First published in Business Times, 13 September, 2013
LETTER TO THE EDITOR
Mak Yuen Teen
ON Sept 3, GRP Ltd announced the appointment of Peter Moe as an independent director. In response to the questions in the appointment template regarding whether he had been convicted of, or had judgment entered against him, or had been subjected to criminal or civil proceedings, for certain breaches, the company answered in the affirmative.
The company disclosed that Mr Moe had been previously disqualified from acting as a director. The announcement also provided further details about the nature of the alleged breaches and the outcomes of the criminal and civil cases against him. These included a criminal conviction for breach of duties as a director and a $5,000 fine (the maximum under the Companies Act), which also led to his disqualification as a director for two years, which was later reduced to one year upon appeal.
There was also a separate complaint against him to the Law Society for professional misconduct, which was dismissed for lack of evidence. Civil proceedings related to the complaint to the Law Society were also commenced against him for misrepresentation and misuse of position of trust and confidence, which were withdrawn after mediation.
On Sept 9, GRP issued a response to queries from the Singapore Exchange (SGX) regarding Mr Moe’s appointment. It seems clear that SGX has concerns about Mr Moe’s suitability as a director, and understandably so.
In its response, the company defended its decision. It said that, based on the disclosure by Mr Moe, the board and nominating committee (NC) are fully aware of the circumstances surrounding the cases involving Mr Moe. It said that the board and NC had examined all the disclosures intensively and are of the view that the conviction and proceedings against Mr Moe are of no concern.
Given the strict confidentiality which governs the mediation process, it is unclear how the NC could have properly assessed the case against Mr Moe, which was resolved through mediation. It said that the conviction under the Companies Act did not involve “moral turpitude”. One would have thought that moral turpitude (or the absence of it) should determine whether a person should be disqualified, rather than whether he is qualified, to be a director.
The company went on to say that the NC was of the view that the conviction “will make Mr Moe a more experienced person” and that he has resolved to be more vigilant. The bar for qualifying as a director appears to have been lowered, with legal actions against a director seemingly considered a positive attribute.
SGX’s appointment template also requires companies to disclose the “search and nomination process”. A search and nomination process would cover how a director was identified or nominated. The company did not disclose this, either in its original announcement or in its response to SGX’s query.
SGX should query GRP further on how Mr Moe was identified as a candidate, including whether he was nominated by particular shareholders. This may shed more light on why, when there is a large pool of independent directors to choose from, Mr Moe was nevertheless considered a suitable candidate by the board and NC.
Mak Yuen Teen
