By Mak Yuen Teen

The Hyflux restructuring is turning out to be more epic than “Avengers: Endgame” which hit town this week and with an ending more protracted than the “Lord of the Rings: Return of the King”, having started in May last year. However, unlike the latest Avengers movie, the outcome remains highly uncertain and it is fair to say that the board would receive mostly rotten reviews unlike the movie.

While most of the same superheroes who have been around since the first “Iron Man” movie in 2008 are expected to save the world, a different team is needed to save Hyflux. It is a nice gesture for Olivia Lum to take a $1 salary and for the directors to take no fees, but no salary or fees does not mean they add value. Directors should not jump ship at the first sign of trouble, but I believe that a new group of directors should have been in place to guide Hyflux through the restructuring process, with the existing directors making themselves available to aid the new directors if necessary.

Not only are the existing directors responsible for the predicament the firm faces – and I believe this has a lot to do with the composition of the board, including the knowledge, experience, tenure, commitments and relationships among certain directors – they do not appear to have the strong financial management and restructuring background necessary to oversee the restructuring process. Without such background, they are likely to be totally dependent on professional advisers and limited in their ability to make informed judgement about the advice they are receiving. From my experience and discussions with others familiar with boards, directors often tend to take the views of auditors,  legal advisers and other professional advisers as gospel truth without questioning such advice, which leads me to wonder what value many directors actually bring to boards. I do not agree with the view that directors are not expected to question professional advice they receive because those advice may be rendered to legitimise a certain position that has already been taken.

In Hyflux’s case, there is already concern about professional fees stacking up and further reducing the already meagre potential distributions to different stakeholders. There is a risk of this getting totally out of control, if not already so.

Under the circumstances, I believe that new directors who are appointed should have significant experience and a good track record in financial management and restructuring (track record is important as there are directors who call themselves turnaround experts but whose companies’ fortunes often get worse after they join). Many existing directors on boards, including household names, would not qualify as they are often there more for their name and their networks than for their expertise.

Of course, the question is whether it is already too late for those who fit the bill to want to step forward.