Are midwifes responsible for S-chips listed here?

With more oversea-listed Chinese companies (S-chips) being rapped for accounting irregularities globally and particularly in Singapore, Mr Max Loh, Ernst and Young's (E&Y) new country managing partner for Singapore, says that the firm is strengthening its client acceptance procedures. It is a set of criteria to decide whether to accept or not to accept a prospective client, particularly on those entities en-route for public listing.

Mr Loh, in my opinion, correctly added that improving Chinese companies' corporate governance does not just fall strictly on the shoulder of accounting and auditing profession.

Thus here are the key questions I am asking for this article. Firstly, who are key expertises ie. midwifes, needed to identify, gestate (ie. packaging) and subsequently get them listed (ie. born) at a particular stock exchange? Secondly, what are their responsibilities for pre- and post-delivery?

Besides the accounting and auditing profession, the other midwifes are lawyers, corporate bankers, capital market specialists, the PR specialists and finally the gatekeeper ie. the security exchange. During the good times of S-chips, there are people going around in China talking and identifying companies for incubation and grooming to be listed. Once both parties agree to work towards listing, the rest of midwifes are brought in to do a makeover ie. make it looks good enough to at least last till the first day of being listed.

Once the entity is listed, most of the midwifes' responsibilities expire except for the exchange and auditor. So when S-chip bubbles imploded across the world's exchanges, the minority shareholders ended up with massive losses. When the minority shareholders look for people who should be held accountable, they were stone-walled with the famous punchline ie. "Buyers beware". In the meantime, the midwifes enjoy their bounty. In recent years' as the S-chips' gravy train has come to standstill, many of these midwifes have shifted their operations to more fertile grounds, geographically or to another trade all together.

Should "Buyers beware" be our first and last line of defence? These midwifes were delivering exactly what the investors were craving for ie. to invest in any company with the word "China" in its name. It is observed that no one from Wall Street has been held responsible and prosecuted till today for financial crisis caused by property meltdown in US.

Perhaps the financial market is a stage where every man and woman plays its part, the outcome is the responsibility of no single person but all participants.

Dayen Chairman sells shares...

take care of that tree during F1

Mr John Lee, Executive Chairman of water treatment company Dayen Environmental, has to sell its own company shares to meet margin call when Dayen's shares dropped by more than 30% in one day.

This has led me to ask a few questions:-

1. Are people in management of public listed companies in Singapore in such precarious financial position? Or are they just the minority?


2. There is a conflict of interest when a senior official of a public listed company geared up and purchased shares of the company he/she is working in. I noticed that purchases of shares of such nature has to be declared. It would be good to summarise such info on the nature of their respective shareholdings for investors to review.

I lost money with AEM Holdings today

Dear fellow investors,

Today I am hit by another loss with my holding in AEM (my last big boo boo was China Aviation Oil).

Company requested for a trading halt this morning. Given last week's DBS Vickers' report earmarking AEM (among many others) as a potential target for acquisition, naturally I thought some deals would be announced along the same tune.

Guess what! The Company seeks a trading halt to announce that the Company is assisting with investigation by CPIB !

Upon resumption of trading, the counter dropped by about 20%. Edgar jumped off the cliff....

Why? Why? Why? Why?.................. and a big sigh....

Should there be a "gang" in the Board of Directors?

I strongly agree that a director should step down if he thinks he can no longer be effective.

But is it appropriate for a director to step down for reason that he could no longer be effective in the absence of his "gang" in the board? Let me cite a recent occurrence of this "gang" thingy.

Prof Cham Tao Soon, who was elected to Robinson's board during AGM in mid Oct 2006, resigned in early Nov 2006. He said that he felt he could not carry on since his fellow independent directors - Ms Chew Gek Khim and Mr Winston Tan - were 'abandoning ship'.

Ms Chew, Mr Tan and Prof Cham had offered themselves for election. The shareholders had voted for them during the AGM. They were duly elected to the Robinson's Board. They must have assessed their individual ability to contribute prior to acceptance for nomination. The shareholders who voted for them must have agreed that each of them can contribute. There was no representation from Prof Cham prior to election that he could not be effective in the absence of the other two.

In Siow Li Sen's Business Times article dated 16 Nov 2006, some degree of "collegiate" atmosphere within a board is necessary to maximise their contribution to the business and shareholders.

What is appropriate?
The jury is still out in slowly maturing corporate governance scene in Singapore. As of now, it certainly leaves a sour taste in my mouth.