.86, paid to external vendors for taking and making calls to members of the public concerning Data Register.

In 2014, the Commercial Affairs Department (CAD) had also investigated Data Register over the alleged scam and seized monies from the company's bank account, but no fraud charges were brought against the company yesterday. The CAD did not respond to queries from The Straits Times by press time.

Even with a conviction, Data Register is not barred from soliciting more business or reviving its payment demands from subscribers.

For its part, Acra said it wrote to Data Register in November 2013, demanding that the firm cease further plans to send "unsolicited business letters with vague and threatening contents", and to offer to remove the firms it had sent letters to from its database and not charge them the $490 fee.

But Acra learnt that some recipients of Data Register's opt-out e-mail the following month found that they were unable to choose the "remove my account" option. And up till July last year, Data Register was sending "final invoice reminders" requesting that firms pay up the $490 to avoid a visit from a credit management company.

Data Register's two registered directors - Dr Szilard Toth, a Hungarian citizen, and Singaporean Lee Wei Hsiung, who is employed at corporate secretarial service firm Tricor, were not in court yesterday.


Correction note: An earlier version of this story stated that Dr Szilard Toth, a Hungarian citizen, and Singaporean Lee Wei Hsiung, who is employed at corporate secretarial service firm Tricor, are registered directors of Data Register. This is incorrect, as both are no longer listed as directors. Mr Lee ceased to be a nominee director on Dec 17, 2013. We are sorry for the error.

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HSR fined, barred from en bloc deals for a year

Business Times
18 May 2016
Lee Meixian

Council for Estate Agencies finds HSR's management had approved lead agent's offer of incentive payments to 4 owners of Thomson View condo

THE Council for Estate Agencies (CEA) has imposed a financial penalty of S$74,000 on real estate agency HSR International Realtors for two counts of acting for a client without declaring a conflict in interest.

The disciplinary committee of CEA also imposed a condition disallowing HSR from undertaking any collective-sale work for one year from April 20, 2016.

The subject incident has to do with the S$590 million en bloc attempt of Thomson View condominium, for which HSR was the marketing agent.

This was the case where the High Court had in 2013 quashed the collective sale and said that HSR's offer of more than S$548,000 in incentive payments to four owners to get a requisite 80 per cent majority amounted to bad faith.

This included offering a return business class air ticket from Europe to Singapore so that one owner's wife could sign the collective sales agreement.

After the court's ruling that the four owners who received the payments could not be counted among the requisite 80 per cent majority, the sale was scuppered.

Now, more than two and a half years later, CEA's investigations revealed that the lead property agent in HSR's sales investment team had approval from HSR's management to offer the incentive payments.

HSR had intended to pay the incentives using the commission from the collective sale.

HSR pleaded guilty to the disciplinary committee on April 12, 2016, to the two counts, and was then sentenced and ordered to pay a financial penalty of S$37,000 for each count.

Disciplinary action was also initiated against the lead property agent who offered the incentive payments, but the agent died before the disciplinary proceedings could be completed.

Asked why it had taken this long for action to be taken against the agency, CEA said two-plus years is a "typical" duration for the investigations, interviews and disciplinary committee hearing to be completed.

When contacted, HSR majority shareholder Patrick Liew said: "The key executive officer and management had decided not to continue with the legal proceedings, and had pleaded guilty as they felt it was the most prudent thing to do.

"The company now wants to move on from the incident and continue working to improve the business amid soft market conditions."

Mr Liew added that the barring from en bloc deals will not affect the company, as HSR has not done any collective sales after the lead property agent resigned. HSR also does not intend to in the near future.

"In any case, there will hardly be any en bloc deals in the next 12-24 months," he said.

In September 2013, the court had found that HSR had breached its duty as an adviser to the collective sale committee by offering the incentive payments.

These incentive payments brought about a conflict of interest, because the agency had placed its own interest (to collect the commission) and the interests of the four owners over the interests of other owners. One of the four owners owned 10 residential units in the 255-unit condominium.

The court also ruled that HSR had breached its duty of transparency by not disclosing the incentive payments to the collective sale committee or the other owners.

The interested buyer at the time was a joint venture between mainboard-listed developer Wee Hur Development and private equity investment firm Lucrum Capital.

Last year, Mr Liew and his wife had bought the loss-making HSR from 3Cnergy (the renamed HSR Global) for a nominal S$1, after having sold their 66 per cent stake in HSR Global to the investment vehicle of Malaysian tycoon Tong Kooi Ong for S$13.7 million in 2013.

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WP takes issue with tweak to Govt Proceedings Act

Straits Times
10 May 2016
Chong Zi Liang

Parliament approved mostly technical changes to 51 existing laws yesterday under the Statutes (Miscellaneous Amendments) Bill, with one change in particular drawing the attention of Workers' Party MPs.

It was to align the Government Proceedings Act with other laws, by removing a limit to how much legal fees the Government can be awarded when it goes to court.

Previously, this amount was capped at the costs of two lawyers. Yesterday's amendment allows the Government to be awarded the legal costs of more than two lawyers.

Ms Sylvia Lim and Mr Low Thia Khiang (both of Aljunied GRC) debated with Senior Minister of State for Law Indranee Rajah over the change.

They said it could end up deterring citizens from seeking legal redress against the Government because they are now faced with potentially higher legal costs.

Ms Indranee said the change would bring legal proceedings involving the Government in line with normal civil proceedings. She added that it is ultimately the courts that decide on the amount of costs to award, "so the safeguard there is that it lies in the hands of the courts".

But Ms Lim said an individual or private entity taking the Government to court usually does not have the same resources to call upon as the state. She said the Government should take "a broader view... even a magnanimous view" in deciding on the change.

Mr Low also raised the same points, saying: "Is it a good thing for Singapore that people who somehow feel victimised by the Government are intimidated by the cost, (because they) don't know how much the court is going to decide?"

Ms Indranee countered that not all who sue the Government have no money. "There are any number of parties with different situations and they may have different financial means," she said.

On why the change is necessary, she said each case requires a different amount of work from the lawyers, so it is best left to the courts to decide on costs in an objective and fair manner.

When costs are awarded in favour of the Government, it also means the other party has ultimately failed in its legal challenge, "meaning that that case should not have been brought in the first place", she noted.

She added: "When this Government is engaged in litigation...(it) does its best to be fair, objective and rational about it. So, it would not be our approach to use cost to be oppressive, but to seek cost where we think that it is fairly and justly incurred and to leave it to the courts to make the appropriate decision."

Speaker Halimah Yacob put an end to the exchange after a few rounds of clarifications by Ms Lim and Mr Low, saying all parties had made their point. "I don't think there's going to be any further development," she said.

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More credible responses needed from S'pore firms accused of bribery abroad: Mailbag

Business Times
04 May 2016

RECENTLY, allegations have been made in media reports about the possible involvement of some Singapore companies in bribery scandals overseas. The responses from these companies typically include an immediate denial of the allegations, and an assertion that the company has zero tolerance for corruption and a code of conduct prohibiting bribery and corruption. In some cases where third parties are allegedly used, the companies have not denied using the third parties, but have stated that the third parties they use are bound by a code of conduct and an agreement to not pay bribes.

Such responses are not helpful for a number of reasons: First, every company will undoubtedly say it has a zero tolerance for corruption. I have never seen a company say it has some tolerance for corruption.

Second, most companies have a code of conduct that prohibits bribery and corruption, and certainly none will have one that condones it. This does not guarantee that employees or third parties may not have violated the code. Without further investigations, it would be impossible to say for sure that no employee or third party has paid bribes.

Third, where third parties are used, the company will not know if the third party abides by the code of conduct and service agreement, especially if it does not audit these third parties. A recent global survey of bribery and corruption found that many companies did not audit third parties. I have not seen a Singapore company accused of bribery through third parties confirm that it audits the third parties it uses.

Having a code of conduct is only the first step to any effective anti-bribery and compliance programme. Even the existence of a robust compliance function cannot guarantee that bribery will not occur, especially if the company has aggressive sales targets and incentive compensation closely linked to individual sales targets, and operates in industries or countries with high levels of corruption.

We have weak enforcement of our anti-corruption laws overseas, unlike some developed countries, which have strengthened their anti-bribery laws and enforcement in overseas jurisdictions.

Further, there is no concept of corporate liability when employees or third parties pay bribes, and senior management and boards are not held responsible when they oversee a corporate environment that is weak in curbing corruption.

Singapore is also not one of the 41 signatories to the OECD Anti-Bribery Convention aimed at combating bribery of foreign public officials in international business transactions. Therefore, while Singapore has strong enforcement of its anti-corruption laws on home turf, there is less pressure on Singapore companies operating overseas to strengthen their anti-corruption controls, compared to companies from countries such as the US and the UK. Given these factors, when bribery allegations about Singapore companies surface, I tend not to dismiss them outright.

In a recent case, overseas media reports said a leaked confidential memo from an overseas company accused of being a middleman in a massive bribery scandal commented that the Singapore company that was allegedly involved was an "ideal client" because it had lax anti-corruption controls, relative to other multinational clients.

However, it has become evident that even if our regulators do not take enforcement actions overseas, Singapore companies may be exposed indirectly through investigations by overseas regulators of foreign public officials, foreign companies and third parties. Even if no enforcement actions against Singapore companies result from such investigations because of jurisdictional issues or because the Singapore companies are not the main targets of investigation, their involvement causes reputational harm and potential loss of future business opportunities, which are likely to affect their long-term profitability. If many Singapore companies become accused of engaging in corruption overseas, it will also affect Singapore's standing in the global community - even more so if government-linked companies are implicated.

Singapore companies that do business overseas need to take a good hard look at their compliance programmes, strategies, incentive systems and business practices and adopt a more measured approach when responding to bribery allegations. Rather than issuing a knee-jerk outright denial, chanting "zero tolerance for corruption" and "code of conduct" whenever such allegations surface, they should take allegations seriously and commit to reviewing their compliance programmes and undertaking their own investigations. Outright denial of bribery without any specific action may give the impression that the company has a head-in-the-sand attitude towards actual bribery risks out in the field. If the allegations subsequently turn out to be true, the company's initial response would be seen to be shallow and, over time, the company will lose its credibility.

Mak Yuen Teen

Associate Professor at the NUS Business School

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Consumers welcome proposed changes to law against errant retailers

TODAY
18 May 2016

They say amendments, if passed, will help trigger caution against bad eggs in the industry

SINGAPORE — The proposed legislative changes to give the authorities more teeth to go after unscrupulous retailers were welcomed by consumers although some wished for provisions to be put in place to secure refunds or compensation for those who had been cheated.

Nevertheless, they agreed that consumers should exercise caution in their purchases to begin with and felt the proposed changes, if passed, would help in triggering caution against bad eggs in the retail industry.

The mooted amendments to the Consumer Protection (Fair Trading) Act allow public officers from the Standards, Productivity and Innovation Board (Spring Singapore) to march into any store to seize evidence as part of their investigation against errant retailers, and then file a court injunction for the retailers to stop their business.

Retailers under an injunction order could also be compelled by the courts to make their status publicly known to consumers by printing it on sales invoices or in the form of a poster pasted at their shopfront. If the retailer wants to change its business address or name, he must notify Spring about any changes.

Errant retailers who do not comply with injunction orders could also face contempt of court, which carries penalties ranging from a fine to imprisonment. These proposed amendments, which will cover all registered businesses, including online retailers, were put up for public feedback since Monday.

Consumers TODAY interviewed noted the Consumers Association of Singapore’s (Case) present lack of teeth, saying the proposed changes would improve retail practices.

But customers who have been cheated by businesses would have gone through a “very traumatising experience” and the authorities should be given the power to make the errant company compensate or refund their victims in the form of cash or vouchers, said a consumer who wanted to be known only as May.

Another consumer, Mr Edmund Chua, suggested that an offending retailer could have its assets frozen, proportionate to the amount of money in dispute between the business and its customers.

“If (the authorities) cannot enforce (recourse), frankly, it all boils down to zero,” said the 41-year-old financial advisor. He added that since only a small amount of a retailer’s assets would be frozen, it would not be unfair to the business even if they are given the all-clear eventually.

Still, Mr Chua said consumers must be careful and responsible with their decisions before making a purchase and should not mistake their own buyer’s remorse for misdeeds by the companies.

Agreeing, undergraduate Jemson Chan, 23, said the proposed changes could be “a real breakthrough when detecting fraudulent shops”.

“Individual complaints may not be enough of a deterrent to scare off fraudulent shop owners,” said Mr Chan, who patronises Sim Lim Square once a month to buy computer accessories.

The mall has been in the public spotlight for some of its tenants’ business practices, including the infamous Mobile Air case in 2014, where a Vietnamese tourist in Singapore was caught on video begging on his knees for a refund from the shop.

Most of the retailers in Sim Lim Square that TODAY spoke to also welcomed the changes, saying they hoped it would restore consumer confidence in the mall and boost business.

Mr John Chong, manager of Alan Photo, said that by red-flagging businesses under an injunction order, it would give patrons peace of mind knowing they would not be ripped off.

Another mobile phone salesperson in the mall, who wanted to be known as Mr Chee, added that “if the bad (retailers) got out of the building, then maybe customers will trust us a bit more and they will come back more”.

Agreeing, another salesperson at a camera store who declined to be named, said: “Whether they buy or don’t buy, at least they know that something has been changed.”

Copyright 2016 MediaCorp Pte Ltd | All Rights Reserved

Employers to be reimbursed for second week of paternity leave

TODAY
10 May 2016
Siau Ming En

SINGAPORE — Employers whose employees took a second week of paternity leave from August last year will be able to seek reimbursements from the Government from July, after the amendments to the Child Development Co-savings Act were passed in Parliament yesterday, paving the way for more support for parents.

With the amended Act — the first of two rounds of changes to enact the various measures — employers can seek reimbursement for the leave taken by eligible employees, while eligible self-employed persons can also claim the loss of income from the Government for the additional week of leave taken.

The second week of paternity leave on a voluntary basis was first announced by Prime Minister Lee Hsien Loong during the National Day Rally in August last year.

The amendments cover fathers who have taken leave from Aug 24, 2015 and are applicable to children born on or after, or those whose estimated delivery date was on or after, Jan 1, 2015. It is also applicable to adopted children where the application to adopt was made or whose dependent’s pass was issued on or after Jan 1.

The Act will be amended again later this year to make the second week of paternity leave mandatory, a move announced during the Budget debates last month.

Meanwhile, the amendments passed yesterday will also allow children of unwed parents to be eligible for the Child Development Account (CDA) benefits, including the new S$3,000 CDA First Step grant. This will apply to children who are born from September.

The First Step grant was announced by Finance Minister Heng Swee Keat in his Budget speech in March, and will see parents automatically receive S$3,000 in their child’s CDA even without prior contributions. What they save in the account thereafter will be matched dollar-for-dollar by the Government up to the contribution caps. The money can be used for the child’s healthcare and educational needs.

Apart from mandating the second week of paternity leave, the next round of amendments to the Act later this year will extend the full 16 weeks of government-paid maternity leave to unwed mothers, and increase the length of government-paid adoption leave and shared parental leave.

Addressing the House yesterday, Minister for Social and Family Development Tan Chuan-Jin said: “With strong families and good support from society, our children can have a good start in life. In the coming years, my ministry will continue to strengthen fundamental family relationships, and support vulnerable families.”

The Government first introduced one week of legislated paid paternity leave in 2013. Last year, 40 per cent, or 12,300, fathers took a week of paternity leave.

While Non-constituency Member of Parliament Daniel Goh and MP Louis Ng (Nee Soon GRC) supported the changes, they also raised suggestions for further improving the total fertility rates and parenthood policies.

Noting that “equality matters for increasing birth rates”, Associate Professor Goh suggested that the additional childcare subsidy for working mothers be made gender-neutral and extended to working fathers.

Likewise, benefits should also be extended to all parents of Singapore children as far as possible, including single unwed parents and the non-citizen spouses of Singaporeans.

“Extending equality to all parents of Singaporean children cultivates positive sentiment for having babies and raising children,” he added.

He also asked the Government to provide S$10,000 in every child’s CDA before parents’ top-ups. This would provide short-term financial security for low- and middle-income households, he said.

Mr Ng urged the Government to not just provide more grants but also ensure both parents have the chance to spend more time with their children.

He also asked that employers not only grant the paternity leave, but also actively encourage their employees to take it.

In his closing speech, Mr Tan reiterated that while there might be some differentiation for unwed parents, their children continue to be provided for on many fronts, such as education, healthcare and childcare subsidies.

“It would (not be) correct to say that they are deprived of everything else,” he said.

“While we do what we can for the children, we do think that we must continue to try to encourage and support parenthood within the confines of marriage,” he added.

Copyright 2016 MediaCorp Pte Ltd | All Rights Reserved

Eye surgeon suspended for hiding $445k in earnings

Straits Times
04 May 2016
Yuen Sin

SMC tribunal says offences serious, not just 'mere breach of an employment contract'

A 55-year-old eye surgeon, who hid nearly $450,000 in extra earnings from his employer, has been suspended for three months.

Dr Marc Tay Tze-Hsin, a former national swimmer, worked as a consultant for Pacific Healthcare Specialist Services (PHSS) and was also a director.

Under an agreement, he was to hand over all generated income to PHSS, which would pay him an annual gross remuneration of $396,000, and some bonuses.

In 2005, he agreed to become a visiting consultant for The Lasik Surgery Clinic (LSC), with the knowledge of his fellow PHSS directors.

He entered into an agreement on behalf of PHSS for LSC to pay PHSS the fees for surgery he performed at LSC.

But between December 2005 and December 2006, LSC paid Dr Tay separate fees that were concealed from PHSS. The total amount was $445,874. He made full restitution in February 2009.

At a Singapore Medical Council (SMC) disciplinary tribunal inquiry on Feb 3, he pleaded guilty to three charges.

In mitigation, his lawyer said the matter was "essentially a civil case involving a breach of Dr Tay's employment contract with PHSS".

However, the tribunal said Dr Tay's offences were serious and "could not be characterised as a mere breach of an employment contract".

The concealment of the payments received from LSC was at the expense of PHSS. The amount involved was substantial, it added.

The tribunal said "any sentence short of a suspension would not adequately reflect the gravity of Dr Tay's offending conduct, which involved dishonesty".

Dr Tay was censured and required to give an undertaking to the SMC that he would not engage in the same or similar conduct again. He was also ordered to pay the costs of the inquiry as well as the costs related to it.

His three-month suspension, the minimum suspension period handed out by the SMC, took effect on April 25 and will run to July 24.

In February 2014, Dr Tay was convicted in the State Courts - then known as the Subordinate Courts - of dishonest misappropriation, and was fined $30,000. The amount in the proceeded charges was $204,325.

He was also fined $2,000 for breaching the Companies Act.

Dr Tay is now with LSC. When contacted, he declined comment.


Dr Tay was censured and required to give an undertaking to the SMC that he would not engage in the same or similar conduct again. He was also ordered to pay the costs of the inquiry as well as the costs related to it.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Tax havens and where S'pore stands

Straits Times
18 May 2016
Lee Su Shyan

It has tough rules to safeguard its trusted financial reputation

The alliterative Panama Papers have thrust the issue of tax evasion and tax havens into the uncomfortable spotlight again. Given that Singapore names and companies feature on the list, it is inevitable that scrutiny has fallen on the Republic's position in and stand on this shadowy world of untraceable funds and faceless names.

What are the Panama Papers?

They are a giant trove of documents that were recently released by the International Consortium of Investigative Journalists. They go back as far as 40 years, with details of names, addresses and offshore companies used by clients of Mossack Fonseca.

The law firm is based in Panama and known as one of the leading firms for creating secret firms. It has offices around the world, including a nondescript one off Cantonment Road here. The high-profile list of clients that has come to light, including Russian President Vladimir Putin, has sparked public anger about politicians, celebrities and businessmen hiding assets in these offshore vehicles to evade tax. The revelations have resulted in the resignation of Iceland's Prime Minister.

But lost in the uproar is the fact that not every offshore company is used for financial misdeeds and, indeed, Mossack Fonseca has denied any wrongdoing.

Singapore Management University (SMU) Professor of Accounting (Practice) Sum Yee Loong said: "It should be noted that it is not illegal for someone to set up an offshore entity. For example, a high-net-worth individual may want to set up an offshore company in a tax haven to hold his overseas investments, especially real estate. The advantage of doing this is that there are very low compliance costs incurred on an annual basis. In addition, the disposal of shares of the entity is relatively straightforward."

The type of compliance costs could include audit fees. There are also above-board examples when offshore companies are used by companies. Fairly common are when they are used as a holding company, a joint venture vehicle or as the listing entity that goes public.

Even though offshore vehicles are not always used for illegal purposes, AlixPartners' Financial Advisory Services group's director, Mr Brent Carlson, notes that "Asian companies constitute a significant portion of the names related to these offshore entities. Companies operating in Asia will need to be aware of any potential implications as new names or entities come to light which were previously unknown or undisclosed to them in their due diligence process on business partners."

TOUGHER STAND

But with the Panama Papers coming on the heels of other leaks of similar documents in the past few years, governments are being pressured to take a stronger stand.

The Organisation for Economic Cooperation and Development estimates that the amount of money moved by companies into tax havens is US$100 billion (S$136 billion) to US$240 billion annually, suggesting tens of billions of dollars in lost tax revenue.

Ahead of an anti-corruption summit held in Britain last week, 300 economists from 30 countries had criticised the continuing existence of tax havens. At the summit, British Prime Minister David Cameron announced ambitious proposals where overseas firms in Britain will have to sign up to a new public register if they own or buy property or if they want to bid for central government contracts. This is to ensure that the real owner of such properties will be known.

In Singapore, apart from the Panama Papers, the ongoing probe by the authorities into Malaysia's 1Malaysia Development Berhad (1MDB) and transactions that took place here is also keeping the spotlight on money laundering.

While the authorities are still trying to piece together what happened at 1MDB, comments so far indicate that shell companies are involved and there are "massive complexities of the investigation". Second Solicitor-General Kwek Mean Luck was quoted as saying: "International money laundering is often hard to detect and even more difficult to prove as those involved take extraordinary measures to conceal their involvement. Singapore as a leading financial centre takes its responsibilities to stamp out and deter money laundering very seriously."

SINGAPORE'S STANDARDS

Despite the critics who take the occasional swipe at Singapore, for low taxes for example, it is undeniable that the Republic has moved pre-emptively to take a much tougher stand against money laundering and tax evasion.

Singapore has worked hard on implementing a sound regulatory framework that is in line with international standards. Being the vice-chair of the Global Forum's Peer Review Group means that the Republic is part of the international effort to boost transparency.

Essentially, this means cooperating with counterparts overseas to exchange information with foreign tax authorities for tax-related probes. Recent assessments by its peers have also found Singapore to be "largely compliant" with the international standard on transparency and exchange of information for tax purposes. Britain and the United States have also received "largely compliant" rankings.

The Republic was also one of the first countries to agree to implement a demanding new standard, called the Common Reporting Standard, by 2018. Under this standard, Singapore will share details of bank accounts of tax residents of Singapore's partner jurisdictions automatically.

These moves that involve international cooperation will also help to deter laundering of proceeds from tax evasion. Knowing that bank details can be shared - eventually automatically - with the relevant home authorities should act as a deterrent to anyone who wants to park tax illicit funds here.

When it comes to prevention, the Monetary Authority of Singapore regulates and supervises financial institutions while the Accounting and Corporate Regulatory Authority (Acra) keeps an eye on the corporate service providers.

Dormant or shell companies are liable to be struck off by Acra.

Since banks and professionals such as lawyers are the ones that may be providing the services to customers that use offshore companies, they need to be subject to rules to ensure that they can be adequate gatekeepers.

These rules may be difficult to grasp, but looking at it the other way will also illustrate the differences between Singapore and some of these so-called tax havens.

Take a request for information, for example. A request for tax-related information sent to a tax haven about the identity of the owner of the funds and the assets would come up against a brick wall. In contrast, in Singapore, that request from any of Singapore's partner jurisdictions would get assistance from the tax authority here through the established channels for international cooperation.

Another characteristic of a tax haven would be the existence of many "letterbox companies", in other words, a firm with just a mailing address but no commercial activity in that jurisdiction. But that is not the case here. And the question of whether there is any actual business taking place in the country also leads to the issue of low taxes. Tax havens generally have low or no taxes, which explains why Singapore, which has a relatively low tax rate, gets mentioned in the same breath.

But as SMU's Prof Sum explains: "Singapore has a proper income tax and corporate income tax regime and companies are taxed at the normal corporate tax rate of 17 per cent. Companies will be granted tax incentives only if they carry on substantive economic activities in Singapore." In other words, unlike tax havens, where income is merely parked there, low taxes are used to incentivise companies which bring business and, most importantly, good jobs to Singaporeans here.

Still, the level of scrutiny on tax havens is set to continue.

Gone are the days when countries could offer low taxes to attract companies' investments and no one would bat an eyelid.

One factor is the depleted coffers of the developed countries. Since the global financial crisis, despite easy money being pumped into the system, growth has yet to recover among the developed countries. At an International Monetary Fund meeting last year, former US treasury secretary Larry Summers repeated his warning of the risks of "secular stagnation", or permanent damage to growth. Slowing global growth means that economies cannot cut their budget deficits.

Attention has therefore focused on companies which play the tax game and which try to book their profits in lower-tax countries. That explains why the likes of Google, Starbucks and Amazon are under fire for the amount of tax they pay.

Coupled with the increasing threat of terrorism and how it is being funded, scrutiny over the flow of funds and where they come from can only increase.

Given this backdrop, Singapore has a tough balancing act to ensure that Singapore remains business- competitive. If there is no level playing field with regard to the exchange of information, then funds could flow out of a stricter Singapore to a regime which is more lax. Tough anti-money laundering rules mean that banks and businesses here face high compliance costs, raising the risk that Singapore's competitive advantage could be eroded and jobs lost. Yet the country cannot afford to give in to such pressure to go easy on rules, as this would put Singapore's priceless reputation as a clean and trusted established financial centre in jeopardy.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Catfight over pet product brand name dismissed

Straits Times
10 May 2016
K.C. Vijayan

There is no reason for pet products maker Fussie Cat to bring out its claws over a rival company's use of the name Kit Cat, as the two are different enough not to confuse consumers.

Trademark registrar Sandy Widjaja dismissed Pets Global's claim and ruled that Kit Cat looked and sounded different enough that it can be used.

B2K Pet Products, billed in its evidence as Singapore's largest pet products supplier with global marketing and sales capabilities, had applied to register the trademark Kit Cat for its cat litter product.

Singapore-incorporated Pets Global, a maker of pet products, which also sells cat food and cat litter, had opposed the registration, based on its own registered Fussie Cat mark.

Its lawyers Zechariah Chan and Jeremiah Chew argued that both marks were similar in bearing the word "cat" in a white stylised font, both used the word "Premium" in gold font at the top of the marks, and both used contrasting white text on a black background.

But Ms Widjaja said there was an "important, although subtle distinction" between the marks as registered,which is that Fussie Cat is depicted as though written on a board that is hanging from a nail.

Lawyers Denise Loh and Jonathan Liang, acting for B2K Pet Products, said the words Fussie Cat and Kit Cat were the dominant and distinctive components of the marks.

"I agree," wrote Ms Widjaja, in judgment grounds released last month. "I think it is more likely than not that a consumer will look at Kit Cat and think that it is an allusive reference to the chocolate brand Kit Kat."

She said this was " particularly so" when the slogan at the bottom of the mark said " Love your cat. Love with Kit Cat", which seemed to "vaguely resemble the chocolate brand's slogan, which is: "Have a break, have a Kit Kat."

But she added that the significance of the vague allusion ended there and was raised because Fussie Cat had argued Kit Cat was trying to misrepresent another entity with such an allusion.

By contrast, the name Fussie Cat played on the idea of a choosy animal or connoted a cat named Fussie.

"In the light of the reminder that the average consumer is one who would exercise some care and a measure of good sense in making his or her purchases, and is not an unthinking person in a hurry, I am of the view that the marks are visually dissimilar, aurally similar to a very low extent, and conceptually dissimilar such that overall, the marks are more dissimilar than similar."

She allowed the Kit Cat mark to proceed with registration.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Pets Global Pte Ltd v B2K Pet Products Pte Ltd [2016] SGIPOS 03

Criminalisation can hit shipping's bottom line

Business Times
04 May 2016
David Hughes

WHEN seafarers suffer a blatant injustice somewhere in the world, there is often genuine widespread outrage in the global shipping industry. That anger is usually tempered, however, by a feeling that nothing much can be done and trade must carry on regardless.

There was an uproar when Spain's Supreme Court recently overturned the 2013 verdict of the Spanish court of first instance in La Coruna, which had acquitted Apostolos Mangouras (master of the tanker Prestige) of charges of criminal damage to the environment in 2002.

Tanker owners body Intertanko's summary reflects the way the episode is widely viewed throughout the global shipping industry. It said: "Captain Mangouras, now 81 years old, is outrageously branded a 'reckless' criminal. Yet his actions were described as 'exemplary' by the vessel's flag state. Confronted with a refusal by the Spanish authorities to give the damaged ship refuge, Capt Mangouras bravely did all he possibly could to protect crew, ship and cargo, and to protect the environment. He remained on board with the chief engineer after the rest of the crew had been evacuated, in order to try and save the ship. Finally, against his judgement, he was obliged by the Spanish authorities to take a series of actions that resulted in the damaged tanker being forced to remain out at sea in appalling conditions, where she eventually broke up."

Every international shipping body you could think of expressed anger. Plenty was said about the criminalisation of seafarers. But it looked, and still looks, like another wrong that cannot be righted.

So it was a bit of a surprise to see a press release from the International Chamber of Shipping (ICS) last week, a few months after the final ruling in the case, saying that ICS has strongly criticised the judgment of the Spanish Supreme Court in the Prestige case.

ICS raised the matter at a meeting of the International Oil Pollution Compensation Funds (IOPCF) last week. The shipowners body told the IOPCF meeting: "This decision appears to be highly unusual and has been reached through a somewhat contorted application of law to facts which were found to be correct by the lower court. The decision also seems entirely unbalanced, applying different standards when assessing the blameworthiness of the master to those applied to government officials on shore, whose decisions were exonerated by the Supreme Court."

However, the case was not just about blame; it was probably even more about money. ICS spelt out what the judgment could mean: "It is of great concern to ICS that this decision may be used to support a claim to break the shipowner's right to limit liability and that the amounts then claimed would far outstrip those limits. These limits of liability are the essential quid pro quo for shipowners for agreeing a strict liability under the 1969 Civil Liability Convention (CLC) regime. However, under the CLC, the right to the limits may be broken if it can be shown that the shipowner acted 'recklessly and with knowledge that damage would probably result'."

Undermining shared liability

ICS says the actions by the Spanish government to pursue its claims against the shipowner - "for what are expected to be enormous amounts in excess of the shipowner's limits of liability" - could seriously undermine the system of shared liability that has been agreed under the CLC/Fund liability and compensation regime.

Understandably, ICS says it has appealed to all member states of the IOPCF to do their utmost to protect and support the system which has worked very well over the past decades, and which should not be sacrificed for the interests of individual countries.

"The whole regime is based on cooperation and trust between the shipping industry, the oil industry and governments," says ICS in its statement to the IOPCF. But ICS warns that it now fears that the entire system of efficient compensation for oil spills could be put in serious jeopardy because of unsound decisions being made by national courts.

Asking countries to be reasonable is all very well but when an incident occurs, local considerations can be overwhelming. Those "interests of individual countries" can often prove too strong.

So does the global shipping industry's policy have to be to cross fingers and hope there is no major incident for a long time to come - and, when it does happen, that the oil laps up on the coast of a "reasonable" state?

Well, not quite. Let us return to the hapless seafarer who is usually at the centre of these cases. If principles of fairness and justice, and the rule of international maritime law, are applied right from the start, we are less likely to end up in a Prestige type of situation.

Almost everybody agrees that creeping criminalisation of seafarers has taken place, and is continuing to blight the industry. Collectively, shipping has got to make an even bigger fuss over injustices when they occur. But there must be a strategy too. It should focus on strengthening the 2006 International Maritime Organization/International Labour Organization Guidelines on the Fair Treatment of Seafarers. Ten years on, it is high time to find a way to ensure seafarers are always treated properly, and with respect.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

Ex-wife of alleged match-fixer admits lying to CPIB

Straits Times
18 May 2016
Amir Hussain

But she tells court it was not over her then husband's laptops but her mode of transport

The then wife of alleged match-fixing kingpin Dan Tan Seet Eng purportedly knew that his two laptops held incriminating evidence against him - so she removed them from their home to prevent graft investigators from finding them, a court heard yesterday.

Guan Enmei also feigned ignorance about the laptops in an interview with the Corrupt Practices Investigation Bureau (CPIB) after Tan had been taken in for questioning, Deputy Public Prosecutor (DPP) Jasmin Kaur said at the close of her trial.

Guan, 41, is accused of lying to a CPIB investigator about Tan's computers on June 6, 2013.

Under cross-examination on the second day of the trial yesterday, Guan, a China-born Singaporean who divorced Tan last year, admitted lying to the CPIB, but not in relation to the laptops.

The lie was about taking a taxi, instead of a limousine, she said.

On May 9 last year, two days after she was prosecuted in court for her single charge, Guan sent a letter to the CPIB. It read: "Sir, I am very sorry that I told lies on some issues. I know I am wrong...

"Let me say sorry again. I am wrong. Please give me a chance. I beg you to excuse me."

Asked to explain what she meant by the "lies", Guan said she had been chauffeured by a limousine driver to the CPIB office in Lengkok Bahru, but told an investigator that she had taken a taxi from Rivervale Crescent instead.

This prompted District Judge Lee Poh Choo to ask Guan: "Can you explain why this is so important that you have to write (to the CPIB investigator)?"

Guan replied through a Mandarin translator: "This is the only mistake I made."

She agreed, however, with DPP Kaur's suggestion that she wrote the letter in desperation, hoping for mercy.

But Guan denied knowing Tan's laptops held evidence which he did not want the CPIB to get hold of. "He is not someone who will be happy to let me check his things," she said.

Pointing out that they married in 2003, but she found out about Tan's last marriage in 2008 and another former marriage only in 2013, Guan said: "I was ignorant of my own marriage... Would he allow me to ask about his things?

"I'm just a housewife. As long as I receive my maintenance fee every month that's good enough," she later added.

Guan also initially denied knowing that Tan was being investigated for fixing football matches at the time she was called to the CPIB's office on June 6, 2013.

However, she admitted she had known about it after DPP Kaur showed her an interview she gave to The New Paper in March 2013 in which she said that reports and allegations of Tan's involvement in match-fixing were "100 per cent false and untrue".

"It's so laughable and funny," she told the newspaper.

Pressed by the DPP, Guan agreed that by March 2013, she knew that Tan was being investigated for international match-fixing. "I asked my husband about this, but he said he was not willing to talk about it," she added.

The judge is expected to deliver her verdict on June 13.

If found guilty of knowingly giving false information to a graft investigator, Guan, who is out on $10,000 bail, faces a maximum punishment of a $10,000 fine and one year in jail.

Tan, described by Interpol as "the leader of the world's most notorious match-fixing syndicate", is being detained without trial under the Criminal Law (Temporary Provisions) Act.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

‘Rosewood importer failed to prove there was foreign buyer’

TODAY
10 May 2016
Kelly Ng

Judge presents grounds of decision to overturn an earlier acquittal of company MD, firm

SINGAPORE — That Convention on International Trade in Endangered Species of Wild Flora and Fauna (CITES) permits were not needed for specimens in transit was a concern to drafters of the convention, who noted it could be abused, thus undermining the goal of conservation.

While resolutions passed later to address this are not legally binding in Singapore, they present “relevant considerations”, said a High Court judge in written grounds detailing his decision to set aside the acquittal of a managing director and his firm for illegally importing nearly 30,000 rosewood logs from Madagascar.

Last October, District Judge Jasvendar Kaur had found that there was no evidence to show that the logs were imported here, and ruled that the defence had no case to answer — a decision that environmentalists had criticised as setting back efforts to stop trafficking of illegal timber.

But in February, Judicial Commissioner See Kee Oon had aside the acquittal, stating that evidence before the courts failed to point “irresistibly” to the district judge’s conclusion that logs were only in transit here, and Wong Wee Keong and his firm Kong Hoo had to defend the charges against them.

Rosewood is a controlled species under CITES, to which the Republic is a signatory. Under Singapore’s Endangered (Import and Export) Species Act, a shipment is considered to be in transit and not imported if it is “brought into Singapore solely for the purpose of taking it out of Singapore” and is kept under the control of the Agri-food and Veterinary Authority director-general or an authorised officer.

In his written grounds released last Thursday, Judicial Commissioner See noted that there was no evidence that there was a foreign buyer in Hong Kong, and Wong had refused to disclose any information on this.

As such, it would appear that Wong and his firm had brought the rosewood — worth US$50 million (S$68.5 million) — into Singapore “in the hope that it might be shipped to Hong Kong if a suitable Hong Kong buyer could be found”. Together with the fact that Kong Hoo was listed as the consignee of the shipment, this went against the district judge’s assessment that the rosewood was brought to Singapore for the sole purpose of transhipment and not for import, Judicial Commissioner See said.

The respondents might well be able to explain these matters away, but “they were matters which called for an explanation”, he added.

Moreover, a meeting of CITES member states in 1994 had drawn attention to the concern that an article under CITES allowing the transit of specimens without the need to obtain CITES permits could be abused, noted Judicial Commissioner See.

“These present relevant considerations to take into account, in determining whether the sole purpose condition has been satisfied,” he noted.

Judicial Commissioner See also disagreed with the district judge’s finding that the rosewood logs, when offloaded, were within the Jurong Port Free Trade Zone under the “control” of an authorised officer. Judicial Commissioner See found that “control” under the Act does not refer to “mere jurisdictional control”, but an “active” form of control, which was not satisfied in this case.

Such “control” was deemed necessary under CITES to prevent potential abuses, said Judicial Commissioner See.

For instance, some traders might keep scheduled species within a transit country while searching for buyer in another country. There was also the risk that would-be smugglers might seek to circumvent CITES protections by disposing of their scheduled species en route.

But in this case, there was no evidence that any authorised officer was aware that the logs were being unloaded, let alone exercise any control over the process, said Judicial Commissioner See.

“The mere fact that the scheduled species were placed in a locality over which an authorised officer exercise passive dominion or jurisdiction cannot, without more, constitute the necessary control,” he ruled.

Copyright 2016 MediaCorp Pte Ltd | All Rights Reserved

Public Prosecutor v Wong Wee Keong and another appeal [2016] SGHC 84

The impact of short selling on insider trading

Business Times
04 May 2016
Qian Wenlan

HISTORY is replete with examples of insider trading, globally and in Singapore.

The Monetary Authority of Singapore (MAS) took action against former banker Vincent Rajiv Louis last October for contravening the Securities and Futures Act after he admitted to insider trading.

Insiders capitalise on profit opportunities because they have private information - details that can be obtained only because they are close to the source of information. Hence, insiders are said to be "informed".

However, we often think that such informed people are only those in, or associated with, a particular firm.

There is one group whom few consider as informed: short sellers.

Short sellers are investors who sell shares that they do not currently own in the belief that prices will decline. This means they can buy back the shares at a lower price and earn a profit. That they are able to analyse and identify overvalued or "suspicious" stocks that will soon experience a price decline or regulatory intervention make these short sellers informed investors, although not from privileged information typically associated with insiders.

Beyond being informed, short sellers execute a considerable amount of trades, making them a critical part of the stock trading system.

Daily shorting is prevalent in many stock exchanges. It has been reported that short selling accounts for 24 per cent of the New York Stock Exchange's (NYSE) share trading volume and 31 per cent of NASDAQ's.

The question is: can informed short sellers affect insiders who do not short sell?

According to my study at the National University of Singapore Business School with fellow researchers Massimo Massa, Xu Weibo and Zhang Hong, the answer is "yes".

We examined publicly listed companies on the NYSE, NASDAQ and AMEX stock markets, using information from various sources such as Thomson Reuters, and found that the behaviour of insiders - directors and officers of listed companies - changes with the presence of short sellers in the market.

Short sellers are potential competition in the trading of private information.

Take, for instance, a firm that is planning to invest in projects with negative net present values. Its insiders (such as its management and directors) would have privileged information, and could decide to profit from trades before the market is aware of the plan.

CATALYST FOR INSIDERS

While short sellers are generally slower than insiders when it comes to obtaining such information, we found that the mere presence of short sellers in the market serves as a catalyst for insiders to trade sooner, and faster.

Insiders are incentivised to sell their shares before the short sellers attack the firm, because competition from short sellers reduces the profitability of insider trading as time goes by.

This results in insiders bringing forward their trades before any short selling occurs - which in turn reduces the average time span of insider sales.

Interestingly, we found that the more shares short sellers have, the more shares insiders want to sell before a short seller attack.

Particularly when short sellers have more shares to sell, insider trading is more likely to occur among more informed insiders such as directors than less informed insiders - suggesting that the more informed insiders are, the more they will exploit their informational advantage to pre-empt short sellers.

This also means that directors and such senior management are most affected by short sellers.

The effects of short selling on insider trades are also amplified when short sellers continue to pay attention to the firm.

We found that companies with more negative news in the subsequent month - hence drawing the attention of short sellers - have more and faster insider selling.

LESSER OF TWO EVILS?

All in, short selling introduces competition that accelerates the rate at which private information is revealed to the market via insider trading.

While there has been talk about limiting short selling, what our research shows is that such a move may have the inadvertent consequence of not exposing insider trading earlier and, hence, decelerating the rate at which private information is revealed to the market.

Regulators will have to think about which is the lesser of the two evils -- short selling or insider trading - because, as it turns out, short selling has its benefits, after all.

The writer is assistant professor of finance at the National University of Singapore (NUS) Business School.

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Coroner’s inquiry into Benjamin Lim’s death: Police, school ensured teen was sensitively treated, says State Counsel

Straits Times
18 May 2016
Elena Chong

Father of 14-year-old Benjamin Lim disputes claim that girl was touched during inquiry into son's death

Benjamin Lim, the 14-year-old who fell to his death in January after being arrested for alleged molestation, entered a lift at the same time as an 11-year-old girl. He was seen dropping his mobile phone. And as he picked it up, his right hand apparently touched the back of her left thigh.

A video of these events on Jan 25, captured by surveillance cameras, was shown in court yesterday, as the coroner's inquiry into his death began. The media was ordered to clear the courtroom when the minute-long video was played, to protect the identity of the victim.

But when reporters returned, Benjamin's 46-year-old father disputed that the girl had been touched. His lawyer Choo Zheng Xi told the court that what the father said he observed was a "brush at the area of the girl's skirt" and that it appeared to him that there was no bodily contact. Benjamin's parents cannot be named after the court granted their request not to be identified.

State Counsel Wong Woon Kwong, assisting the court in the inquiry, said investigation officer Mohamed Razif stood by the description of what transpired in the lift. The State Counsel explained it was up to State Coroner Marvin Bay to make a finding on whether Benjamin had touched the girl.

Benjamin's death on Jan 26 has put a spotlight on the treatment of young people during criminal investigations, and when schools should release students to the custody of police.

Yesterday, State Counsel Wong told the court that the police and North View Secondary School, where Benjamin studied, had taken steps to deal with him sensitively, including sending officers in plainclothes, letting the principal speak to him first to reassure him, allowing school staff to sit in during the interview by a single officer at school, and not handcuffing him. Officers also talked to him to put him at ease on the drive to the station and he was interviewed in an open-plan office.

The State Counsel stressed that the case stemmed from a serious offence involving the alleged outrage of modesty of a very young girl, who at about 4.25pm on Jan 25, lodged a report at Yishun North Neighbourhood Police Centre.

She said she did not confront the person who had allegedly given her a soft tap on her left buttock as she was scared. Through footage from police cameras around the block, police found that the suspect was wearing North View Secondary School's physical education attire.

On the morning of Jan 26, five plainclothes police officers went to the school in two unmarked cars. School staff identified the suspect as Benjamin, given the red-framed spectacles he wore.

When Inspector Poh Wee Teck interviewed the boy in the principal's office, Benjamin said he might have "accidentally" touched the girl as he was picking up his mobile phone. At Ang Mo Kio Police Division, Benjamin admitted to Assistant Superintendent Razif that he had followed the girl into the lift, deliberately dropped his phone and touched her.

He was placed under arrest and his mother posted bail for him. They reached home at 3.30pm. An hour later, Benjamin was found dead at the foot of the block where they lived.

ASP Razif said in his report that Benjamin had undergone counselling from Primary 1 to 4. He also said the boy had been looking forward to attending a school camp, according to his parents and older sister. Benjamin had been told by his mother minutes before he fell that he would not be attending the camp. The inquiry continues.

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A breach is a breach, whatever the outcome: SingPost corporate governance special audit

Business Times
10 May 2016
Melissa Tan

IF A tree falls in a forest and everyone claims he or she did not hear it, did it make a sound? That metaphysical question could probably keep philosophers in business for another century.

For regulators, though, a similar question demanding a more immediate answer has arisen in the wake of Singapore Post's recently concluded corporate governance special audit: If a disclosure lapse has allegedly zero impact on a deal decision, is it still a breach that warrants regulatory action?

If it is, then letting it slide - whether in appearance or otherwise - could inadvertently open the doors to moral hazard.

Regulators are no doubt aware of this and to their credit, they have responded quickly to say they are looking into the investigation findings. Still, the public needs stronger assurance that a disclosure breach is fundamentally unacceptable in a quality market - regardless of whether it was deliberate or allegedly had zero impact.

In a summary of the special audit findings released last week, SingPost's special auditors found that SingPost director Keith Tay was "arguably in breach of section 156(1) of the Companies Act" for not declaring his interest in SingPost's 2013 acquisition of Famous Holdings "as soon as practicable".

They also found he had breached some fiduciary duties under the Companies Act relating to that deal and to SingPost's acquisition of Famous Pacific Shipping (NZ), or FPSNZ, in 2015.

The special auditors said, though, that Mr Tay's 2015 omission appeared to not have been deliberate.

While regulators have thus far declined to say whether they are investigating Mr Tay or SingPost for potential breaches, the Singapore Exchange has issued a firm statement, saying it is "reviewing the findings" and "will take disciplinary action for any breaches of the listing rules and refer breaches to the relevant authorities, if necessary".

The Accounting and Corporate Regulatory Authority (ACRA), which deals with breaches of the Companies Act, has also said it would "work with the relevant agencies to review the findings from the special audit report to assess if any regulatory action is warranted".

But ACRA added: "In this regard, ACRA will take into account key considerations such as the sufficiency of public interest, whether any harm has been occasioned by the alleged breach and the culpability of the relevant parties."

Therein lies the rub. Regardless of ACRA's intentions, one way to read the phrasing of its statement is that if a breach seems to have caused no damage and nobody is interested, ACRA may decide to take no action against the rule violation.

Surely that can't be right. Going by that possible reading, several concerns follow.

First, what can be read into the special auditors' seemingly pointed note that their "interviews suggest" that Mr Tay's lack of timeliness in disclosures would have made no difference to the decisions to enter into the Famous acquisitions?

Second, how much were the auditors constrained in their questioning by the fact that the scope of their investigation was prescribed by the terms of reference for their probe? And consequently, how much should the interview results be allowed to tip the balance for regulatory action?

On the first issue: The special auditors have been careful to stop short of saying it is their own view that Mr Tay's disclosure lapses made no difference.

For instance, they wrote: "Our interviews suggest that the lack of timeliness in the disclosures would have made no difference to the decisions to enter into the Famous acquisitions." And again: "Our interviews suggest that it would have made no difference to the decision to enter into the FPSNZ Acquisition if Mr Tay had declared his interest to the SingPost Exco."

Notably, the auditors did not say whether they are convinced by the results of those interviews.

This leads to the second issue - that is, what questions the special auditors were allowed to ask their interviewees in the first place.

On the one hand, the auditors have declined to say whether their line of questioning was restricted to a binary "buy or don't buy", or had also taken into account other significant deal factors such as valuations.

On the other, it would also likely be difficult for the directors interviewed to know for sure what they would have done back in 2013 had they known from the very start about Mr Tay's conflict of interest.

Unfortunately, the special auditors have refused to shed light on what reasons their interviewees gave when claiming Mr Tay's lack of timely disclosure had zero effect on the deal decision.

This leaves minority shareholders in the dark as to whether SingPost may have overpaid for deals due to the alleged disclosure breaches.

If the breaches subsequently attract little to no clear regulatory sanctions, the public might interpret that to mean directors can get away with poor disclosure as long as other board members agree - but only after the fact - that it made no difference. Such outcomes will potentially lead to moral hazard.

This danger applies to all directors, including the board chairman who is ostensibly in charge of keeping board matters shipshape.

While SingPost's special audit was triggered by one inaccurate statement in a deal disclosure, it has unearthed flaws in the way the entire board functions; and all board members ought to share responsibility for the shortcomings.

The Famous acquisitions might not be the only deals affected by director disclosure failures; and minority shareholders may never find out if there were other lapses due to information asymmetry.

A firm demonstration from regulators that directors cannot expect to get away with disclosure lapses - no matter how allegedly accidental, uninteresting or impactless - will go a long way to assure shareholders and other market players.

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Court awards legal costs for work done on pro bono basis

Straits Times
03 May 2016
K.C. Vijayan

A construction company which lost its appeal against a worker's $1,900 wage claim has been ordered by the High Court to pay $6,000 in legal costs meant for the law firm representing the worker on a pro bono basis.

The case is significant for pro bono work, as it is the first reported case where the court has directly ruled on the availability of legal costs to pro bono lawyers and provided clarity on the issue.

Judicial Commissioner Debbie Ong said there is "no reason" why the losing party should not be ordered to pay costs, just because the winning party lacked money and was represented by a lawyer on a pro bono basis.

She made clear in oral judgment grounds released last week that the payout was not tantamount to champerty - where a client pays his lawyer only if he wins a case.

In this case - a dispute over unpaid wages between SATS Construction and Bangladeshi worker Islam Md Ohidul - the Labour Court had ordered SATS to pay $1,931.13 to the worker last year.

SATS then appealed to the High Court, which dismissed the appeal in January, but the judge ordered a further hearing on whether costs were payable to a winning party where the lawyer acted pro bono.

TSMP Law Corporation lawyer Melvin Chan argued for the worker that if the plaintiff - SATS in this case - had won, a costs order can be made against pro bono-aided defendants.

But in this case, if the plaintiff cannot be ordered to pay costs when it loses, it would be an open invitation to the plaintiff to " try its luck" in appealing against the Labour Court decision, he said.

SATS was defended by lawyer Dhanwant Singh.

Judicial Commissioner Ong said the courts have a discretion to award costs. "In the present case, there is nothing on the facts that warrants a departure from the general principle that the defendant, as the successful party, ought to be awarded costs," she said.

Citing a 2013 judgment by a Court of Three Judges, she said the prohibition against champerty did not apply in this case where the impecunious defendant would not have been able to afford a lawyer.

"It is indeed honourable for a lawyer to give his services pro bono, knowing that if the party he represents is unsuccessful, or if costs are not awarded in favour of that party, he will not be paid."

The pro bono lawyer has put in substantial time and effort, she said. "There is no windfall for the client, who will not keep the cost sums ordered. There is no prejudice to the opposing losing party who would have had to pay costs to the winning party in non-pro bono situations."

In legal aid cases, costs recovered by the legally aided person on winning a case would go to the Legal Aid Bureau, she noted.

She said the policy and principle behind legal aid and pro bono work are similar - they are meant to enhance access to justice and "it is fair for the providers of such services to be paid for the work they had done, by virtue of cost orders".

TSMP is donating the costs awarded to the Humanitarian Organisation for Migration Economics, a group dedicated to addressing migrant workers' concerns.

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Did regulatory slips 'enable' the 1MDB scandal?

Business Times
18 May 2016

Despite a "no-go" from the board, management pushed through the sukuk bond issue at an unusual pricing not befitting the firm's capital base

WITHIN the span of six years, 1Malaysia Development Bhd's (1MDB) debt had ballooned 10 times to RM50 billion (S$17 billion) and its business deals are now the subject of probes in seven jurisdictions, including Singapore. Could the mammoth scandal around the state-backed fund have been averted?

The answer is "Yes", given the events at the strategic investment firm from the outset, which ought to have set off alarm bells at various government agencies, regulatory authorities and financial institutions.

In fact, had there been vigilance and proper checks and balances in the first place, the 1MDB controversy could well have been nipped in the bud.

Barely three months after the firm was formed in February 2009 (it was then called Terengganu Investment Authority under the oil-rich state before it was taken over by the federal government), there were already tell-tale signs from the firm's RM5 billion government-guaranteed sukuk bond issue, the first in a series of big debts 1MDB would pile on over the years.

The manner in which the sukuk was issued should have raised a red flag. Despite a "no-go" from the board, management pushed through the issue anyway - at an unusual pricing not befitting the firm's capital base.

No one took heed - not even after Terengganu state authorities raised serious concerns and signalled that the fundraising should be halted given certain improprieties; and not after the resignations of two prominent, high-profile individuals from the 1MDB board within a year of its inception.

What followed instead were several billion-dollar deals with joint-venture partners from the Middle East and big-scale buyouts in the energy and real estate space - all funded with more debt and risks which would in the firm's short existence lead to crippling financial woes, shaken public trust in Malaysia's leadership and highest institutions, marred the country's international reputation, and, more recently, defaults on its bond payment.

All that could have been avoided if someone - be it from 1MDB's board (past and present members, many of whom hold top posts in government-linked institutions) or the regulatory bodies - had spotted and acted on the irregularities in the original bond issue and, later, the hundreds of millions of dollars funnelled in and out of the country's banking system.

Regulators abroad too should have been sharper to the warning signs. As it turned out, several financial institutions in Singapore, Switzerland and the United States are now mired in the 1MDB scandal.

Two weeks ago, the Malaysian finance ministry said it would take over the firm's remaining assets and dissolve its advisory board, chaired by Prime Minister Najib Razak. The ministry (which is also headed by Mr Najib) has accepted the en bloc resignation of 1MDB's board members. A new structure - albeit a skeletal one as the firm is set to be unwound - does little to mitigate the damage caused by the scandal. It will take a lot more (and a lot longer) for true closure. But at some point, regulators have to acknowledge that their indecision and tardiness in acting had unwittingly turned them into "enablers" of this controversy that has beset the country, its financial system, and its people.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.