Singapore Exchange (SGX) chief Hsieh Fu Hua
SINGAPORE: The Singapore Exchange (SGX) just can't seem to get it right. The conflict-of-interest issue that should have been settled decisively in a day dragged on for a fortnight, leaving behind a bruised image of the SGX as a listed company and regulator, the local media as a watchdog and Singapore as a financial centre.
When Dow Jones started digging into the story that there might be a conflict of interest because SGX chief executive Hsieh Fu Hua had an interest in a firm that was involved in attracting China companies to list in London, alarm bells should have gone off.
Instead, the SGX dug its heels in by issuing a quick rebuttal the day the story broke on April 12. The matter might have ended there. But The Asian Wall Street Journal, typical of a tenacious newspaper, picked up on the story six days later and went to the Monetary Authority of Singapore (MAS) for a quote.
And the quote by managing director Heng Swee Keat — that the SGX board should not ignore external views — triggered an announcement hours later that Mr Hsieh would relinquish his non-executive director's position in PrimeFounders Inc (PFI), which has an indirect stake in a joint venture that technically competes with SGX, and that his financial interest there would be put in a trust.
If you thought that was the end of the story, more was to come. SGX chairman, Mr J Y Pillay, obviously feeling there were gaps in the story, held a press briefing five days later on April 23, to which the foreign media was not invited. He revealed two startling pieces of information.
One, that a potential conflict of interest had existed from the time Mr Hsieh was chosen to head the organisation in 2003, which was slightly different from SGX's robust stand that the Dow Jones story was not justified. Two, that the SGX wanted him to give up his stake in PFI at the time they head-hunted him for the job but Mr Hsieh refused — and the board found it difficult to get someone else of his calibre because of his predecessor's sudden departure.
The Business Times, which for some reason did not report on the press briefing, must have decided to recover lost ground and reported on April 27 by quoting Mr Pillay as saying that Mr Hsieh would leave in Sept 2009.
The board had no choice but to issue another rebuttal saying that "whether the contract will be renewed in 2009 is subject to the board's decision, and Mr Hsieh's consent, and other relevant factors, at that time".
To complete the messy picture, the SGX even suspended trading of its shares for three hours on the same day.
Phew! What a fortnight it was for the SGX.
Nobody disputes that Mr Hsieh has done a great job with SGX's profits going up three times to $187 million since he took the job four years ago. Nobody disagrees that there was no wrongdoing. Mr Hsieh had declared his interest and sufficient safeguards were put in place to deal with the conflict of interest issue.
What everybody is wondering is how and why the SGX allowed this episode to drag on for so long, why the local media was playing such a reactive role and what all this means for Singapore's role as a financial centre.
As for the company, as it licks its wounds, there is an urgent need to relook its communications strategy with a special focus on how to deal with the scrutiny that will continue to come from outside Singapore.
The SGX did not anticipate how the story would develop and had acted in a knee-jerk fashion by swiftly rebutting the Dow Jones report with a short statement. It never expected the MAS to be interviewed by The Asian Wall Street Journal and for the central bank to say what it said. Mr Pillay's candour at the press briefing was welcome. But reading his quotes published in The Business Times on Friday and issued as a statement to all media on the same day, it would take a super human being to appreciate the fine difference it was trying to make.
Communications is a minefield. Say too little and tongues will wag. Say too much, without emphasising the buts and howevers, and you are likely to be misunderstood.
One simple rule to overcome such misunderstandings: Anticipate how the media is going to angle the story and take pains to communicate the subtleties you have in mind.
As for the local media, it did not raise the issue of a potential conflict of interest and, worse still, did not get the quote from the MAS that triggered a change of mind at the SGX. Right through the episode, it was playing catch-up, focusing mainly on what the foreign media and what the SGX were saying.
A relook at the role of the local media, now that Second Minister of Information and Communications Vivian Balakrishnan has surprised many with his "I expect the Press to whistleblow" remark at a Foreign Correspondents Association talk, is necessary.
As for Singapore's image, it has been somewhat bruised. If an important institution such as the SGX cannot get such a small thing right, then what about the bigger ones it will face as the country gets more and more hooked up to the international grid?
The fortnight that just went by should be a wake-up call for action. Yes, Singapore's fundamentals to become a financial centre are strong. But there is no certainty that it will continue to be this way.
That is why this messy fortnight should not be a closed chapter, to be tucked away in some dusty file and forgotten.
When Dow Jones started digging into the story that there might be a conflict of interest because SGX chief executive Hsieh Fu Hua had an interest in a firm that was involved in attracting China companies to list in London, alarm bells should have gone off.
Instead, the SGX dug its heels in by issuing a quick rebuttal the day the story broke on April 12. The matter might have ended there. But The Asian Wall Street Journal, typical of a tenacious newspaper, picked up on the story six days later and went to the Monetary Authority of Singapore (MAS) for a quote.
And the quote by managing director Heng Swee Keat — that the SGX board should not ignore external views — triggered an announcement hours later that Mr Hsieh would relinquish his non-executive director's position in PrimeFounders Inc (PFI), which has an indirect stake in a joint venture that technically competes with SGX, and that his financial interest there would be put in a trust.
If you thought that was the end of the story, more was to come. SGX chairman, Mr J Y Pillay, obviously feeling there were gaps in the story, held a press briefing five days later on April 23, to which the foreign media was not invited. He revealed two startling pieces of information.
One, that a potential conflict of interest had existed from the time Mr Hsieh was chosen to head the organisation in 2003, which was slightly different from SGX's robust stand that the Dow Jones story was not justified. Two, that the SGX wanted him to give up his stake in PFI at the time they head-hunted him for the job but Mr Hsieh refused — and the board found it difficult to get someone else of his calibre because of his predecessor's sudden departure.
The Business Times, which for some reason did not report on the press briefing, must have decided to recover lost ground and reported on April 27 by quoting Mr Pillay as saying that Mr Hsieh would leave in Sept 2009.
The board had no choice but to issue another rebuttal saying that "whether the contract will be renewed in 2009 is subject to the board's decision, and Mr Hsieh's consent, and other relevant factors, at that time".
To complete the messy picture, the SGX even suspended trading of its shares for three hours on the same day.
Phew! What a fortnight it was for the SGX.
Nobody disputes that Mr Hsieh has done a great job with SGX's profits going up three times to $187 million since he took the job four years ago. Nobody disagrees that there was no wrongdoing. Mr Hsieh had declared his interest and sufficient safeguards were put in place to deal with the conflict of interest issue.
What everybody is wondering is how and why the SGX allowed this episode to drag on for so long, why the local media was playing such a reactive role and what all this means for Singapore's role as a financial centre.
As for the company, as it licks its wounds, there is an urgent need to relook its communications strategy with a special focus on how to deal with the scrutiny that will continue to come from outside Singapore.
The SGX did not anticipate how the story would develop and had acted in a knee-jerk fashion by swiftly rebutting the Dow Jones report with a short statement. It never expected the MAS to be interviewed by The Asian Wall Street Journal and for the central bank to say what it said. Mr Pillay's candour at the press briefing was welcome. But reading his quotes published in The Business Times on Friday and issued as a statement to all media on the same day, it would take a super human being to appreciate the fine difference it was trying to make.
Communications is a minefield. Say too little and tongues will wag. Say too much, without emphasising the buts and howevers, and you are likely to be misunderstood.
One simple rule to overcome such misunderstandings: Anticipate how the media is going to angle the story and take pains to communicate the subtleties you have in mind.
As for the local media, it did not raise the issue of a potential conflict of interest and, worse still, did not get the quote from the MAS that triggered a change of mind at the SGX. Right through the episode, it was playing catch-up, focusing mainly on what the foreign media and what the SGX were saying.
A relook at the role of the local media, now that Second Minister of Information and Communications Vivian Balakrishnan has surprised many with his "I expect the Press to whistleblow" remark at a Foreign Correspondents Association talk, is necessary.
As for Singapore's image, it has been somewhat bruised. If an important institution such as the SGX cannot get such a small thing right, then what about the bigger ones it will face as the country gets more and more hooked up to the international grid?
The fortnight that just went by should be a wake-up call for action. Yes, Singapore's fundamentals to become a financial centre are strong. But there is no certainty that it will continue to be this way.
That is why this messy fortnight should not be a closed chapter, to be tucked away in some dusty file and forgotten.
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