Singapore, Hong Kong companies can improve anti-corruption disclosures: Panel

COMPANIES in Singapore and Hong Kong are lagging the region in terms of disclosures relating to anti-corruption practices, and this is something that needs to be improved, said speakers at a panel discussion organised by the Securities Investors Association (Singapore) (Sias) on Friday.

This would be helpful as strong corporate governance and company culture could complement regulations in the fight against corruption, they said. Companies with the right practices may also be able to better protect themselves from downstream liabilities.

Jamie Allen, secretary-general of the Asian Corporate Governance Association (ACGA), said that companies should pay close attention to the value of good disclosures, as institutional investors are also interested in companies' anti-corruption systems.

"We find more disclosure from corporates in Malaysia, Thailand and Australia, than in Hong Kong (and) Singapore," he said, noting this could be an area of interest for further research.

"I think there are many reasons for this, but perhaps one of the reasons is that both Hong Kong and Singapore at the macro level have stronger anti-corruption systems within the government," he added. "Perhaps corporates don't feel as much pressure to have their own internal systems, or at least report on those systems, but we do see a need for much stronger codes of conduct and whistleblowing systems within Hong Kong and Singapore and to report on those."

Professor Lawrence Loh, director for Centre for Governance and Sustainability at NUS Business School, also said local companies can do better in their disclosures. He noted that a 2020 corporate governance assessment of listed companies in Singapore showed that companies were less disciplined or willing to disclose details of their related-party transactions, which he said was something of concern.

Prof Loh also observed that people put a premium on "the hard approach", but this may not always be effective.

"We always rely so heavily on the playbook; the moment we do that, all the people down the line will just play by the book," he said. "We actually need to go soft, because actually, it's the soft aspects, ironically, (which) will hit you harder, and I think that this might be a whole new way of us looking at corporate governance, particularly in relation to anti-corruption."

Jarrod Baker, partner and forensic investigations leader for Singapore and South-east Asia at Deloitte, observed that fraud, corruption and financial misconduct typically occur where opportunity, motivation and rationalisation converge. The Covid-19 era has created a "perfect storm" for fraudsters to exploit, with factors such as remote working resulting in the lack of supervision and oversight, he said.

Companies would need to implement a risk-management framework that focuses on prevention, detection and an effective response, he added. Effective whistleblowing channels would complement traditional methods of internal audit and management reviews. Technology can also help with proactive monitoring.

"Prevention is better than cure," he said, adding that building the right corporate culture, having appropriate compliance frameworks and top-level commitment would be important factors for companies to consider.

Baker also observed that having an effective compliance framework to tackle such issues may also help companies avoid further trouble when things go wrong.

Patrick Ang, managing partner, Rajah & Tann Singapore, noted that corporates would need to bear in mind that there is still corporate liability for corruption. "The prosecution generally goes after the individuals, but in order for corporates to avoid liability, corporates should have, in my view, compliance programmes, whistleblowing programmes, training programmes," he said.

This could help with the argument that the institution does not condone such acts, and that they have in place strong measures to try and mitigate against such actions.

Even as corporate governance and culture plays a role in the fight against corruption, it is still important for effective anti-corruption agencies to exist.

ACGA's Allen said: "When you look at the less-effective markets in Asia, in terms of anti-corruption work, quite often the agency doesn't have a clear line of reporting to the top of government, and sometimes, it's not even clear where the agency is in its sort of work.

"There needs to be very strong, clear support from the top of government, but at the same time, it needs to be independent also."