By Mak Yuen Teen

On 18 May 2021, GRP Ltd announced that its independent director, Mr Mahtani Bhagwandas, had informed the company that he has been suspended by the Court from practising as a lawyer due to professional misconduct issues. The announcement said: “The misconduct charges were in relation to (i) acting for a client against a former client who has passed away despite having acquired confidential information about the former client, and (ii) not making a timely disclosure to the administrators of the former client’s estate about his conflict of interest”.

The case for which Mr Mahtani was suspended is the widely reported Boon Tat Street death case, where the estranged husband of a woman was killed in broad daylight by the woman’s father.  A Straits Times article on 14 May 2021 titled “Boon Tat Street death: Lawyer for victim’s mistress suspended for 2 years after widow’s complaint” reported on Mr Mahtani’s suspension.(https://www.straitstimes.com/singapore/courts-crime/boon-tat-street-death-lawyer-for-victims-mistress-suspended-for-2-years-after)

The woman had turned to Mr Mahtani, who had acted for her spouse in their impending divorce, for help with estate matters. Mr Mahtani agreed to help the woman without disclosing that he was also acting for her late husband’s long-time mistress, who later made a $3.4 million claim against his estate. The woman lodged a complaint to the Law Society in May 2019. Mr Mahtani was suspended from practice for two years by the Court of Three Judges. He was referred to the Court by the disciplinary tribunal for punishment after the latter found him guilty of two misconduct charges last year.

One charge was for accepting to represent the mistress in her claim against the estate, despite having acquired confidential information about the deceased man’s assets while engaged as his lawyer. The other charge was for failing to make a timely disclosure to the deceased man’s spouse about his conflict of interest, which resulted in her revealing confidential information.

GRP said: “The Board, in consultation with the Nominating Committee (“NC”) excluding Mr Mahtani, who had abstained from the deliberations, has assessed Mr Mahtani’s suitability as an independent director. The NC and the Board are of the view that Mr Mahtani is still suitable to continue as a director of the Company taking into consideration, his experience and directorships both past and present and that over the years, Mr Mahtani has demonstrated his ability to contribute constructively to challenges on the Group’s proposals and exercise independent judgement on corporate matters. As such, the suitability of Mr Mahtani as an independent director was unanimously accepted by the NC and the Board”.

Mr Mahtani is the Chairman of the NC, although the company disclosed that he had recused himself in assessing his suitability to continue as an independent director. The misconduct charges that Mr Mahtani were found guilty of relate to conflict of interest and failing to make timely disclosure of such a conflict. Timely disclosure of conflict of interest is the least that is expected of  directors as part of their duties. Where such conflicts are serious, directors must avoid them altogether. If Mr Mahtani failed to recognise a serious conflict of interest and make timely disclosure while practising as a lawyer, can shareholders have any confidence that he will be able to do so as a director?

This is the second instance of GRP appointing a director who has faced questions about his suitability as a director. In September 2013, GRP announced the appointment of Mr Peter Moe as an independent director. His appointment was queried by SGX and, at that time, I also wrote an article questioning his appointment (https://governanceforstakeholders.com/2013/09/29/grp-should-clarify-board-appointment/).

The company disclosed that Mr Moe had been previously disqualified from acting as a director. The announcement at that time 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 Mr Moe 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.

In its response to SGX’s query then, GRP defended its decision. It said that, based on the disclosure by Mr Moe, the board and NC were 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 were of the view that the conviction and proceedings against Mr Moe were of no concern.

It also said that the conviction under the Companies Act did not involve “moral turpitude” and 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.

Mr Moe, together with Mr Goh Lik Kok, an independent director, and Mr Kwan Chee Seng, an executive director and GRP’s controlling shareholder, are the other current members of the NC. Therefore, Mr Mahtani’s suitability as a director was assessed by an NC which includes a director whose own suitability as a director had previously been questioned, and the controlling shareholder of the company.

The Board which together with the NC assessed that Mr Mahtani is suitable as a director is chaired by Mr Daniel Teo Tong How, who was appointed as the Honorary Chairman of the Securities Investors Association (Singapore) in 2018.

In my view,  the Board and NC of GRP should re-consider the suitability of Mr Mahtani as a director of the company.