​Settlement shows robustness of S'pore regulations

The settlement by Goldman Sachs for its involvement in the 1Malaysia Development Berhad (1MDB) saga shows the robustness of Singapore's legal and regulatory framework, observers noted.

They said it also highlights the Singapore authorities' acumen to penalise the bank for lack of good corporate governance while keeping its access to the market open to deal making and risk taking.

Professor Foo Maw Der of Nanyang Business School said: "The whole Goldman Sachs saga and how the Singapore authorities dealt with it, in my view, strengthens Singapore's position as a glo-bal financial player."

Goldman Sachs Singapore - which will pay a record US$122 million (S$165 million) to the Singapore Government as a settlement penalty - dispenses investment banking, securities and investment management services from its office in Raffles Link.

Refinitiv ranked Goldman Sachs second only to DBS Bank in Singapore for underwriting equity capital market deals in the first nine months of 2020, with a 23.2 per cent market share and US$1.14 billion in related proceeds.

Prof Foo said: "It is a tough balancing act. It goes to show that our regulatory frameworks and authorities do not tolerate financial deals that are shady but at the same do not want to over-regulate and control such that financial deal making becomes onerous."

Assistant Professor of Finance Aurobindo Ghosh of Singapore Management University's Lee Kong Chian School of Business said Singapore's financial regulators have often been taken as a role model for enforcement of law without being overly harsh on meting out punitive damages to companies.

"The challenge for the regulators is to balance between the supervisory or lighter-touch role that could encourage innovative businesses to take on opportunities and meting out penalties for non-adherence to the strict compliance-based ecosystem that could act as a deterrent to risk taking," he said.

Associate Professor Lawrence Loh of the National University of Singapore Business School said Goldman Sachs is one of the largest global investment banks, yet the settlement shows it is not too big to escape penalty.

"This is a good signal that will help our reputation as a financial hub," he said.

The settlement by Goldman Sachs does not mean the bank is completely off the hook.

The settlement is under a deferred prosecution agreement (DAP) its New York-based parent entered into with the US Justice Department. It typically means the bank will not be prosecuted if it fulfils certain conditions in the DAP.

Singapore's Commercial Affairs Department has also served the bank's Singapore office with a 36-month "conditional warning", which means the bank must not commit any wrongdoing during a stipulated period.

Prof Foo said that if Goldman Sachs is found to have committed any wrongdoing within that period, it can be prosecuted for the original crime.

Source: The Straits Times, 24 Oct 2020