The Ming Yi fiasco: a sombre lesson in a system which relies on “trust”

The Ming Yi fiasco: a sombre lesson in a system which relies on “trust”

I was absolutely dumbfounded when I read in the Straits Times that the management committee of one of Singapore’s largest charities - Ren Ci did not know how much they were paying their chief executive. (read article here)

They could have asked, admitted Ren Ci Hospital’s committee member Chan Ching Oi, but they did not.

Instead, they let its CEO and founder Ming Yi decide on what he deemed to be a ‘fair’ salary, Mrs Chan said on the witness stand yesterday, while testifying on the third day of a criminal trial against the Buddhist monk.

Ren Ci is the second largest charity in Singapore which was set up by the charismatic Ming Yi in 1991.

How can a charity which deals with millions of dollars of donations from the public be so sloppy and careless when it comes to corporate governance?

Mrs Chan’s lame defence that Ren Ci’s focus in the first decade had been to ‘get things done’, with less emphasis on corporate governance issues does not exonerate her or fellow directors on the management committee from blame.

As much as Ming Yi is culpable for the mess Ren Ci is in now, the directors should be held responsible for being negligent in the discharge of their duties and failure to detect deficiencies within the system.

Mrs Chan, who has been Ren Ci’s honorary secretary since it started in 1994, admitted she did not know how much Ming Yi’s salary was and that the management did not pry into it.

She said the committee trusted Ming Yi would give himself a reasonable salary, pegged to that of other hospital CEOs and also based on the scope of work undertaken by him for the hospital.

Ren Ci’s management committee might have refrained from asking Ming Yi to reveal his salary out of respect for him. He was after all a highly venerated buddhist monk in Singapore before the fiasco broke out.

Ren Ci’s donors, patients, staff and directors all trusted Ming Yi. He had worked tirelessly to build Ren Ci to its present state from nothing. His name was synonymous with Ren Ci and he was its largest fund raiser, having risked his life performing dangerous stunts in charity shows. Who would expect him to raise fix his own salary and to raise it arbitrarily without discussing with anybody?

The Ming Yi fiasco has proven to Singaporeans again beyond doubt that a system which relies on trust alone is a faulty one open to abuse. When there are no checks and balances in the system, a powerful, charistmatic or influential leader will be given a blank cheque to run the organization without having to account to anybody. And that lies the real danger. Can we expect human beings to check on themselves?

Had Ren Ci instituted a proper system to ensure its CEO answer to the Board of Directors, Ming Yi would not have been tempted to make such a blunder in the first place. He should know his actions were wrong, but he still went ahead because nobody would find out.

When it comes to managing the nation’s treasury which is a million times more than Ren Ci’s funds, all more should there be stringent measures put in place to ensure that the people in charge of it are held accountable.

No man is above Singapore, even if he is the nation’s founding father who had made tremendous contributions to its growth and development. Can our present system stand up to scrutiny?

Our two sovereign wealth funds - Temasek and GIC are supposed to manage our country’s reserves. They are owned by the Ministry of Finance.

Both funds are run by a Board of Directors like any other corporate companies. However, we have no idea about the following:

1. Who is responsible for deciding the pay and bonuses of these directors and executives?

2. What are their salaries, bonuses and perks?

3. Do these executives hold directorships in other companies?

These are legitimate questions which every Singaporean ought to ask the government. Unfortunately, it is unlikely we will obtain an answer from the Minister of Finance Tharman who appears to favor a system based on “trust”.

Let us recap this exchange between Inderjit Singh and Tharman on 5 February 2009 in Parliament on the hasty approval of the use of our reserves by the President:

Inderjit Singh:

What’s missing is the process that the President took after he got briefed by the government. If we could get a sense of what they discussed and what process they went through to decide, then this may clear many of these questions.”

Tharman:

“I’m not sure why it is relevant. At the end of the day, this is a system that is different from Norway and Australia, where as much detail as possible is provided. This is a system that relies on trust in the individuals who are in charge including those appointed to the CPA and the Elected President. Do you trust them? Have they made decisions wisely? Has the government been acting responsibly?”

Does Mr Tharman have trust in the individuals who are in charge of Temasek and GIC now? Having trust in one another is a matter of personal conviction. It should not be confused with accountability and transparency.

As the minister in charge of managing the nation’s treasury, Minister Tharman should know that “trust” is not enough to ensure that our precious reserves are properly managed.

A system which does not hold leaders accountable for their actions is a ticking time bomb waiting to explode upon us. Who can promise that the leaders in the future will be as honest and incorruptible as the present generation?

Human nature is unpredictable. People do change. Rules and regulations can be bent at will easily too. Only a system having multiple layers of checks and balances will prevent power from being concentrated in the hands of one person or group which will keep possible abuses to a minimum.

There is no reason why Temasek and GIC cannot subject themselves to external audits. In fact, the Ministry of Finance should engage a reputable accounting firm to audit their accounts on a yearly basis and publish the report online for the public to see.

Ren Ci had taught us another sombre lesson in the fallacy that “trust” in individuals alone will make the government act responsibly. Trust must be based on having adequate checks and balances in the system to hold the executive accountable for its actions without which it is merely a hollow word with no significance.

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