Monday, April 18, 2005

Silence not golden for shareholders

Today (18 April) has this headline: "Silence not golden for shareholders".

It says, "As the Commercial Affairs Department investigates corporate wrongdoing, silence prevails, leaving investors in the cold".

The CAD is investing Accord Customer Care Service and Citiraya. In both cases, shareholders have not been informed about the nature of the investigations. The uncertainty has dragged on for several weeks. It is not clear whether the company or CAD should be releasing updates.

My friend told me that, in the USA, they have a faster way to resolve these issues. Action is taken quickly, and the issue is settled within a short time. In some cases, the CEO gets replaced quite quickly. In other cases, the matter is settled.

I hope that the authority in Singapore can find a way to resolve these issues more promptly.
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3 comments:

Lex said...
This comment has been removed by a blog administrator.
April 19, 2005 11:34 AM
eugklng said...

On one hand, I applaud CAD for responding to potential fraud cases and making a good example to all that they mean business.

However on the flipside, I'm appalled by the apparent lack of progress of these investigations.
The business world doesn't like uncertainties and the CAD is currently casting a dark cloud of uncertainties over ACCS and Citiraya and this is costing them big time (especially when it comes to retaining clients).

If the police wouldn't detain a person indefinitely while investigations are on-going, likewise CAD should not "detain" these companies while investigations are on-going. Its disruptive to business irregardless of the seriousness of the offence.

April 29, 2005 9:20 AM
inotstupid said...

Another Catch 22 facing the poor public, with different govt agencies afraid to step on each other toes?

a) CAD operates on the basis that investigations are confidential, to protect the innocent. Its SOP (like many other govt investigation dept) is to caution the investigatee that they should not discuss the investigation. When asked about whether shareholders should be informed, they will say that it is outside the scope of their authority to give advice.

b) MAS and SGX promotes open-ness and transparency. They will ask the subject company for info about the investigation for their own internal needs. But when asked about whether the information should be disclosed to shareholders, they demur and say that CAD investiation is outside their jurisdiction.

c) Directors' then take legal advice and they get non-committal comments but since there is no precedent to inform shareholders, most boards would err on the side of caution and keep mum.

We preach best practices and quote the practice in other key financial centres. In this case, there is no talk about following World Class practice. Sigh

May 02, 2005 12:45 PM

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