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Institutionalising Ethical Conduct and Implementing Whistle Blowing: Issues and Challenges. A/P Mak Yuen Teen Co-Director, Corporate Governance and Financial Reporting Centre. CPA Australia/ICPAS Dinner Talk, 3 January 2006.
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A/P Mak Yuen Teen
Co-Director, Corporate Governance and Financial Reporting Centre
CPA Australia/ICPAS Dinner Talk, 3 January 2006
© Mak Yuen Teen. Certain materials used in this presentation are provided by iCounsel Pte Ltd and used with permission.
Assess current ethical culture/program
Identify desired core values
Identify key elements
Writing the code
Gu Yanfei tipped to be new CAO head [Business Times, 19 October 2005]
`She is the only one, at this point, who can effectively handle relations between CAOHC and the Singapore team - a matter which is key to CAO's future survival,’ a source told BT. `No one can manage the concerns of both sides as well as she can.’ Sources, however, also told BT that Gu may not be appointed chief executive immediately or in the near future as she still faces criminal charges relating to the CAO scandal. She was charged in June for breaching her fiduciary duties as a director and for failing to disclose CAO's huge options trading losses of US$550 million to the Singapore Exchange. The maximum penalties are a fine of up to $250,000 and/or jail of up to seven years.Sources say it's likely that an interim CEO will be appointed first, with Gu taking over only when her charges are resolved - even if that means she will only become CEO a year from now.
Brilliant boss faces insider trading charges[Business Times, 7 September 2005]
Brilliant said yesterday that Koh will continue with his current duties as executive chairman and managing director. `The board wishes to emphasise that the charges pertain to Mr Koh in his personal capacity and do not affect the operations of Brilliant which is not under any investigation,’ it said.
Boeing fires CEO over relationship (www.cnn.com, 7 March 2005)
Boeing has ordered its Chief Executive Harry Stonecipher to step down because of what the U.S. aircraft giant said was an improper relationship with a female executive. The company said the female executive, who has not been identified, did not report directly to Stonecipher and that the relationship was consensual and had no effect on the conduct of the company's business. But it said the relationship violated Boeing's code of conduct… "the board concluded that the facts reflected poorly on Harry's judgment and would impair his ability to lead the company," …"The resignation was in no way related to the company's operational performance or financial condition, both of which remain strong," Boeing said in a statement. "However, the CEO must set the standard for unimpeachable professional and personal behavior. And the board determined this was the right and necessary decision under the circumstances..(emphasis added)
Poll, SAICSA Dinner Talk, 8 December 2005 (76 responses)
Types of qualifying disclosures:
Qualifying disclosures are disclosures of information which the worker reasonably believes tends to show one or more of the following is either happening now, has happened in thepast, or is likely to happen in the future
Who are protected:
What sort of protection:
Conditions for protection:
“Where a person has a malicious or secondary purpose in making a disclosure, it is considered that the good faith requirement would not be met.”
(Revised Singapore Code, Guideline 11.7)
Source: BP Code of Conduct
Source: Qantas Code of Conduct
S.157. —(1) A director shall at all times act honestly and use reasonable diligence in the discharge of the duties of his office.
S. 157C(1) - Use of information and advice
S. 157C(2) - Subsection (1) shall apply to a director only if the director —
"For those who argue that employees owe strict loyalty to the company, whistleblowing seems to be an act of extreme disloyalty. It puts at risk the reputation of the firm. But this seems to be based on a narrow view of loyalty as if it demands that we do whatever the company or another individual believes to be in their best interest...Loyalty cannot imply that we should not report the unethical conduct of others... This may imply for an employee that he or she is most loyal when trying to prevent something that could lead to harm for customers, shareholders, or the general public. If there is no proper response internally, or if by the nature of the case, it is not possible to find an internal remedy, then it would seem ethically correct to blow the whistle. In fact, sometimes there can be a duty to do so. It would be obligatory for an employee to blow the whistle when the level of harm to others is serious, and the employee has clear evidence of the unethical practice that has led to this. This could, for example, be in terms of product safety or severe financial hardship for others.“
Michael Walsh, "Whistleblowing: betrayal or public duty?," http://www.erc.org.au
“I am the finance manager of a listed company (SGX). The management ( who is also the controlling shareholders) induced or influenced my accountant to manipulate the financial reports without my knowledge. I have reasons to believe that it was carried out for almost a year and past result announcement, monthly reporting to the Board and information provided to the bankers might have been wrong. The present structure are prone to internal control weakness as management are able to override existing controls, policies and procedures.
Have informed the chairman ( who have deemed substantial shareholding via another listed company -SGX) who reprimanded them and he is unlikely to pursue the matter further. Perhaps he will divest the shareholdings when time is ripe.
We are due to report our quarterly result in a month time and I discovered recently that the profit are overstated. If I report to the Independent directors and if they chose to remain passive, my career will be at stake. The management played a critical role and are likely to continue in office.
Sequence of events:
Powerpoint presentation can be downloaded from http://www.cgfrc.nus.edu.sg