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Conflicts and corporate governance

Today's edition of BT has a distinct corporate governance emphasis starting with the report of the special auditors into SingPost's lapses, to SGX's regulatory announcement reminding directors of their obligations when it comes to disclosing conflicts of interest, to a letter to the editor about Singapore companies accused of corruption/bribery in other countries.

I've followed the SingPost saga quite closely since it started a few months ago and although it's disconcerting to hear of how careless the company was in its internal practices and disclosures, this actually only confirms what the market had been thinking all along based on rumours that had circulated over the past few weeks. Perhaps the impending board renewal/reshuffle will result in tighter standards; at the very least it should bring about some change. And yes, SGX's reminder is timely - it's really up to boards and senior management to be forthcoming when it comes to conflicts of interest.

On the subject of indulging in corrupt activity in other countries though, a different kind of conflict presents itself, namely one of values. I'm not so sure if the issue is really that cut and dried. In some third world countries, bribery is a way of life, deeply ingrained in the culture such that those who don't follow the norm will lose out. This is commercial reality that Spore companies have to deal with when venturing abroad and arriving at a one-size-fits-all solution is by no means straightforward.

The problem is that at home and in many other countries, Singapore companies don't have to resort to underhanded means to secure contracts or to do business so there is no conflict of values. You submit a tender for a job and the tenderer assesses all the bids (hopefully fairly) and awards the deal according to whatever criteria it sees fit - lowest price, quickest completion date, etc. Of course, money may still pass under the table before the winner is announced but I'd think this would be the exception rather than the norm. The same however, can't be said of other jurisdictions where the winner may have had to pay significant sums in bribes or kickbacks to clinch jobs.

So what does a Singapore company do in order to survive - stick to its guns, run a clean operation and appeal to the locals' sense of fair play, or adapt in order to survive? If that country doesn't have anti-corruption laws that are as strict as those here, then I see a compelling case of adhering to the old adage  "when in Rome, do as the Romans''. If however,  the authorities there decide that they want to take action then the music would have to be faced, but perhaps that should simply be viewed as a risk of doing business.

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It isn't right by any means but business cannot always be 100% above board, can it?

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