StrategicRISK reports from the Vietnam leg of AIG’s Asia-Pacific corporate governance roadshow

The regulatory environment in Vietnam is “getting significantly tougher”, according to partner in KPMG Forensic’s Dispute Advisory practice Owen Hawkes.

“The stakes are higher than in Singapore, for example,” he told a seminar held in Ho Chi Minh City today that focussed on corporate governance and management liability protection for company executives.

“In Singapore you may lose your licence, but you won’t lose your freedom.”

These comments were made during a panel discussion that covered managing regulatory risks and responding to regulatory incidents. The other participants were deputy director of the inspection department of State Securities Commission of Vietnam (SSC) Le Cong Dien; head of Hong Kong regulation and investigations at Norton Rose Fulbright David Lee; head of D&O liability Asia at AIG Jason Kelly; and head of risk and compliance at VinaCapital and the only Vietnamese board member of Pan-Asia Risk and Insurance Management Association (PARIMA) Ly Xuan Thu.

Hawkes went on to add that the key message was that prevention was better than cure.

“Ideally we want to see wrongdoing as preventable in the first place – to avoid trouble rather than clean up after it occurs,” he said.

Hawkes suggested that there were three questions for firms to ask in relation to regulatory risk: How scary is your regulator (and how severe are the penalties); how high do you value your corporate reputation; and how accountable are you to your shareholders?

He also pointed out that common problems that he sees when conducting risk assessments include firms not keeping their risk management frameworks fresh; a zero tolerance to regulatory breaches being negated by zero investment in preventing them; and blind faith shown in internal audit procedures that are not regularly tested.

Norton Rose Fulbright’s David Lee said that, in his experience, “the things that start investigations are symptoms rather than causes”.

“I think it’s important that companies create an environment where people can be whistleblowers and know that there won’t be any retaliation,” Lee said.

“You have to create a culture where people feel it is OK to put up their hands.”

Regional events
StrategicRISK’s Asia team attended today’s Vietnam leg of the corporate governance roadshow organised by AIG, in partnership with KPMG, Norton Rose Fulbright and PARIMA. Seminars are also being held in Singapore, Malaysia, Indonesia and the Philippines, Vietnam and Mainland China before wrapping up in Hong Kong on 26 June.

The seminars highlight that the importance of good corporate governance cannot be underestimated and in the light of increasing regulatory activity, should be high up on the agenda of companies, shareholders and governments alike.

Enhancing corporate governance brings increased protection for shareholders, additional security to employees and directors, competitive advantage for companies in the war for talent and governments as they seek to create an attractive environment to entice investment.

Correspondingly, the risks and costs that result from inadequate attention to good corporate governance can be significant, from a financial and reputational perspective.

Commenting on the seminar series, AIG’s Jason Kelly noted that the aim of the events was to raise awareness of corporate governance among risk managers, and provide practical and valuable advice on how to get organisations ready should a regulator come knocking.

“We believe that having a good D&O policy is one important step towards good corporate governance,” he said.

General manager of AIG Vietnam Susan Loftus added that regulatory investigations had moved to the forefront of exposures that board members faced in Vietnam.

“The right preparation in this increasingly stronger regulatory environment is essential to running a successful and profitable organisation,” she said.