Were Lehman-linked cases really resolved?

There are complainants unhappy with FIDREC rulings

Letter from Thomas Lee Zhi Zhi

I REFER to recent reports on the role of the Financial Industry Disputes Resolution Centre (FIDREC) in the handling of various Lehman-linked complaints.

The use of the word “resolved” is rather misleading, as if all the cases reported were amicably “resolved” by the banks, with the complainants accepting the recommendations of the adjudicators. Perhaps it would be more meaningful if, instead, the report goes into greater detail the number of cases closed with and without payout and the quantum of each payout.

Although there was a top-level assurance that complaints would not be dealt with solely from a legal angle, the complainants I have spoken to say the adjudicators did exactly that, on the grounds that the complainants had ample time and opportunity to read the brochure on the risks.

The fact remains that some town councils and Government bodies too fell into the trap of investing in these products although they have teams of financial experts to advise them. So, how could an individual investor have been expected to make a better decision?

The Monetary Authority of Singapore’s finding on the lapses of the issuing banks also seem to have been brushed aside.

In retrospect, it is ironic that banks in Hong Kong, despite being part of a communist country, have been more magnanimous by voluntarily offering to compensate all investors up to 60 per cent of funds invested — with retirees getting 70 per cent — without the investors having to lift a finger.

One imagines the participating banks here can do better.

MPs to raise questions on financial governance

SINGAPORE

Are there requirements for Government agencies to have industry specific policies for managing fraud risk?

Are there clear pathways for whistle-blowing?

Law Minister K Shanmugam and Finance Minister Tharman Shanmugaratnam are expected to address these concerns when Parliament sits on Monday.

Among four Members of Parliament who have filed questions, Workers’ Party chief Low Thia Khiang wants to know if the alleged fraud in the Singapore Land Authority has “exposed a gap in public sector financial governance regulations and their implementation”, while Madam Halimah Yacob has asked about the lessons learnt from the alleged cheating incident.

Even as eight new cheating charges were tendered on Friday in the largest civil service fraud, the case had already prompted discussion among corporate governance experts on whether such practices need to be re-examined.

“When this case first broke, one of the first things that crossed my mind was whether the individuals had committed similar frauds in their previous organisations,” said Associate Professor Mak Yuen Teen.

“The GeBiz system used in the public sector is meant to promote fair, transparent and efficient procurement but, as can be seen, it can be exploited if basic principles of sound internal control aren’t followed or if people who are responsible don’t do their jobs properly.”

While he noted that fraud and corruption in the public sector here is still amongst the lowest globally, the National University of Singapore academic told MediaCorp that complacency “may also be a factor”.

Another corporate governance watcher from the NUS, Associate Professor Ho Yew Kee, felt that some fields such as IT might be rather specialised, and independent opinion hard to obtain. He suggested job rotation to prevent civil servants from amassing too much power and control over an organisation’s functions.

Both Koh Seah Wee and Lim Chai Meng, the duo accused of the fraud, were seconded to the SLA from the Infocomm Development Authority.

When asked how it oversees such staff, an IDA spokesperson said their performance is monitored through staff reviews, personal performance reports, periodic dialogues and regular user satisfaction surveys.— Were there lapses in Government guidelines for finance and procurement processes?

Leong Wee Keat

Ex-SLA executive’s alleged involvement in fraud may have begun in 2005

It could have started earlier than thought ...

Leong Wee Keat

weekeat@mediacorp.com.sg

Koh Seah Wee (picture) was charged with cheating the Intellectual Property Office of Singapore (Ipos) when he was assistant director of its Information Technology Department from July 2004 to March 2007.

Koh, 40, purportedly conspired with Chartered Systems & Services to enable the business to win IT contracts from Ipos. The company would submit payment invoices for fictitious goods and services, which Koh would certify even though nothing was delivered.

Eight fraudulent transactions, amounting to about $286,000, are thought to have occurred between December 2005 and March 2007. “Investigations against Koh’s activities in Ipos are continuing,” according to a joint statement from Ipos and the Law Ministry.

While a previous cheating scam involving former Trade Development Board chief executive officer Yeo Seng Teck had gone on for a longer period — for five years, between June 1988 and July 1993 — investigations into Koh have turned to his time at the Supreme Court,

where he was deployed before July 2004.

Koh now faces a total of 302 charges, while former SLA manager Christopher Lim Chai Meng, 37, faces 309. Both men bought luxury cars from the alleged $12.1 million they siphoned from SLA between November 2007 and March this year.

Ipos conducted its internal investigation after the purported SLA fraud came to light in June. An independent review panel was convened and it recommended improvements to Ipos’ internal controls, systems and processes, which have since been implemented.

“These included strengthening internal audit structures and processes, centralising the procurement process and ensuring the purchasing officer and the receiving officer are different individuals,” read the joint statement.

Ipos said its financial statements and accounts were audited externally, not by the Auditor-General’s Office, during the time the alleged offences took place. This was done in accordance with the Auditor-General’s requirements.

“The audits conducted were statutory audits of financial statements and compliance audits designed to ensure compliance with finance procedures and processes. These types of audit may not always be able to pick up such fraudulent activities,” Ipos said.

Disciplinary investigations of officers whose lapses in supervision may have contributed to the fraud going undetected are in progress. Action will be taken, if found appropriate, said Ipos. Koh’s case will be mentioned again on Dec 3.SINGAPORE — In a further twist to the largest suspected fraud in the civil service, investigators now believe that one of the accused began cheating the State years before he joined the Singapore Land Authority, where his alleged crimes were first discovered. On Friday, former SLA deputy director