MPs’ Directorships and Conflict of Interest

by singaporearmchaircritic

In response to my previous blog post on our incumbent MPs’ (Members of Parliament) attendance in Parliament, some readers on The Online Citizen’s Facebook page brought up the issue of MPs’ directorships. They attribute MPs’ frequent absences in Parliament to the number of directorships they hold.

One reader, for instance, questions:

Are the MPs having too many commitments? Shouldn’t there be a line draw something like a MP can only hold 1 full time job or 5 directorships etc, if not, given one day only has 24 hours, how can they have the integrity and still managed to hold so many responsibility [sic]?

Another argues:

The problem is that MPs are part timers. The constitution must be amended to ensure all law makers are full timers. One will truly see who are the committed ones and the parasites. We as citizens should demand this type of Parliament. We want full timers to look after our interest and not part timers or even no timers to sit in Parliament as MP and yet hold multiple directorships. The ones that hold multiple directorships to me are in Parliament for self gain. Before being MP maybe no directorships but after become MP have multiple directorships. Am I the only one to smell something is not right? Which ever MP holds multiple directorship “kee chui” and please don’t stand for the next election [sic].

While it is understandable that some of us may share these concerns, there is really no necessary correlation between the number of commitments an MP has – such as a full-time job and directorships – and his or her attendance in Parliament.

Among the MPs with exemplary attendance are several Ministers, including Prime Minister Lee Hsien Loong, who were present at every single Parliament sitting from October 2011 despite their dual roles and heavier workload.

That is to say an MP’s frequent absences in Parliament may well be a reflection of his poor time management skills, or worse, a lackadaisical attitude towards his roles as a lawmaker and his constituents’ representative.

Either way, voters should give serious thought to whether he deserves your vote in the next General Election.

The Real Issue with MPs Holding Directorships

The problem with MPs holding multiple directorships, therefore, is not that they will necessarily be less committed to their duties as elected MPs.

The troubling issue here is the potential conflict of interest between their roles as MPs and as directors of private and/or publicly listed companies.

Spelling out the rules of prudence for PAP’s MPs, a letter issued by the Prime Minister’s Office after 2011 General Election cautions MPs:

You should not solicit for Directorships in any companies, lest you appear to be exploiting your political position to benefit yourself.

You should not accept directorships where the company just wants to dress up the board with a PAP MP or two, in order to look more respectable.

Some grassroots leaders are businessmen who own or manage companies. You should not sit on any boards of companies owned or chaired by grassroots leaders appointed by you, so as to avoid the perception that you are obligated to them or advancing their business interests…

Ensure that the company understands that you are doing so strictly in your private capacity, and will not use your public position to champion the interests of the company, or lobby the government on its behalf…

Specifically, just like anyone else contemplating a Directorship, you should ask yourself…

Will you face any conflicts of interest, and if so can you manage them? (See Rules of Prudence, nos. 14-22)

PAP MPs have to disclose to the Whip all the Directorships they hold and the director’s fees or benefits in kind they receive (Rules of Prudence). However, these information are neither published nor readily available to the public and the electorate.

Way back in 2004, The Straits Times polled 22 PAP MPs (10th Parliament) about whether there should be a cap to the number of directorships an MP can hold and whether such information should be accessible to the public (“Most MPs say no to cap on board seats,” 8 June 2004; “MPs split on publishing directorships,” 8 June 2004).

Only three of the 22 MPs polled agreed that there should be a cap on the number of directorships one could hold.

Said Ang Mo Kio GRC Inderjit Singh, “It won’t address the real issue, which is that we want MPs to effectively carry out all the duties they undertake, whether government-related or private” (“Most MPs say no to cap on board seats,” 8 June 2004).

Furthermore, 10 MPs were against publishing information on their directorships. They either claimed that declaring the information to the Whip was itself adequate, or said the information was already “public.”

MPs’ directorships in listed firms could be found via the Singapore Exchange site whereas those in privately held firms could be searched on the BizNet database at a fee.

According to the ST report, the MPs who held the most directorships in 2004 were Bukit Timah MP Wang Kai Yuen and Tampinese GRC MP Ong Kian Min, each with 10 directorships (“Most MPs say no to cap on board seats,” 8 June 2004).

Little Transparency on MPs’ Directorships

There is scant information on the current batch of MPs (12th Parliament) and their directorships. After GE 2011, a report in TODAY wrote, “It appears that fewer Members of Parliament are holding company directorships now compared to the past” (“Are fewer MPs holding company directorships now?” 8 June 2011).

Reading through the report, however, I find little evidence to support this statement.

Of the 52 MPs queried about the directorships they held, 16 responded positively whereas 19 did not reply or declined to comment.

The reporter then jumped to the conclusion that there might be fewer MPs with company directorships on the highly suspect presumption that the 19 who had not disclosed anything were NOT holding directorships. For all we know, the opposite may be true.

Such secrecy over MPs’ paid directorships is unacceptable and undesirable for various reasons.

While there is some truth to the argument that MPs’ experience as directors in certain companies may enhance their understanding of the ground or come in handy when they serve their constituents, it is also possible that the holding of directorships is but a self-serving act.

We cannot dismiss the possibility that some MPs may be attracted to the director’s fees, which, ten years ago, can already range from $10,000 to over $70,000 per year (“MPs split on publishing directorships,” 8 June 2004).

This is, of course, on top of an MP’s annual allowance of $192,500 ($16,041 per month).

Assuming that an MP holds 5 directorships that each pays an average annual fee of $40,000, his total remuneration of $200,000 from the directorships would have exceeded his annual MP allowance.

Not including the remuneration from the MP’s full-time job, his income will be $392,500 per year or $32,708 per month.

This is more than 6 times the average monthly income of Singaporeans.

If an MP holds 10 directorships that each pays an average annual fee of $40,000, he will be earning an income of $592,500 per year or $49,375 per month, which is close to 10 times the average monthly income of Singaporeans.

As there is no cap to the number of directorships an MP can hold and the PAP does not “vet or approve such decisions” (Rules of Prudence, no. 19), what is there to stop a self-serving MP from milking his public position and making a lucrative sideline by indiscriminately serving as board directors? His integrity???

The fact that a PAP MP could make more money from his directorships than his MP job also appears to contradict the principles of “clean wage with no hidden perks” and the ethos of sacrifice in public service (see White Paper on government salaries).

More importantly, without access to information on MPs’ directorships, how can we voters be sure that there is no conflict of interest between the role of an MP and his role as a board director?

MPs are, after all, elected representatives of the people and their conduct while in office should be subject to the scrutiny of their constituents.

It is perhaps time for the PAP government to consider an earlier call to legislate codes of conduct for MPs and ministers.

Short of that, the least the government should do is to publish information on MPs’ directorships and leave it to the public to keep an eye on their MPs’ conduct.