Should failing to act diligently be a crime?

MOST people think that so long as they do not cheat, steal or act dishonestly, they would have carried out their duties as directors under the law.

However, this is not the case in Singapore and it should be realised that the standard of governance for directors sets a much higher bar than that.

What's more, the penalties for failing to exercise proper due diligence can be very high. In fact, it can be criminal.

Criminal sanctions

The 2008 case of Chuan Soon Huat Industrial Group Limited is an important example. It is the first time that independent directors were convicted of a crime and punished for management's failure.

Chuan Soon Huat was a timber door maker, listed on the Singapore Exchange. The board of directors failed to disclose that the executive chairman was ill and no longer discharging his dut…