by Khush Chopra
The Monetary Authority of Singapore (MAS) has declared that there was no form of ‘impropriety’ found in DBS’ arrangement of the sale of perpetual securities by Hyflux in 2016.
This is the problem in Singapore. Without any transparency or public inquiry, DBS is cleared willy nilly. Just like that. These teflon coated elite darlings can simply do no wrong. In the incestuous pond that our elite establishment has become, they will not bite their own.
The incestuous cess pit that our elite establishment is so badly mired in conflicts of interest that it’s just no longer funny and a real solution to this “own self clear own self” outcomes needs to be found.
Let’s look at these numbers:
Lehman Brothers
- 10,000 retail investors
- Over S$500 million involved
Hyflux
- 34,000 retail investors
- S$900 million involved
How many retail investors will be involved and what amounts will be involved the next time? That is the billion dollar question.
The trajectory is very clear. More and more Singaporean’s are investing their hard earned savings on the say so of the trusted local banks.
Is there a pattern emerging?
Singapore’s biggest bank, DBS was among the banks that sold Lehman products to its customers, many of whom were simple, working-class people looking for safe investments for their retirement savings.
It is important for everyone to note this salient fact. While DBS raised funds from retail investors they themselves did not fund Hyflux. In fact not one local bank funded Hyflux. It was Malaysian Maybank that funded Hyflux.
Why is that? Why were our local banks so prescient about keeping their money away from Hyflux but were quite happy to get retail investors to invest in Hyflux?
Just like Olam before and Lehman brothers I think that the Government will probably step in with a massive bailout BUT without a single hair on the head of the CEO’s and others responsible being touched in what has become stand operational procedures for such fiascos. It’s election season after all. They will see this as an opportunity to score political points with retail investors.
But look at the pattern that appears to be emerging. Banks sell junk to retail investors and make tons of money and then it all explodes and the Government steps in.
In reality what we see is a Government that is actually bailing out our banks not the retail investors. The Government bailouts in effect act as a subsidy for the bank’s and otherwise encourage banks like DBS to sell junk to retail investors.
I call for an appropriate transparent and public Commission of Inquiry to be formed to investigate exactly what happened and to make recommendations to prevent our retail investors from getting hurt so badly again.
This Inquiry will be separate and distinct from any legal action that retail investors may want to institute against DBS and/or Hyflux. That would be a separate matter from the inquiry which should focus on ways and means to protect Singaporean retail investors.
While the PAP Government cannot protect investors from price and regulatory risks and investors have to keep their eyes open and judge for themselves whether the returns are adequate to justify the risks, no retail investor takes the risk of being sold junk not fit for purpose.
This was first published on Mr Chopra’s Facebook page and reproduced with permission
