Tan Kin Lian's Blog: Call for Public Inquiry

Friday, October 24, 2008

Call for Public Inquiry - some views

Anonymous said...
There should be a PUBLIC INQUIRY held which should be initiated by the Govt on this matter. Do not let them sweep this matter 'under the carpet'.

Issues include:
1. MAS role as a regulator in this matter. Why there was an oversight over this matter? Who was the head of the division who oversaw this?

2. Why MAS did not further investigate when complaints as far back as 2003/04 began regarding mis-selling of structured products? How many complaints of mis-selling had been brought to MAS attention?

3. Can the Finance Ministry also look into their role to provide a higher level overview over MAS responsibilities?

4. Can those who bought structured investment products sold by Lehman/Merrill Lynch via local banks go to their MP and raise the issue with them. Go every day or week - go pester them as much as possible! They should be working for you - Spore citizens & not the govt! Go in a collective group but behave yourselves first! Agitate for a PUBLIC INQUIRY via a petition! A govt cannot refuse the public's request!

5. Organize collective groups to go to the MAS & Banks to protest & demand a PUBLIC INQUIRY. Do not fear the riot police squad because it's your money that is at risk. There is a fine line between political protest & personal protest. If you keep quiet & don't agitate, then you won't see your money! Better to go to jail than not see your money! What can they do to you as a collective group? It is not a time to be passive. Assert your rights as citizens to be heard!
2:01 PM

Donald said...
I agree with 2.01 pm. A PUBLIC INQUIRY is definitely required. If MAS failed in their role, they people responsible should be removed. FIs being the 'main mastermind' if found guilty should be penalised. Very sad, hard to find independance in Singapore. I am not surprised the minibond issue will drag to 2009, as FIs need their books to look good for 2008 to justify their bonuses.

Anonymous said...
From the way MAS is handling this issue, it is obvious to me that it is trying to side-step responsibility.

I suspect that there could be wrong-doings or careless decisions being made by MAS when they "registered" (which is as good as giving consent) for such dubious toxic entrapping products to be sold by the Financial Institutions.

Therefore, I fully agree and support the call for a Commission of Inquiry to be conducted by an independent neutral body convened by the Govt. Either the PM or the Finance Minister should initiate the Commission of Inquiry to address likely injustice, fraudulent dealings, breaches of regulations, cunning manipulations of the laws as well as to draw lessons from such a fiasco so that MAS and FIs would be put into their proper shoes in order to bring confidence back to Singapore as a financial centre.

by Neutral Observer, 24 Oct 2008.
2:43 AM

19 comments:

Anonymous said...: Taken from ST Forum > Online Story

quote

Mistake to pay investors not satisfied to park their funds in fixed deposit account

I REFER to Thursday's article, 'Lifeline for most investors'.
It was reported that DBS Bank, Maybank and Hong Leong Finance said they were working hardest to help the 'highly vulnerable' investors (who lost huge sums in the High Notes 5 and Minibonds fiasco), including the elderly and less educated, and some investors may get all their cash back.

I deprecate such a move by the three financial institutions.

Irrespective of whether the investors were misled or deceived in the course of making their investments in High Notes 5 or Minibonds, many of these investors made such investments because they were not satisfied to park their funds in a fixed deposit account in a local bank. To put it bluntly, they had been greedy.

The rescue effort announced by these three institutions makes a mockery of the values of prudence, care and safety that have been inherent in the attitudes of account holders who have chosen to let their funds remain in fixed deposit accounts. The message that such a rescue effort is sending is that as long as an investor meets certain criteria (in this case, 'elderly' and 'less educated'), he may invest with impunity, and without fear of losing his principal sum because rescue is always round the corner.

Failed investments must be left to their own devices and machinations for account holders of fixed deposits to experience any reward for their prudence and patience.

It was reported in the article that the rescue would involve paying some $70 million to $80 million. The pertinent question is, from where will the three financial institutions be drawing this payout of $70 million to $80 million? It would be highly disturbing if such payout were to be drawn from the accounts of the financial institutions' other customers, or from sources that would affect (directly or indirectly) the potential value of other customers' accounts. There is no reason why the folly and greed of these High Notes 5 and Minibonds investors should be paid for by other customers of the financial institutions.

I should add that the creation of a special class of 'highly vulnerable' investors, that is, the elderly and the less educated, opens a Pandora's box and may lead to more unfairness. An individual may be streetwise and knowledgeable, but still qualify as 'less educated' just because he does not possess the prescribed certificates. An investor may be elderly, but may well have had the benefit of advice from family members behind the scenes, yet still qualify for the rescue. On the other hand, a policy of non-interference across the board would ensure that there will be no abuse of magnanimity.

Last but not least, there is no reason for DBS Bank, Maybank and Hong Leong Finance - or any other financial institution, for that matter - to make payouts in the absence of any finding of liability on their part by a court of competent jurisdiction. It is up to an aggrieved investor who claims he has been deceived or misled - and who, by the way, refuses to accept the risks inherent in investing - to bring the particular person or people responsible to justice and obtain compensation through the proper legal channels.

Take the risk. Bear the risk. It is only right.

Yeh Siang Hui

unquote

I find the writer having an extremely narrow view.; October 25, 2008 8:58 AM
Anonymous said...: Comments by Mr Heng Swee Keat, Managing Director, Monetary Authority of Singapore, in response to the announcements by DBS Bank, Hong Leong Finance and Maybank:

"In our press conference on the sale of structured products to retail investors on 17 October 2008, MAS set out the 3-step resolution process that financial institutions (FIs) have put in place for every investor.

MAS also asked FIs to give priority to cases where there are sufficient indications that the product was mis-sold or that it was clearly inappropriate given the investor's profile and circumstances. For such cases, we emphasised that the FIs should take responsibility and work towards fair settlements, in part or in full.

MAS welcomes the statements from DBS Bank, Hong Leong Finance and Maybank that they are expediting the resolution of cases involving vulnerable investors. It is right that FIs are giving priority to such cases. We understand that the FIs are finalising the details of the settlement for these cases, and will communicate the decisions to the affected investors. MAS expects other FIs to take a similar approach.

MAS also expects FIs to deal with the remaining cases, regardless of the background of the investors, in accordance with the serious and impartial process that has been set out earlier."; October 25, 2008 9:03 AM
Anonymous said...: MAS is not doing anything for the investors.Theeir refrain is we cannot force this and that . That is between the investor the FIs. We don't want to over regulate and the craps.
There has been NO over regulation.
There was NO regulation and that is why the FIs, the products and the salespeople messed up the lives of the man in the street.; October 25, 2008 9:30 AM
Anonymous said...: Yeh Siang Hui,
You missed the point of the compensating exercise. You have also deprecated the work of Mr. Tan.This, I will leave to him to challenge you.
The 3 FIs are NOT showing magnanimity . They are NOT as you think. Either they save their face or face a legal suit. This is a way out for them and to avoid a 'run' on them. Public anger has reached a point where the flash point is very low.
I wonder what is your interest in this case. A share holder? Too bad that you have misunderstood the risk. A customer who fears his fund being used to pay for the compensation? You pretend ignorance
or just simply an idiot to make such a conclusion.
The FIs have revealed they found inconsistencies in the RMs' approach to the investors and the advice was far below what was required of the standard as set in section 27 of the law. This is mis-selling and misrepresentation and this is Cheating and is a crime.Put yourself in the shoe of the FIs. Do you want to go a court proceeding to determine there was cheating when it is written all over the place? Come on, Mr. Yeh Siang Hui, you must be someone who is very educated to understand the implications of a legal proceeding in court for the FIs.Whatever your interest in the FIs will be put at risk.
Take what risk when the investor had NO idea of risk. Would you put ALL that you have in one of these NOTES? Idiots know that is not good to put every thing in one basket but the investors were made to.Was the investment adviser's recommendation appropriate? Was there ANY INTENTION to help the cleint? Was there any INTENTION TO CHEAT by misrepresentation? If you examine the document like the KYC
you can find those evidences.
As FIs will you still insist that $80 millions is a lot?
Let me tell you it is not the end here. The FIs need to pay up another $500millions before they can cover the cases. This is a just a BIGGER peanut for them, still peanut.

Cashew Nut; October 25, 2008 10:07 AM
Unknown said...: Although Lim Hng Khiang said in Parliament:

"The Financial Advisers Act regulates the sales and advisory process for financial products, and sets out the steps to be followed when giving advice on investment products. Unless an investor chooses to opt out of receiving advice, financial institutions (FIs) and their representatives must have a reasonable basis when recommending investments. In doing so, FIs must consider the investment objectives, financial situation and needs of the investor."

Why hasn't MAS issued any statements or comments in response to a public declaration by OCBC Securities that they are not giving advice when selling this product?

"OCBC Securities’ executive director and general manager Yeow Chin Wee said that the company is a distributor of structured products and does not offer investment advice or recommendations. He said: “We provide the necessary forums such as investors’ seminars to enable customers and IFAs to meet with
the issuers to better understand the product mechanics and risks involved.”

Can broking firms circumvent the FAA by taking this approach? If they can't, why no comments from MAS on broking firms circumventing the FAA?

If they can, why is Mr Lim talking about what the FIs are supposed to do under the FAA?

MAS, please investigate and let us know your stand.; October 25, 2008 10:32 AM
Anonymous said...: Quis custodiet ipsos custodes?; October 25, 2008 10:37 AM
Anonymous said...: I think the ST writer does not understand the structured product. She also did not find out how the products were sold right from the MAS aproval stage, the advertisement. brochures, prospectus, selling process, profiling, inaccurate conveying of information etc etc.

She should research first because in theory, what she wrote can be held up except for the mis representation and mis selling, people's lives have been messed up.

She takes the easy way of writing the big theory without researching the facts.; October 25, 2008 12:00 PM
Parka said...: Hi, tiang

I bought from OCBC securities and they said the financial products can be sold without advice.

That's basically circumventing the FAA. But the thing is, they still own a duty of faith to their customers. FAA Sec 27 is just an extension to that duty of faith. They didn't exercise that duty of faith.

To use the Supermarket analogy, if a can of milk sold killed someone, the Supermarket is still liable for stocking and selling that.

I've also sent an email discussing the similar situation to OCBC Securities.; October 25, 2008 12:13 PM
Anonymous said...: So what else is new? This kind of Tripartite Arse Covering has been in practice for decades. Highly paid civil servant having a good time doing practically nothing. A greedy private institution having a field day. Poor peasants clueless and thinking of more good years as promised by the million dollar leaders.; October 25, 2008 2:13 PM
Anonymous said...: Yeh Siang Hui,
Just donot know why your intention of writing in the ST forum. It seems that the intention is for persnal interest. either you are a big share holder of the FI, or are being paid by somebody to write the articles. Should the company in china that involved in the milk scandal pay you to write a story, I am sure you will write as if those who bought the milk are having themselves to blame for buying as "nobody force you by the neck to buy, right?". If you are not the investor, donot add salt to the wound for all the victim, it is very evil. You probably a tow sar pau, at least I know inside are black!!!; October 25, 2008 2:51 PM
Anonymous said...: HKMA has admitted oversight. Last night Alan Greenspan also admitted he make a mistake. How about MAS and the ministry of finance? Come on, s'porean are not blind or deaf.
Why the US and the world become like it is today? Because there was not enough regulation, the banks do what they want and if anything happen they still walk away with a golden parachute. Greenspan believe in free market and today is the outcome. Not sure if MAS stil believe they are right and invincible, after hearing Greenspan?; October 25, 2008 11:37 PM
C H Yak said...: Read what Greenspan the "Oracle" testified when grilled by Henry Waxman, Chairman of the "House Oversight and Govt Reform Committee", and other US lawmakers.

Quote "I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms," Greenspan said.

Waxman noted Greenspan had been one of the nation's leading voices for deregulation, as he had argued that govt. regulators were no better than markets at imposing discipline. Greenspan agreed he was partially wrong.

When our banks re-structured following the 2007 Asian Financial Crisis, on hindsight, I feel MAS has taken the same approach, and DBS is one major bank that follow that principle aggressively. They "eat up" other banks like POSB and also banks in Asia.

Up to now, this "care-free" "bo-chup" attitude leaving to free market is still showing and has back-fired. Many clients are still not ready in respect of readiness to invest in open market. Singaporean still think DBS is POSB and not vice versa.

The outcome ? : Now DBS and other FIs could not protect their shareholders as claimed by Yeh Siang Hui, and also their other stakeholders including those "valued" investors who trusted their service and bought the toxic products. Are they (FIs)assuming MAS will regulate and ensure governance? Or is MAS preaching "free market" like Greenspan?

Or are DBS and other FIs the same as Yeh Siang Hui had described the affected investors, that is, "To put it bluntly, they had been greedy."

Greenspan had admitted he was partially wrong before the House Oversight and Govt Reform Committee.

What do our top brass from MAS, DBS and other FIs have to say?; October 26, 2008 12:58 AM
nhyone said...: I believe in the future, the elderly and lowly educated will need to have a joint a/c with a younger/higher educated person to invest in "risky" products -- if they do at all.; October 26, 2008 9:39 AM
Anonymous said...: All this has happened because of under regulation. The Fi s are left to do anything or don't do anything. MAS says this allows flexibility to FIs which are at different stage of development and this is to avoid the one size fits all that stifles.
This is RUBBISH!!!!!What no regulation has led to.
1.Toxic products from the banks and insurance companies
2.CEOs and senior management reward themselves freely and agents get high commission .
3. Ths RMs and the insurance agents do anything they want.
4. Daily insurance agents and RMs commit unethical practices
5.The industry self regulates to cheat the consumers.
6.MAS bochap..and still says they don't to over regulate. Where got regulation? If there was a little bit of regulation this fiasco would not have happened. CEDLI recommendations were introduced in 2001, 7 years ago. Whatever in the CEDLI the FIs never followed. ONLY lip service.Product selling and pushing is on the rise for the RMs and the insurance agents to make quick money. Where is section 27 of the FAA? Where is the CEDLI? They are lying in the stores of the FIs.Maybe even shredded..What self regulation by insurance companies?Averagely only 30% of insurance agents are practising need based selling and NTUC agents are the worse, almost all still pushing products, Manulife reistered the highest of 60%(figure may be dubious also). The industry is NOT moving any where even after 7 years from the introduction. WHY???????
MAS bochap...no enforcement..no audit on the FIs and salespeople..
no check on the products...they don't want to check the merits of the products and as a result products like the toxic minibomb , Notes, Cash back anticipated endowment, and rubbish wholelife are dumped into the market using the unregulated, greeedy consultants and insurance agents to poison the consumers.
Greenspan has the courage to admit the flaws and realised that the current financial turmoil is due to no regulation, trusting the FIs to self regulate. This is abused.
Companies with fanciful mission and vision statements hung on the building walls deceiving the public
and behind these covers the actual mission and vision of the companies are found .In the CEOs, senior mangement, down to the despicable salespeople they all have one goal, that is to squeeze and rob as much out of the customers with dubious products so that they can reward themselves with fat salaries and high commission.
Isn't all due to no regulation MAS is advocating?

Frustrated Public losing confidence; October 26, 2008 9:43 AM
Anonymous said...: Tharman and the deputy chairman of MAS already said, no over regulation.
Regulation means more work for them.
DBS and other FIs have a free hand in anyhting. From toxic products to anyhow sell to increase profit.; October 26, 2008 10:43 AM
Anonymous said...: MAS or "Mana Ada Sistem" literally means "Where Got System?"; October 26, 2008 10:28 PM
Anonymous said...: The truth feelings of Singaporeans eligible to vote will surface at the next election. Wondering whether the government is bother by such thing or not. Guess, the opposition is not strong enough, epecially so with heavyweight like Mr JB Jeyerathnam's demise, one down with the opposition candidate. Mr Chiam See Tong had stroke, that will be two down. We need more of Mr Tan Kin Lian and Mr Leong Sze Hian types to come forward and represent fellow Singaporeans in the Parliament.

The government should expedite in resolving the issues to win back the confidence of the people, then will they dare to invest. Now if you tell the oldies to put their money in fixed deposit, I doubt some of them will feel confident.; October 26, 2008 10:45 PM
Anonymous said...: The name "Minibonds" itself is a misleading word for investors. Whatever money you have invested in this "Minibonds" are not invested in bonds of the six reference banks or bonds issued by Lehman Brothers.

This is how it works. Lehman Brothers may or may not buy any bonds from the six reference banks but it is just using these banks as "reference entities", some sort as a "bet" with Minibonds holders. There are basically 5 entities involved in the Minibonds arrangement.

1)First of all, its Lehman Brothers as the credit risk swap (I will explain what credit risk swap entails in this case later) partner.

２）Secondly, Lehman Brothers has created an empty shell company Minibond Ltd which will issue the Minibonds to investors.

３）Third, the investors.

４）Forth, the money taken from investors will be invested in a basket of AA financial products from 150 companies which includes CDOs which is basically collateral debts obligations, some of them are related to SubPrime debts.

5) The reference banks which has nothing to do with investors' investment other than being a betting reference: i.e. if any one of them failed, it would be a credit event that make investors lose money to Lehman Brothers.

For simplicity to understand the whole arrangement, just take it that Lehman Brothers has bought some bonds from these six reference entities (banks) and it needs somebody to insure its risk of exposure to these banks. It did not insure its risks from insurance companies like AIG　but instead, via this Minibonds arrangement, bought insurance from investors like you.

Through the Credit Risk Swap, you as an investor has agreed to sell insurance to Lehman Brothers with regards to the reference entities. In order to become an insurance agents of Lehman Brothers, you will need to come up with money as collateral. This money is collected from you via the financial institutions that you bought the Minibonds and given to Minibond Ltd to invest in a basket of CDOs issued by 150 companies.

Whatever returns from these CDOs issued by these 150 companies (variable returns) are given to Lehman Brothers. In return, Lehman Brothers will give Minibonds Ltd a FIXED premium (most probably higher than 5.1%) and Minibonds Ltd will give investors 5.1% returns for their investment.

Now, the variable returns from the Collateral Assets may be higher or lower than 5.1% but investors will only get back 5.1%. It means that Lehman Brothers will take the risk of variable returns from these Collateral Assets in return for your risk taking on the reference entities. This complete the Credit Risks Swap, swapping your risks of variable returns for a fixed returns, while you in return, insured Lehman Brothers for their risk exposure to the Six reference entities.

The problem is that Minibonds Ltd, under the control of Lehman Brothers, may choose to invest in a higher risk instruments or CDOs because it would be very profitable if the returns from these investment is higher than 5.1% that Lehman Brothers promised you. Especially so, when they do not need to bear the risks of defaults these CDOs or any of the assets in the basket of Collateral Assets. The returns from these Collateral Assets, they take but you bear the risks of defaults from these assets.

Under the contract, once a CREDIT EVENT happens, the whole arrangement will be liquidated. The Credit Event involves:

1) If any one of the reference banks failed, it is considered as a Credit Event and the investors will have to pay Lehman Brothers for the insurance it bought via the Credit Risks Swap. Meaning, investors will lose all money invested.

2) If more than 11 companies of the 150 companies listed in the Collateral Assets failed, or a certain percentage of the CDOs or credit-linked derivatives held as Collateral Assets go into default, the whole Minibonds will be liquidated and any loss from these defaults will be born by investors (not Lehman Brothers).

But the definition of Credit Event does not includes the failing of Lehman Brothers as the Credit Risks Swap partner. Thus, at this moment, investors do no face immediate liquidation of the Minibonds and suffer immediate losses.

However, investors RISK losing a lot of money due to the fact that the value of the basket of CDOs and other credit-linked derivatives held as Collateral Assets has devalued tremendously due to the present financial crisis. The likelihood of a credit event triggered by the failing of a substantial number of companies within the list of 150 is very high at this moment.

Furthermore, as Lehman Brothers has gone into bankruptcy, it will no longer give you the 5.1% as it promised and in this financial crisis, the variable returns from the basket of CDOs and credit-linked derivatives would be nearly zero as most of them are linked to SubPrime products.

Thus, with this basic understanding of the product Minibonds, I shall answer Peter's questions:

1) What was sold to the unsuspecting and gullible investors ? Is it a Credit Default Swap( CDS ). What is a CDS ?

Credit Default Swap, also commonly known as Credit Risk Swap, is a mechanism whereby two parties "exchange risk". In this case of Minibonds, it is totally an UNFAIR swapping. The "RISK" Minibonds Investors swapped with Lehman Brothers is the VARIABLE RETURNS from the basket of Collateral Assets they implicitly invested via Minibonds Ltd controlled by Lehman Brothers. However, the risk of the failing of the whole basket of Collateral Assets are not insured by Lehman Brothers. Thus, Lehman Brothers will not compensate investors if they lose money due to defaults of the CDOs and credit-linked assets held in the basket of collateral assets!

This is where the tricky part is. Lehman Brothers could use Minibonds Ltd to invest in many HIGH RISK financial derivatives to get very high variable returns and it will benefit from these returns while only giving back a fixed 5.1% to investors. But if these HIGH RISK derivatives failed, investors will have to bear the brunt.

On the other hand, Lehman Brothers has used the Six Reference banks as a risk bet to Minibonds investors. It seems to me that using such reference entities of "Low Risk" nature as Credit Default Risk exchange is MISLEADING as it creates an impression of "LOW RISKS" while in fact, the amount of RISK investors born is very much higher as they are responsible for the risk of the Collateral Assets!

2) What is the purpose of REFERENCE ENTITIES ( REs ) ? The REs are prominently displayed in the brochure and fooled us into thinking we are investing in their bonds.

As explained, the Reference Entities are just a reference of "Risk" that Lehman Brothers is swapping with you. Your money invested did not invest in these banks but rather in a list of 150 companies' credit-linked derivatives which may be of HIGH RISKS nature.

The main Risk that investors is taking lies in the basket of Collateral Assets.

3) The money collected from investors, what did they do with it. I saw the swapping chart in your blog in chinese. Can you kindly prepare one in english and email to me so that I can photocopy and distribute this sat. at speakers corner to help investors achieve some understanding.

The money collected from investors are invested in a basket of HIGH RISK derivatives issued by 150 companies. High risk derivatives may give high VARIABLE returns but the returns from these High Risk derivatives was swapped by the arrangement of CREDIT DEFAULT SWAP, to Lehman Brothers. That means that investors are bearing the HIGH RISKS of this basket of derivatives (not bonds, but CDOs and credit-linked derivatives) but Lehman Brothers has taken all the returns from these derivatives and in return, only promised to give you a FIXED return of 5.1%!

4) The REs have not defaulted,but the value of our investments have plumetted to almost zero. What is the rationale behind this incomprehensible senario.?

Although the REs have not defaulted but the basket of HIGH RISK derivatives that your money actually invested in as a basket of Collateral Assets has actually diminished due to the financial crisis that we are facing. Although you as investors have not enjoyed the high returns from these high risk derivatives (which you have swap and given to Lehman Brothers for 5.1% return) but you bear the risks of defaults or devaluation from these financial derivative instruments.

5) Did the distributor :-
a) misrepresented this product ( not aware of it's true nature and operating mechanism )
b) concealed the material fact ( they knew but did not tell us )

a) From the many descriptions given by investors with regards to the information they received from sales representatives, it is a CLEAR MIS-INFORMATION and MIS-REPRESENTATION of this product. The RISK you faced is not LOW as the failure of any one of the six reference entities. You, as an investor, also face risk of defaults or devaluation of the basket of HIGH RISK financial derivatives issued by the 150 companies and yet, you did not enjoy FULLY the potential high returns from these instruments but taking the risk of these instruments! Basically it means that, somebody used your money to invest in HIGH RISKS products and keep all the potential HIGH RETURNS from your investment but in return, they only give you back a FIXED 5.1% and you bear all the risks of defaults and devaluation of these products. I believe if this is represented properly to you, many investors would not be investing in this product. I mean, who wants to bear all the HIGH RISK while taking back only a FIXED 5.1%?

b) I am not in the position to say whether "they knew but did not tell you" or they conceal any material facts because I am not vested and would not know whether those front line sales representatives actually know what they are selling in the very first place. I believe not many people really understand this Lehman Brothers Minibonds when it was first sold. If those financial elites at MAS actually study the whole structure carefully, they would realize that this Minibonds is DETRIMENTAL to consumers' interests and it is a totally UNFAIR Credit Default Risk Swap as Lehman Brothers controlled the Swap Party Minibond Ltd.

I hope my explanation is clear enough for you to understand.

Goh Meng Seng; October 28, 2008 6:15 PM
Anonymous said...: The ball cannot remain in the MAS’s court forever. From the various statements made by representatives of MAS and the dilly-dally "one-step forward two-steps backwards" modus oprandi, as well as the attempts to shake off of any responsibility, the credibility of MAS is now seriously at stake, which leads to the credibility of Singapore as a good financial centre (yet lagging behind Hongkong in terms of initiative and leadership) being put at risk and investors’ (both local and foreign) confidence severely shaken, especially so while in the midst of a global financial crisis and the worsening world economy.

The present situation in Singapore is similar to the situation in the USA under President George W Bush, where the neo-cons are refusing to regulate, thereby giving the rich and powerful a leeway (or LEE-way) to do whatever they want, with the objective of churning out business and therefore higher profits and shameless remunerations, commissions and bonuses. De-regulations, lack of regulations or the refusal to regulate is the sin that has caused this tragic outcome that exploited to the fullest the concept of “Caveat Emptor” or “Buyers Beware”.

The question in most people’s mind is: “How does one expect the buyers to beware or be aware when only the positive sides are painted while the negative sides are hidden or not revealed to the buyers, whether deliberately or otherwise?” This is similar to the way the principal newspapers operate in Singapore by projecting only the “good news” and neglecting to publish “bad news”, e.g. the economy was bad yet attempting to paint the picture that the economy was good by showing selective statistics and projecting a lopsided aspect of the whole issue.

Therefore, the time has come for the government, which means the PM, to take definite concrete actions in order to win back this credibility and confidence of Singapore as a global Financial Center. If the PM, who was then the Chairman of MAS as well as the Finance Minister, has no moral courage to do so, then it is now left to the President of the Republic of Singapore to stand up and be counted for his extremely well-paid job by initiating a Public Commission of Inquiry into the whole tragic affair of not only the Lehman Brothers’ Minibonds but all the structured financial products that have been and are still being sold by Financial Institutions regulated (or not regulated, or refused to regulate) by the MAS. Lessons must be drawn from this episode and the MAS and Financial Institutions, especially local banks such as DBS, UOB and OCBC, must be made to do a house-cleaning after that. This matter cannot be left to inaction and being swept under the carpet, and pretending that it is none of their business. The implications and ramifications are extremely difficult to fathom!

The concept of “Caveat Emptor” is now in the court of the government. Let the President beware!; October 29, 2008 9:02 AM

Friday, October 24, 2008

Call for Public Inquiry - some views

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