Transcript: Closing Address by Lim Boon Heng at the Temasek Roundtable on Governance and Ethics


Ladies and Gentlemen 

Today has been a long day of listening and, I believe, of learning for all of us. I would like to thank most sincerely all our speakers1. I mention especially Peter and Diane, and Bruce and Karolos from Debeviose and Plimpton, who have travelled to be with us today. And thank you to Simon, Hassan, Mun Leong and Sunny for your insights this afternoon too. 

All of our speakers have shared perspectives and experiences that are valuable. I hope these perspectives will contribute to a greater understanding of the issues that boards and management must navigate. 

And thank you, my colleagues, for participating in the discussion. For sharing your own experiences and interacting with our panellists. 

I spoke this morning about one of the core principles on which Singapore was founded – that we are a clean place for both business and government. I said we take this reputation seriously.  

It falls to us, as leaders of our respective businesses, to guard that reputation; to defend it and strengthen it. It is too important to lose. 

Some key points from the presentations today resonated with me, as I am sure they did with you too. 

I like Diane’s way of putting it. To put it in simple terms; do not pay bribes. Keep proper books. I think it’s very easy for everybody to understand. Regulators are watching company behaviour, and they are being aided by whistleblowers and leaks to identify allegations of wrongdoing. Nothing stays a secret.  

As we heard this morning, they have more enforcement tools than ever before, and a far-reaching network of partners to investigate and prosecute wrongdoing in a globally co-ordinated way. 

Regulators shoulder expectations on the part of governments and the wider public, who want to see corruption and illegal corporate behaviour punished. These expectations drive tougher laws, which, in turn, impose more compliance obligations on all our businesses. The net is cast wide to catch every one.    

It means we all need to constantly review and refresh our internal approach to governance and integrity. As boards, we must work out the right ways to effectively oversee management and ensure effective awareness and compliance programmes are in place. 

Integrity is so important, and the consequences for failure serious enough, that it must constantly be on our agenda. However, compliance should not be merely for compliance’s sake. We should all be looking to exceed minimum expectations, because our corporate behaviour should align with our own high ethical standards. 

As leaders of companies, whether directors or management, we do not tolerate corruption or unethical behaviour, in all its guises, anywhere we do business.  

Put simply, we lead by example. We set the tone. We drive awareness and integrity. 

Much of our conversation today has focused on particular forms of corruption, but reputation risk arises from other forms of behaviour that the community sees as equally unacceptable.  

Collusion, price-fixing, deceiving regulators, harassment and bullying by executives – in recent months, companies around the world have been exposed for misconduct and, in some cases, resulting cover-ups. Their reputations have been tarnished as a result. 

We must all guard against our companies being involved in any form of misconduct. Don’t dismiss risk because the chances of getting caught are low; the risk is too far from Singapore; or that this is just the way you have to do business in some overseas markets. None of these are acceptable excuses.  

We strengthen our companies by ensuring robust governance and compliance processes are in place. We should not turn a blind eye to these risks but encourage transparency and manage such risks as a team, as Diane said in her presentation. 

Systems and processes need to be in place to prevent, detect and rectify risks or practices that compromise integrity, or may lead to wrongdoing. 

Prevention is critical. The key to prevention, as you heard today, is principally twofold.  

First, it goes to culture. Do all your people understand why wrongdoing is unacceptable? Do they share the ethical values that our companies expect? 

It is worth asking ourselves do we have the right attributes in place to ensure our people know right from wrong. It sounds simple, but as an organisation grows in number and geographical footprint, these principles can start to blur.  

However, as I have said before, where practices are questionable and compromising integrity is required to win business or contracts, we have to be very clear – this is a line our companies must not cross. 

Second, it goes to systems that guard against wrongdoing, because it is not enough to rely on everyone following the rules. Checks and balances become all the more meaningful as we think about ways to guard against wrongdoing. 

No one cultural attribute or system will guard against wrongdoing, as we’ve heard from many of our speakers today. This is why I emphasise robustness.  

Culture can be inculcated, but needs to be overlaid with systems and processes.  

We then must have the tools to detect, and where identified, rectify, both the risk of wrongdoing, and the actual wrongdoing. Codes of conduct can be built, but must be accompanied by commitment and effective enforcement measures. 

For example – as Peter and Diane talked about – you must have a resolute commitment to enforce the standards expected of your people, at all levels of the organisation, including senior leadership. Corrective actions need to be taken where there are lapses.  

I absolutely agree with Diane’s statement that the business leader is the owner of integrity – you can’t just leave that for the lawyers to handle. 

Boards should look to restructure deferred compensation, to introduce longer term and more significant deferrals. Clawback provisions that can be triggered in the event of transgressions, potentially even for some period after senior executives leave the firm, are worth considering. It is something that Shell and other companies have done. It is something that Temasek itself has done. And I hope that our portfolio companies will do likewise. 

Where wrongdoing is identified, we all must all face our responsibilities. We must be ready to engage shareholders and stakeholders with what we have done to remedy the wrongdoing, and ensure it doesn’t recur. 

Our expectation is to identify where we have gaps between our organisation’s practices and international anti-corruption best practices, such as guidance from regulators or ISO 37001, as Mun Leong shared today. 

Action is required, first to identify gaps, then plug them, then to monitor and ensure ongoing compliance. As your business expands or rules and regulations change, monitoring will extend into where new gaps may start appearing – this needs to be an ongoing process. 

Boards should make clear to management your expectations that this task needs to be resourced adequately, with a combination of internal and relevant external expertise. 

As you heard this morning, corporations can be held legally accountable for the actions of their staff and their third party agents. The expectations on directors are also very high.  

Companies pay a high penalty for wrongdoing. The burden on individuals can also be very heavy. Fines, heavy legal fees, the stain on reputation, disqualification from directorships, even prison time: these are all possible consequences. But your relations with your loved ones carry an even heavier penalty. 

The challenge we have as business leaders is to strike the balance between risk and growth. The point is, not all growth will be good growth, if the price of achieving it compromises your reputation. 

By highlighting these important issues, we don’t intend to foster a culture of risk avoidance or hamper healthy business risk taking. Growth into new markets and business segments will require a pioneering spirit, to innovate and compete, as your companies have done so well over the years. 

But not at any cost. 

ABB’s experience has shown that companies can hold to the highest standards and still do business and grow. 

I hope the points made by all of our speakers will help us to frame the challenges of growth versus risk in the right way. As I said earlier, to help us identify that line we shall not cross, well before we get near to it. 

It takes courage to walk away from business opportunities, but it is more important to maintain and protect the reputation of your company and our nation. So it is the way you do business. 

Before I conclude today’s session, I want to touch a little on the concept of stewardship. 

At Temasek, we are very clear that our role is a trusted steward, defined in our Charter as striving for the advancement of our communities across generations

All of us, as Chairs, board directors or senior management, are stewards of our companies. We are responsible not just for performance, but the sustainable, long term future of our companies. So, as we do well, we must also do right and do good. 

We hold our companies in trust on behalf of all shareholders – not just Temasek, but others too. And not just today’s shareholders, but those who will come later, knowing they acquire shares underpinned by sustainable value. 

Today has provided us a very useful reminder on the importance of these issues. It behoves us to strengthen our culture of integrity, systems and processes – even where we think we are well covered. Robustness requires ongoing effort and vigilance.  

Take nothing for granted in a time where regulators have more powers than ever to investigate and prosecute wrongdoing. They do so on behalf of their communities, who expect the highest standards of corporate behaviour. We must not let them down. 

I think this will not be the last Roundtable on this subject for Temasek and its portfolio companies because this is too important a subject to leave to chance. And I expect that we will gather from time to time, to discuss our journey on this subject. 

So once again, let me thank our speakers, and to all of you for participating today.



1Speakers mentioned: Peter Voser, Chairman, ABB; Diane De Saint Victor, General Counsel, ABB; Bruce Yannett, Presiding Partner, Debevoise & Plimpton; Karolos Seeger, Partner, Debevoise & Plimpton; Simon Israel, Chairman, Singtel; Tan Sri Hassan Marican, Chairman, Singapore Power; Liew Mun Leong, Chairman, Surbana Jurong; Sunny Verghese, Co-founder & Group CEO, Olam International.