SINGAPORE (Nov 23): For decades, Singapore has thrived on the idea that it is, in a word, exceptional. “We are a small country in this part of the world and to survive, you have to be exceptional,” Prime Minister Lee Hsien Loong said at a May Day Rally in 2015. The city state does not have the natural resources that its neighbours are endowed with. But, through hard work and perseverance, it has transformed itself into the successful trade and financial services centre it is today. Its strong rule of law and regulatory environment, stable government and free capital markets have attracted MNCs, financial institutions and the world’s wealthy to its shores.

Yet, several cases of corporate malfeasance and other questionable behaviour among publicly-listed companies here have tested local investors’ trust in the system. In 2013, the penny stock crash, a result of alleged stock manipulation by John Soh Chee Wen and his associates, wiped out some $8 billion in shareholder value. Then there were allegations of fraud at Midas Holdings and Trek 2000. The former was a supplier to the China rail industry and the latter a home-grown tech company that invented the ubiquitous ThumbDrive; both were once investors’ darlings.

Even before all this happened, investors were burnt by several China-based companies that were encouraged to list on the Singapre Exchange. Many of the companies collapsed under the weight of poor management and wrongdoing, and shareholders lost their money. Questions have been raised about how such actions escaped detection by investors, independent directors on their boards, auditors and regulators.

Meanwhile, shareholders in a couple of other locally listed companies experienced a different sort of loss and indignation.

In May, a shareholder in Asiatic Group (Holdings) was threatened with a defamation suit after he criticised the company’s management for running part of its business poorly. Jerry Low had emailed his concerns to the company’s board, substantial shareholders and SGX, and published the criticisms in an open letter. The company did not proceed with its suit.

In September, investor Mano Sabnani was sued for defamation by Stamford Land. At the company’s annual general meeting, Sabnani had questioned the company’s dividend payout and compensation for the chairman, deputy chairman and CEO, who are related. He apparently made the mistake of recounting his experience at the meeting on Facebook and in a letter published in a newspaper. Both parties eventually settled out of court.

Most recently, authorities in Singapore have announced they are finally investigating commodities trader Noble Group for suspected false and misleading statements, as well as breaches of listing requirements under the Securities and Futures Act. This, however, comes three years after allegations first surfaced that it was misleading investors with questionable accounting, and after more than 98% of its market value had been wiped out. And, as we report in our pages inside, it could be too little too late. Institutional and retail investors have lost billions of dollars, and Noble has already embarked on a controversial restructuring plan, swapping out the bulk of its equity to senior creditors.

Login to read: Noble case underscores need for regulatory reform, new growth strategy for local market

The Edge Singapore held a roundtable recently to discuss the future of the Singapore stock market, and whether events such as those outlined above have caused some investors to stay away for fear of losing their money. Such a trend would certainly be detrimental to the stock market. After all, companies list so they can access the secondary fundraising provided by the public market. Investor apathy or distrust defeats that purpose and causes companies to seek alternative sources of funds. In the same vein, corporates should be aware that poor conduct on their part erodes the very platform that helps them grow.

Among the themes that emerged from the discussion were, firstly, that the authorities in Singapore have limited enforcement resources and power; secondly, the fallout here was not as bad as in other markets; and thirdly, that such incidents were to be expected and were, in fact, indications that our market was alive and well.

The latter two points are disconcerting and disheartening. The success of Singapore’s financial and commercial sectors has been attributed to our high standards of law and governance. As one roundtable participant put it, Singapore’s advantage is the “trust premium” that brings business and investment here.

As such, when troubles or failures arise, they should not be brushed off as business as usual, or be considered smaller or less damaging than events elsewhere. After all, to be exceptional is to rise above the rest.

As PM Lee said in 2015: “If we say, let’s just be something like our neighbours, you’ll be pushed around, shoved about, trampled upon, that’s the end of Singapore and the end of us.”

This story appears in The Edge Singapore (Issue 857, week of Nov 19) which is on sale now. Or subscribe here