Published April 24, 2009

Over-regulation has downside: Shanmugam

But more can be done to create effective corporate governance

By CHEW XIANG

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(SINGAPORE) Lax enforcement, rather than lack of regulation, is at the root of the present financial crisis, and more rules are not the solution, Law Minister K Shanmugam said yesterday.

Handsome win: Mr Shanmugam presenting the Best Managed Board gold award to SMRT Corp chairman Choo Chiau Beng

'I do not suggest there is no need for additional regulations,' Mr Shanmugam, who is also Second Minister for Home Affairs, said in a speech at the Singapore Corporate Awards presentation last night. 'But going too far in that direction is not going to help.'

While there is 'strong public pressure to do something, almost anything', especially in countries at the epicentre of the crisis, 'no rule or law by itself can prevent criminality, nor can it prevent irrational exuberance or speculative excess', he said.

Singapore's regulators have found 'an appropriate balance' between rules and enforcement, but more can be done to create an effective 'corporate governance eco-system', Mr Shanmugam said.

Boards of directors, and professionals such as auditors, lawyers and consultants, 'will have to play an active role', he said. And 'much in particular will be expected of independent directors; they cannot simply make up the numbers'.

Speaking to reporters later, Mr Shanmugam - himself a former independent director - said that the role of independent directors is not to replicate the duties of executive directors. Their role is to apply their expertise and knowledge to a company's projects and proposals.

Some independent directors have resigned in frustration at the lack of cooperation or information from management, leading to calls to grant independent directors greater legal protection or to codify directors' duties in the Companies Act - something now being reviewed by a steering committee.

But Mr Shanmugam said that there is a limit to what independent directors can do. 'If the top management or executive directors are on a course of outright fraud, and hide things, then the ID cannot be at fault,' he said.

The rest of the evening was devoted to recognising outstanding examples of corporate governance - the objective of the annual Singapore Corporate Awards.

SMRT Corp won the gold award for the Best Managed Board in the big cap category (more than $1 billion), while WBL Corp won in the mid-cap category.

StarHub's Terry Clontz was this year's Best Chief Executive Officer in the big-cap category.

Rotary Engineering chairman Chia Kim Piow and Boustead Singapore's Wong Fong Fui shared the prize for Best CEO in the mid-cap category, while FJ Benjamin CEO Nash Benjamin won in the small cap category.

ComfortDelGro's Choo Chek Siew took the prize for Best CFO, with ASL Marine's Lilian Tan and Qian Hu Corp's Lai Chin Yee winning in the mid and small-cap categories.

Fourteen companies - including Keppel Land, Petra Foods, Qian Hu and CapitaMall Trust - were recognised for their exemplary disclosure in the Best Annual Report award, while SingTel, Tat Hong Holdings and OKP Holdings were among companies honoured for having the best investor relations. Qian Hu stood out at the awards, winning four accolades in total.

Last evening's event, one of the highlights of the Singapore corporate calendar, is organised by The Business Times and supported by the Singapore Exchange and other partners.