Empower the sentinel: use regulatory funds to bridge investigation gap
By using the money collected from ‘bad actors’ to fund the investigations of misconduct, we create a self-sustaining ecosystem
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THE article “Corporate investigations: a test of mettle for Singapore boards”, published on Feb 20, rightly underscores the board’s role in defending corporate integrity.
However, history – from the S-chip era to the recent insolvencies – shows that “mettle” is often defeated by tactical obstructionism. When a controlling party under suspicion holds the chequebook, the board’s independence becomes an unfunded mandate.
Currently, Singapore-resident independent directors are caught in a regulatory trap. They are legally expected to investigate misconduct, yet they have no way to access company funds if a majority shareholder blocks them.
Should local directors be expected to personally bankroll forensic audits? Rather than stopping fraud, such expectations may scare away the best local talent from joining boards.
We don’t need a new tax or complex insurance scheme. The Monetary Authority of Singapore and Singapore Exchange already collect fines and impose penalties on listed companies and individuals for regulatory breaches and market misconduct. While some of this is used for investor education, a portion could be repurposed into a “direct investigation fund”.
When a board faces a funding impasse, they should be able to apply for an immediate drawdown to hire independent investigators. The fund could operate as a support scheme where the regulator can collect the cost from the company’s remaining assets once the truth is out.
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By using the money collected from “bad actors” to fund the investigations of suspected misconduct, we create a self-sustaining ecosystem. The mechanics of such a fund definitely requires rigorous design, but the principle is clear: governance needs ammunition.
Let’s treat local directors as partners instead of “available targets”. Give our sentinels the ammunition they need to stand their ground.
Roger Tan
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