What next in Singapore?

June 2013, London

18 years ago, Nick Leeson made history by single-handedly causing the collapse of one of the oldest and most successful British banks. He was an employee of Barings Futures Singapore – an indirect subsidiary of Barings Plc. His speculative investment activities in Nikkei futures contracts led to losses of over £848 million, which exceeded the value of Barings’ shareholders’ funds. The bank was sold to ING for a nominal amount and Leeson was sentenced to six and a half years in prison.

Ten years later, a Singapore-listed Chinese company, China Aviation Oil, caused another stock market scandal by failing to provide information on losses from oil derivatives. Since then, the Singapore exchange has been trying to tighten listing procedures for Chinese companies. As a city state that inherited the English common law system and where nearly a fifth of the listings are Chinese companies, Singapore may have some balance to strike.

The overall investor confidence in the China-related sector may sometimes be affected by difficulties such as the recent debt servicing problems experienced by FerroChina, the steel-coil maker. Add to that the recent UK proposals to introduce new criminal offences for top management of big banks, and the resulting atmosphere may not be very comforting, especially with regards to transparency. Watch this space.

An article about the escalating white-collar crime in Singapore is available here.