By Mak Yuen Teen

Those who have been following what I have written on the Datapulse Technology saga would know that I have spent a fair bit of space in my articles on Mr Low Beng Tin, its current Chairman who is being proposed for removal at the coming EGM on April 20.

Readers may also have read my response to the anonymous misleading and malicious document sent to shareholders which includes a question as to why I have singled out Mr Low in many of my articles. As I said in my response, I do not have any conflict with Mr Low in the past. To me, he was just one of the several thousand directors who sit on boards of listed companies here. However, his involvement in Datapulse has attracted my attention for the following reasons (amongst others), which I explained in my response:

  • Mr Low is the Chairman of the Board, and the Chairman plays a critical role in leading the board in setting the right tone, providing strategic direction, ensuring good corporate governance, and working with management and other stakeholders to ensure the company performs well
  • He made wrong disclosures about past regulatory actions against a company where he was the lead independent director when he was appointed to Datapulse and two other companies, and about a petition for winding up against another company when he was appointed to Datapulse and another company. He has claimed that they were inadvertent omissions but they occurred for several companies.
  • Mr Low sold more than 700,000 shares to Ms Ng Siew Hong (whom he claimed he did not know at the time when he did) just before he joined the Board, at more than 50 percent premium, a premium that was only available to a few shareholders, including him.
  • He has a poor track record based on the companies he has been involved in, in terms of performance and/or corporate governance. These include OEL Holdings/Oakwell Engineering where he was chairman and managing director until 2016 and the company went into deep financial trouble during his tenure.
  • Datapulse has some questionable past transactions with Lian Beng where Mr Low is an independent director.
  • The circumstances surrounding his appointment raise questions about his independence.

On Mr Low’s share ownership and disposal, Mr Low entered the top 20 list of Datapulse shareholders in the 2017 annual report, which shows that as of October 9, 2017, he owned 979,066 shares.  As shown in the 2016 annual report, as of October 13, 2016, Mr Low was not in the top 20 list. The largest shareholder on the top 20 list then held 780,666 shares. So we know that Mr Low either bought his 979,066 shares or increased his stake to that number of shares between October 13, 2016 and October 9, 2017, before selling more than 700,000 of those shares to Ms Ng Siew Hong at a more than 50 percent premium. Several other top 20 shareholders also increased their stakes between the dates of the lists of the top 20 shareholders between the 2016 and 2017 annual reports – and data on married trades show that the number of shares sold in November 2017 when Ms Ng bought her 29 percent stake matched the total number of shares they last held as of October 9, 2017. I think it would be interesting for regulators to look at the increases in shares held and their subsequent disposal in November 2017.

Back to Mr Low. In the circular to shareholders dated March 26, 2018 for the coming EGM, Mr Low attributed his failure to disclose the regulatory actions by SGX and MAS against China Yongsheng where he was the lead independent director, and the winding up petition against another company where he was director, to “inadvertent omissions”.

In the case of the regulatory actions by SGX and MAS, he said that a report by KPMG Advisory Services Pte Ltd to China Yongsheng’s audit committee concluded that the assertions that the then independent directors of China Yongsheng (including Mr Low) were compromised was without basis, and he was not found to be guilty of any misconduct or misdemeanour in such incident. The circular further added: “Given the minimal impact of the incident on himself, he did not have a strong recollection of the incident, and inadvertently failed to disclose this.”

I cannot speak for others, but I can remember that since I came back to Singapore more than 20 years ago, I had to pay fines (and in some cases, incur demerit points) for “inadvertently” driving on a bus lane on Clementi Road during the restricted hours, “inadvertently” doing an illegal U-turn on Telok Blangah Road at Vivo-City, “inadvertently” beating a red light on Bukit Batok Road and most recently, “inadvertently” speeding along MCE/ECP. Those were the four traffic offences I have committed and I remember them all. If I am asked to file a declaration (maybe in applying for a job as a “mature” traffic cop) and it requires me to list all my traffic offences, I would remember them all. Wouldn’t you? They did not have much impact on me except for hurting my pocket a bit and making me more careful when driving.

While it is true that the regulatory actions were against China Yongsheng and were not actions taken against individual directors, regulatory actions are few and far between. Our regulators do not take such actions lightly. It’s harder to get a regulatory action in the form of public reprimands and warnings than striking first prize in 4D – maybe harder than even striking first prize in successive draws.

I also cannot see how such actions can be considered as having “minimal impact” on any of the directors who were there at that time or how directors can not have “a strong recollection of the incident” when such regulatory actions are taken. In fact, I am even more concerned when a director downplays such regulatory actions on themselves or cannot recollect the incidents that triggered the actions. Bear in mind too that he was the lead independent director at China Yongsheng.

I have read the KPMG report on China Yongsheng which I found online. KPMG’s finding on the issue of independence as quoted in the circular was in relation to the fact that land cost payments had been made before the signing of a joint venture agreement with a Chinese partner, and the assertion of the former financial controller that these facts and their handling by the independent directors had compromised their independence. On this specific issue, KPMG found no basis for the ex-financial controller’s assertion.

However, the report went on to say: “It is however the case that the minutes of 13 May 2008 Board meeting show no attempt by the independent directors to pursue their concerns at the said meeting. We have noted, there were efforts to deal with this outside of the Board meeting…. We were also informed by the AC Chairman and one of the AC member that the Independent directors had voiced their dissent outside the formal settings of the Board meeting…However, we thought the Independent directors could have used their voice, and if necessary their dissent, in a formal Board meeting to emphasize the need for changes in the way significant transactions were handled by management.”

On the matter of the assertions of the ex-financial controller about the two profit warning announcements, the report said: “We have no evidence that the Audit Committee had explicit knowledge of the adverse developments in the Group’s profit, as the Group does not release monthly management information to the Audit Committee. Given that the factors affecting profit were not unique to the Company, with increases in raw material costs in the industry and wide-scale weather disruptions in China at that time both widely reported in the business press and the general press, it is arguable that even non-executive directors  with a general understanding of the Group’s business could have understood the potential for adverse effects on the Group’s profitability and could have directed management  to consider the need for announcements to be made”.

In other words,  KPMG’s report raised issues of whether the independent directors were pro-active in questioning and overseeing management. The comments by the AC Chairman and a member about the independent directors having voiced dissent outside of the formal settings of the Board meeting were merely what were told by them to KPMG – the key is that the independent directors did not challenge management in a formal Board meeting, which is the proper forum for the Board to make its views known and to direct management.

In summary, the KPMG report did not in any way say that the independent directors did what was expected of independent directors.

I would urge shareholders to bear all the above in mind when they are voting for the removal of the Chairman. I will be writing more about Datapulse soon, especially in relation to matters mentioned in the circular.