Your Baby Didn’t Die

I’m going to do something that I don’t usually do – I’m going to try and make the most of the fact that I’ve spent the last half decade working for a firm that specializes in a unique field of accountancy called “insolvency.” The field that I’ve worked in is in a curious place between accountancy (liquidator’s and trustees in bankruptcy are mostly trained accountants), law (most of our work involves crossing a legal minefield) and management (the process of liquidation involves management skills of having to collect debts, pacify angry creditors, deal with frustrated landlords, firing of employees – many of who may not have been paid for some time, disposing of assets and so on.). In a funny way, my day job in the insolvency trade has given me many of the skills that my side hustle of promoting a start-up accelerator requires.

One of the main reasons why I don’t blog directly about what I do during the day is because much of what happens in the business involves legal. However, wherever possible, I do try to share my experiences of dealing with people in certain situations, particularly the sad and depressing ones and I guess one of the key topics that someone who has a toe-hole in this business should address is the emotional topic of corporate insolvency and bankruptcy.

Many of us were brought up with the notion that business is entirely about making money. The concept of business is simple enough – you buy low, sell high and pocket the difference. However, as the act of buying and selling involves human interaction, the concept of business is complicated by human emotion. If you hang around business people long enough, you’ll realise that business is not just about money – it’s about something more important – the human being.

In my five-years of being in the insolvency, I’ve seen how a business becomes part of a person. I remember liquidating a company set up by an Englishman who had found himself on the wrong end of a law suit. Throughout the process he kept repeating that we were taking away 27-years of his life and it took several reminders from us and his friend, who was an Australian lawyer that he had no company left.

The man had a point. The business he had started and built up from the ground was his life’s work. A few of the people who were collecting their goods from the Company actually remarked that the man was a pioneer in his field and was effectively an industry unto himself.

However, the fact remained, the court order against him had been issued and he was unable to come to an agreeable settlement with his petitioning creditor. While there was a semblance of a functioning business, we had the power to stop him from functioning and that was that.

While it was easy to sympathise with the man, the fact of the matter was he had not made payment on a judgement debt and the creditor had every right to wind him up. A good part of my job was to handle him and to keep reminding him that he and his business were contrary to what he was feeling separate entities.  The business had died but he was alive and well enough.

Too many business people forget that part of the reason they set up a “company” in the first place is because a company is a separate legal entity from the person. While a company may contain a person and more often than not in Asia (I’ve been involved in liquidating companies as old if not older than me) a family’s life’s work, the company is not in any biological sense a living being.

If a human being dies, that’s it. If a company dies, there is a possibility that the business it was running can be revived at some stage or another.

While this may seem self-serving (considering its my main stay to get liquidation and restructuring projects for my employer), business people need to remember that there is no shame in calling in professionals to help them restructure or in many cases to shut the company down. Companies, no matter how much time you might have spent building them up, are not living beings. One should not hold onto a company for emotional and personal reasons. When the company cannot survive, it is better to let go. There are laws relating to “insolvent trading” or situations where the directors are clearly aware that the company is in obvious financial difficulties and cannot be saved. I cannot stress enough that the company is not a living being where you have a moral obligation to look after.

The same point leads to the matter of personal bankruptcy. Like corporate insolvency, bankruptcy is an issue that many try to avoid. This is particularly true in Asia, where the concept of “Face” is all important (rough translation is reputation but the meanings of “face” are often deeper). Nobody, particularly someone who is known to be successful wants to confront.

However, the reality is that many of today’s lenders insist on personal guarantees (PGs) before they make loans of a certain quantum. There are situations where bosses have pledged personal properties to the banks and in some cases, even the landlords (one of the most powerful group in Singapore’s economy) insist on personal guarantees before leasing out a place.

When this happens and the company goes down, one can expect banks and landlords to call on their PGs. In this case, one has to be clear headed. If you owe in the millions and have no prospect of ever earning that type of money, bankruptcy is the sensible option.  I had to explain to someone recently that it was better to pay thousands on personal debts of millions. While bankruptcy does impose restrictions on things like overseas travel, it also allows one breathing space to reoganise one’s financial situation. A bankrupt is perfectly capable of earning a living. Bankrupts are also entitled to certain government assistance programs like legal aid.

Having said that, bankruptcy should not and does not protect one from criminal laws. While it’s pointless to sue a bankrupt (what can you collect), anyone thinking that bankruptcy protects them from fraud charges is wrong. You can do jail time for things like fraud.

Thanks to Covid-19, the world economy is in a bad shape. The prospect of business failure and a collapse in one’s personal financial situation is an increasing reality for many. Insolvency and bankruptcy are likely prospects. While neither are pleasant things to go through, they are not medical issues that involve your personal well being. If you have to go through them, use them as situations where you can figure out how to rebuild when things improve. Work with your liquidators or bankruptcy trustees. You can still make a living and you can always rebuild even when dealing with business failure or personal bankruptcy. 

A Disreputable Son

I got to confess that I am an unsuccessful son of a very successful man. My father was at one stage, one of the top advertising film photographers in town. His success was such that it reached the stage where hiring my father was considered a higher status symbol than flying in an expatriate to do the job. I, by contrast have had a rather different checkered career path. Whereas my father went from rags to riches, I went pretty much the other way. I think of the “horny aunty” who asked if I was a reformed Yellow Ribbon Criminal because the fact that I worked as a waiter and spoke the way I did, did not quite add up. You could say that I am a “disreputable” son.

I bring this personal discussion up because it seems that I’m not the only so called “disreputable” son walking around. In the five years I’ve worked in the insolvency industry, I’ve noticed that there are plenty of them around. There are a number of boxes of documents that I’ve read through, which were once thriving enterprises that were started and built up by a tough, street wise entrepreneur, that turned south after the old man died and left things to the much better educated son. Whenever these boxes ended up on my desk, I’ve often found myself asking “what happened?” How did an enterprise go from thriving and unbeatable to a box of documents for me to go through?

Succession is what you’d call the single greatest challenges facing family businesses. How do you ensure that your good work stays and grows when the main qualification for your successors is family ties? It’s obviously succeeded as many of the greatest fortunes come from family businesses that have lasted generations. However, more often than not, a thriving enterprise ends up as a box on my desk.

With the prominence of family businesses on the global stage, it’s worth studying the things that make them tick and the things that screw them up. I live in a nation that is, in many ways, the classic family business. The current Prime Minister is the son of the Founding Prime Minister and he is also the husband of the CEO of one of our sovereign wealth funds. Our national story does offer some guidelines on what to do and what not to do.

There was never any doubt that our current Prime Minister would become Prime Minister. It was only a question of when. In fairness to the late Mr. Lee Kuan Yew, he generally demanded high standards of the people he chose to serve him and there are enough accounts to show that he made it a point that his family were not to cash in on his political office the way the families of his contemporaries in Malaysia and Indonesia had done. The current Prime Minister needed to have the brains to get into Cambridge (where he was regarded as a brilliant mathematician) and when he was in National Service, he did go through basic military training (BMT) and Officer Cadet School (OCS). He did not get 12-year deferments to study soil as a matter of national security.

Our Prime Minister was brought up knowing what there were expectations for him to perform. In a sense, the original Mr. Lee “trained” him up by making him go through national service, getting into Cambridge and when he entered politics, he did win his seat in a single member constituency (SMC).Before taking the top job, he did serve as his father’s successor’s deputy. In a sense, he was given time to grow into the job and we were prepared for him to take over.

The obvious comparison is Saudi Arabia, where the world knew King Salman would be the next king after his brother, King Abdullah died in 2015. What we were not prepared for was Mohammad Bin Salman, who came out from nowhere to be given a range of portfolios and before we knew it, there was a 30 plus something with no prior experience of running a fire hose, running the entire country.

However, while our current Prime Minister has been a competent enough manager, he’s been nothing. Unlike his predecessor who called for a “Kinder, gentler Singapore,” or his father who went through the independence struggle with the British and the Malayan Federation, our Prime Minister has never once articulated his vision.

At best he’s been guided by GDP growth figures in the same way that a CEO of a commercial company has been guided by sales targets. If there is a criticism to be leveled at this Prime Minister, it is that he’s been a little too preoccupied with the growth statistics than what those growth statistics mean on the ground. His signature policy of opening the floodgates on immigration was the prime example. It brought growth but it also brought a host of other issues, which Singapore is still trying to cope with.

Part of the responsibility with this, lies with the Old Patriarch. The younger Mr. Lee had to contend with the old one in his cabinet as “Minister Mentor” and somehow there was a never a chance to stamp his own mark onto the government. As is often argued, the problem with brilliant founders is that they never know when to let go.

One of the greatest causes of failure in families is the failure to let go. While Singapore has not been run to the ground and I don’t believe its in any danger of going down the tubes anytime soon, the unwillingness to let go has allowed the things that set Singapore apart to quietly vanish. Unless a new leader with a passion to set out a vision emerges, Singapore will decline.

Just as I started talking about my personal experiences, I shall end on them. I’m grateful my father allowed me to do my own things. All though I’ve not been the roaring success he was, my success and failures are mine. I was not molded to take over something that was not meant to be mine. I wonder how many family businesses might have survived if the founder had let go and allowed his successors to be their own people. 

Teaching Asians to Think

Just saw a letter in the Straits Times Forum page entitled “Time ripe for a pan-Asian university,” which argues that in light of the blame game for the “Covid-19” and growing anti-Chinese sentiment (which affects non-China Chinese) in the West, it was time for Asians to produce a “Pan-Asian University.” The letter can be found at:

https://www.straitstimes.com/forum/letter-of-the-week-time-ripe-for-a-pan-asian-university

This letter also reminded me of a talk I attended that was conducted by Her Excellency, Ms. Kara Owen, the High Commissioner of the United Kingdom, a few months ago (back in the pre-Circuit Breaker days). In that talk, the High Commissioner acknowledged that Singapore had sent many students to the UK and said that she hoped that there would be more student interaction between the UK and Singapore with more UK students heading to study in Singapore.

Interestingly enough, the topic of universities is one of the classic cases of Westerners having more confidence in the future of Asia than Asians. I remember telling someone of South Asian decent what the British High Commissioner had said and his only reaction was “She must be mad, why would they want to come here when they have the best universities there.” This reaction is, sadly, not a lone one. As far as most Asians are concerned, the world’s best education remains Western.

To an extent, this is true. If you look at rankings of the world’s best universities, they are, with the exception of Oxford and Cambridge, inevitably American. A look at the Times Higher Education Ranking can be found at:

https://www.timeshighereducation.com/student/best-universities/best-universities-world

These rankings are pretty entrenched and if you look at the normal Asian mindset, unlikely to change anytime soon. I look at Singapore as the prime example. We invest heavily in education. We are proud of our universities and we spend a lot of money on them. Yet, despite all our pride in our home-grown universities, our country is inevitably run by people who went to Oxbridge for a first degree and did an MBA in an American University.

There are of course, reasons for the dominance of Western Universities in the top ranks of the world’s best. For all the apparent issues with Western societies (think social unrest on American streets at the moment), they remain societies that are open to free expression and more importantly the free flow of ideas. America in particular has rolled out the welcome mat for the world’s best brains and allowed them to flourish. Furthermore, as in the case of America, there is a culture that encourages experimentation. Part of that culture includes a tolerance for failure, which remains an anathema to many Asian societies

For many Asian governments, there is also prestige in having people trained by the world’s best. Here in Singapore, we take pride in the fact that our top people have not just proven themselves at home but in world-renown places like Harvard, Cambridge and so on. Governments in places like China have also done the same.

Having said all that, the question remains – why can’t Asia produce a world-class university and why can’t we accept the idea that people from the West might want to come to study in this part of the world.

The economics are certainly making Asia a more attractive place to be. For all it’s faults, China is the world’s second largest and most dynamic economy and other Asian countries are also following suite. Business interest in the West has certainly become more focused on Asia. I remember, when Ogilvy hired Tham Khai Meng as its global creative head. While the local media made a song and dance about the first Singaporean to be a global creative head of a major ad agency, there was also another person who got promoted, which was Miles Young, who became CEO. Mr. Young cut his teeth in Asia-Pacific.

A major ad agency thought it was important to fill its key positions with people with Asian experience because it saw that this was where the future consumers would be. However, are Asians being more than just copycats of a Western Mind?

Developing a great university would be the right start to proving that the answer is no. There are positive signs. I think of John Chambers, former CEO of Cisco Systems singing the praise of the Indian Institutes of Technology (IIT). I think of the efforts of Singapore’s Universities to create a start up system in the same way that Stanford did around Silicon Valley (as a matter of disclosure, I am working for NTU’s start up and commercialization arm and I have worked for the IIT Alumni).

However, more needs to b done. Asian societies will need to encourage greater innovation, which means a culture that allows experimentation, failure and questioning of established rules. The money is there to spend on research but cultures need to match. Think of the King Abdullah University of Science and Technology (KAUST), which has the full financial backing of Saudi Aramco, the world’s most profitable company. The facilities are wonderful and its hired famous names but has the culture created innovation and great research?  

Admittedly, I didn’t shine in university but if you look at what universities do, you’ll see that they are the bedrock of producing an innovative and prosperous economy. America has ruled the world in just about every sphere. It has most of the world’s best research universities. Surely that cannot be a coincidence. Instead of sending students there, most Asian governments could do well to ask what makes American universities so good and to replicate it within. There’s no reason why there can’t be a great Asian university.