I am sure there was much talk in corporate Singapore yesterday regarding the decision of the Appellate Division of the High Court to partially allow an appeal by Dr Goh Jin Hian against having to pay damages for breaching his duty of care when he was a director of marine-fuel supplier, Inter-Pacific Petroleum (IPP), which became insolvent. The ruling said that Dr Goh had breached his duty of care as a result of not being aware of IPP’s cargo trading business and not because he had failed to open a probe into red flags surrounding the company.
The full judgement can be accessed here: https://www.elitigation.sg/gd/gd/2025_SGHCA_7/pdf
As a corporate governance advocate, I believe that directors, including non-executive directors, should be held to high standards of accountability, although I accept that non-executive directors would often not have the same amount of knowledge about the affairs of a company. I have not read the full judgement yet but I am also following the Star Entertainment case in Australia where in December 2022, ASIC commenced civil proceedings actions against 11 former executives and directors.
ASIC alleges that “Star’s board and executives failed to give sufficient focus to the risk of money laundering and criminal associations, which are inherent in the operation of a large casino with an international customer base.” The directors who are included in ASIC’s action include the former board chair and other former non-executive directors. This is not the first time that Australian regulators have pursued actions against non-executive directors. Regulatory actions such as these and class actions by shareholders against directors are very much part of the system in Australia that help ensure that directors, including non-executive directors, take their responsibilities seriously (although I accept that class actions can be abused, so if they are introduced into Singapore, which I hope they will be, we need to look into how to mitigate the risk of abuse). However, a system where directors are rarely held accountable will continue to hold back the development of Singapore into a truly trusted capital market.
A director this morning mentioned the case study on Star Entertainment which I edited as part of the collection of case studies called Corporate Governance and Ethics: Case Studies, published by the Centre for Investor Protection last year. He had read the case and thought it would be useful to remind the director community about director duties and its enforcement in Australia. I am therefore sharing this specific case study here:
I am currently working on a new collection of case studies which will be published by the Centre for Investor Protection later this year.
Related to this, I have been having conversations with some directors in Singapore and Malaysia about a new directors body. In fact, last night, I had dinner with three directors, one from Malaysia visiting here. I have had conversations with others. They are directors who are highly experienced and have demonstrated the right values, and have agreed to be part of this new body. We want this new body to be made up of directors, particularly independent directors, who take their responsibilities seriously. Therefore, we plan to put in a robust process for admission of members, and set expectations for those who want to be part of this new body that they will use their best endeavours to raise corporate governance standards in companies they are associated with. I have no wish to have a directors body where people join mostly to network and to get directorships. I hope we will have a body with members who are truly role models for other directors.
As mentioned, the conversations so far include directors who serve on boards in Singapore and Malaysia. Perhaps over time, we can have a truly regional body for independent directors who are truly committed to high standards of corporate governance.
This could be the last big thing I will do for corporate governance in Singapore and the region before I retire from the scene, which of course means there needs to be succession planning too.
More news will be shared about this in the second half of the year.
