SINGAPORE - Good governance, ethics and risk-management enable organisations to function and grow, said Mr Edwin Tong, Minister for Culture, Community and Youth and Second Minister for Law, on Thursday (Nov 5).
Mr Tong was addressing a virtual audience at the launch of a new social enterprise founded under the RHT Rajan Menon Foundation, a registered charity.
The RHT Grace Institute, as it is called, aims to uphold governance, risk management, anti-money laundering, compliance and ethics as five core business principles.
Mr Tong said: "These five principles form the backbone of any healthy organisation.
"We have seen how the lack of these principles can lead to the demise of seemingly large and strong organisations, sometimes almost overnight, and often with devastating impact."
He cited the Enron scandal in 2001, where the company went bankrupt due to accounting fraud and corruption, and the Lehman Brothers collapse in 2008 that caused global markets to plummet.
"So the importance of these principles cannot be underestimated or overemphasised," he said. "They help to protect investments, jobs and lives of people. They also enable the organisation to grow."
He added that surveys have found that investors will pay more for the shares of a well-managed company as they believe that this will bring them higher rewards.
"Consumers are also more willing to buy their products and services if they identify with their ideals, values and practices. Conversely, companies can lose customers quickly if they display poor ethical behaviours."
He noted that Singapore is one of the easiest places to do business in the world, but it does not mean that it is "lax", adding that firms set up shop here because of trust in various systems.
"To maintain that trust, we do require companies incorporated in Singapore to adhere to strict regulatory compliance on areas such as governance, risk management (and) anti-money laundering.
"The obligations increase accountability and transparency and assure the investors, shareholders and other companies of the prudential rigour of the company before they decide to invest in or work together. They protect the companies, their investors, their shareholders, their employees and families - everybody."
The new institute has developed an app so users can connect and share experiences and best practices.
Temasek Foundation Cares chairman Richard Magnus said at the launch: "Organisations in the 21st century are exposed to dynamic changes, including geopolitical and protective policies. Corporations rise and fall based on their values, business culture, and associated actions.
"Changing corporate values, breeding a principled environment, and adapting customised training based on organisational need are paramount for the success of these organisations."
He added that this is where the new institute can help to design and develop training that meets the changing needs of corporations.