Don't dismiss call for independent SGX inquiry

I refer to the letter, "No need for independent inquiry into SGX snafus" (My Paper, Dec 15).

While the Singapore Exchange (SGX) remained silent on the Small and Middle Capitalisation Companies Association's (SMCCA's) call for an independent inquiry into this month's breakdown in trading, the letter comes out strongly to dismiss that proposal. The writer argues that the appointed board consisting of four independent directors of SGX is adequate.

He is entitled to his opinion, but critically examined and analysed, it lacks merit.

The mandatory appointment of independent directors in public limited companies and their meaningful contributions is itself a debatable topic, which is unnecessary to introduce here.

However, when problems arise, surely the whole board is collectively answerable. Can appointed independent directors abrogate their fiduciary obligations and blithely claim immunity, unless they have put on record their objections or opposals?

It is in this last context that the appointment of only a company's own independent directors to a board of inquiry involving the self-same company must inevitably raise the question of conflicts of interest which, in the general public interest, is best avoided.

When the public is inconvenienced - or as some have commented, an unflattering image is projected beyond our shores - a high degree of transparency becomes necessary in any subsequent inquiry.

Overall, SMCCA's suggestion and reservations have some substance.

Self-regulation within the broking industry was sorely tested, and found wanting, when the Pan-Electric crisis erupted at the end of 1985.

Going even further back in time to 1938, when workers in Singapore's then major public transport company, Singapore Traction Company, went on strike for better wages and working conditions, the colonial government of the day set up a tribunal (also of four individuals) none of whom was even remotely connected with the company. By all accounts, their findings and recommendations were accepted by all, and an amicable resolution to the impasse was reached.

These precedents should be telling examples why SMCCA's suggestion for an independent board of inquiry should not be summarily cast aside.

Narayana Narayana

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