New misadventures in independence

A FEW years ago, I expressed frustration on the issue of independence of independent directors or IDs ("Looping around the problem", BT, July 5, 2010) and said that "the lack of independence of independent directors here is such an intractable issue that there's little hope of any improvement".

Five years on, have I become more hopeful? Unfortunately not. I have previously commented on key changes in the Code of Corporate Governance in Singapore and the strengthening of director independence guidelines ("Now let's see the practical impact", BT, June 16, 2011; "Good code, pity about the governance culture", BT, Nov 24, 2011). However, there have been new challenges in implementing tougher independence guidelines, here and in other countries.

There have been some interesting cases of directors being redesignated from non-independent to independent directors. There are those directors who were redesignated after they passed the "cooling off" or "look back" periods of "past three financial years" (for employment relationships) or "immediate past financial year" (for business relationships). Some were redesignated as soon as the "cooling off" period lapsed. These directors were not independent when they went to bed, but became independent when they woke up the next day.