Corporate investigations: a test of mettle for Singapore boards – Opinion

Thw start of 2026 has been marked by a sobering sense of deja vu for Singapore’s banking and corporate community. A recent high-profile insolvency involving duplicate financing has reignited concerns about the fragility of asset-backed lending.

In the wake of the Autobahn case, creditors face significant losses from an alleged scheme where the same inventory was pledged to multiple lenders, bypassing traditional checks. This case serves as a reality check for boards: it demonstrates that despite tighter regulations, wrongful and dishonest conduct involving management is expected to persist.

For directors, the timing of this exposure is critical. Under the new disclosure-based regime led by Singapore Exchange Regulation (SGX RegCo), boards no longer have the luxury of handling such discoveries quietly.

For non-listed companies, the shift is commercial. While not bound by SGX rules, private boards face a trickle-down effect where lenders, investors and stakeholders increasingly benchmark governance against these heightened public standards.

Whether answering to public shareholders or private family offices, how a board responds to allegations of misconduct has become a definitive marker of its mettle.

Current benchmarks from the US-based Association of Certified Fraud Examiners found that executive and upper management levels present a particularly high risk for fraud, based on the combination of frequency and median loss. Furthermore, 61 per cent of victim organisations in Asia-Pacific recovered nothing of their losses.

These statistics highlight a critical consideration for directors: because recovery is rare and the financial impact at the executive level is high, the priority should be effective fraud prevention and detection.

The stakes are personal for directors. Failure to properly oversee an investigation can have reputational and legal implications for themselves. Based on our experience, boards that navigate this critical period successfully are those that proactively address two main challenges: ensuring independent oversight rather than relying too heavily on management and protecting the investigation process from conflicts of interest.

To navigate these challenges, directors should consider these points for a comprehensive fraud response plan:

• Establish independent oversight early

Upon becoming aware of a serious allegation, the board should convene a Special Investigation Committee (SIC), which typically comprises independent directors. This independence is vital for managing conflicts of interest, particularly when management is involved in the allegation. Formal protocols for recusal are essential.

If a director or senior executive is involved in the allegation, they should be strictly separated from the investigation. This means excluding them from the SIC’s deliberations and ensuring they do not have access to progress reports or witness interview transcripts. This separation is vital to prevent interested parties from influencing witness testimony or the direction of the inquiry.

• Determine the threshold for external experts

A common dilemma for boards is deciding when to escalate an internal review to an external investigation. While minor operational issues can often be handled by internal audit, it is generally prudent to engage independent legal and forensic experts when the allegation involves senior management, potential regulatory breaches or complex cross-border transactions.

The SIC needs to assess whether the internal team has the necessary independence and technical capability to handle the specific issue. If the integrity of the company’s financial statements or the conduct of its leadership is in question, relying on internal resources may be insufficient to demonstrate objectivity to stakeholders.

Engaging independent counsel and forensic specialists in these scenarios provides necessary expertise; it secures the chain of evidence and protects the integrity of the findings, allowing the board to make decisions based on verified facts.

• Prioritise data preservation

When an allegation with potential legal implications surfaces, it is best practice for the board to issue a formal notice to all relevant employees and the IT department, instructing them to preserve data and documents.

Speed is critical as both digital and physical evidence may be at risk of tampering by the perpetrator. Physical destruction of paper documents, such as shredding, may permanently destroy important evidence. Digital data can be modified even when systems are turned on or off.

Poorly managed or slow preservation can lead to altered metadata, rendering evidence inadmissible in court. Consequently, forensic specialists require access to raw IT systems to independently preserve the evidence trail and determine whether any data has been altered or deleted.

• Prioritise remediation over containment

Boards should avoid the tendency to focus primarily on containment, seeking to minimise the issue to protect the share price of listed companies.

Demonstrating robust remediation and cooperation with authorities is often critical for satisfying market and regulatory scrutiny.

Boards should encourage transparency, disclosing material findings to the market as required by listing rules and committing to a concrete plan to rectify the issues.

Admitting the scope of the problem early and demonstrating robust corrective steps, such as strengthening internal controls in line with the Code of Corporate Governance or restructuring reporting channels to ensure independence, is often the most effective path to restoring stakeholder trust.

An investigation is ultimately a test of board leadership. A passive or a delayed response can compromise findings and impact market confidence. Directors cannot delegate the defence of the company’s integrity. By adopting this response framework, a board can demonstrate its resolve, seizing the opportunity to rebuild trust and emerge as a stronger, more resilient organisation.

The writers are from Forvis Mazars in Singapore. Wallace Lee is partner, financial advisory (forensic services) and Justin Lim is partner, head of outsourcing and corporate secretarial (Asia-Pacific)

Source: The Business Times © SPH Media Limited. Permission required for reproduction.

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