April (US) A study conducted by executive search and board recruitment firm James Drury-Partners on board service

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1 April 2007 Study Finds Fewer CEOs Serving On Boards Former Livedoor Executives Sentenced; Company Fined Record $2.4m Thai Stock Exchange Tightens Audit Committee Regulations Former CFO Of DVI Ordered To Pay $51m For Fraud And Sarbox Breach South Korean Fund Managers Become More Active In Corporate Management Issues Ex-IT Head Of BaFin Charged With Embezzling 6.8m Smithsonian Chief Resigns Amid Criticisms Of Excessive Spending Fu Yu Files Report Against Former Chairman Over Possible Breaches Singapore Polo Club, President Face Lawsuits Study Finds Fewer CEOs Serving On Boards (US) A study conducted by executive search and board recruitment firm James Drury-Partners on board service patterns of active Fortune 500 CEOs over the past 16 years has found that the number of active CEOs on corporate boards has declined dramatically from 72% in 1990 to 53% in The study also found that active CEOs who continue to serve have reduced their outside board commitments from an average of 2.2 boards to 1.4 boards, a decline of 36%. It was also found that in 1990, eight of the CEOs running top 10 Fortune 500 companies served on outside boards, filling 16 board seats. In 2006, eight of the top 10 CEOs sit on no outside boards whatsoever. The study said the shrinking pool of the most experienced and talented director candidates represents a major weakening of the American governance system. The most respected directors are leaving the playing field, Jim Drury, the search firm's founder and CEO, said in an interview. Corporate governance watchdogs disagree. To me this is very good news, said Nell Minow, editor of The Corporate Library, a corporate governance research organisation. As a group, active CEOs of public companies haven't been particularly good directors, she said. It could be they're too busy to provide oversight or they're overly deferential to another CEO. ~ Adapted from The Flight of the American CEO, ; Fewer CEOs are directors: A disaster or a blessing?, 18 March 2007.

2 Thai Stock Exchange Tightens Audit Committee Regulations (THAILAND) The Board of Governors of the Stock Exchange of Thailand (SET) has amended requirements affecting audit committees of listed companies in a bid to reduce redundancy between the roles of the SET and the Securities and Exchange Commission (SEC). While SEC oversees the audit committee members' qualifications, the Exchange will now supervise their roles and responsibilities. SET will clarify the roles and responsibilities of audit committees of listed firms in four areas: independence of auditors and the firm's internal audit; consideration by audit committees of connected transactions or those which may involve conflicts of interest; new minimum requirements for audit committee reports; and a new requirement to report to SET where an audit committee member resigns or is dismissed. The amendments have undergone consultation with relevant parties including representatives from SEC, SET, Listed Companies Association, Investment Banking Club, Thai Investors Association and legal experts. The Exchange will now submit them to SEC for approval. ~ Adapted from Thailand: Thai bourse tightens up audit committee regulations, Thai News Service, 20 March South Korean Fund Managers Become More Active In Corporate Management Issues (SOUTH KOREA) South Korea's fund managers are becoming increasingly vocal about corporate management issues and are actively casting their ballots to be heard at annual shareholders' meetings, in contrast to only a couple of years ago when they were criticised for being a rubber stamp on most corporate policies, ignoring their fiduciary duty to protect the interests of their investors. The transformation has mainly been brought about by their growing influence in the local stock market due to the rising popularity of mutual funds. Korean companies had not paid much attention to shareholder value until domestic activist funds, such as the Korea Corporate Governance Fund (KCGF), began to appear last year. Initiated by shareholder activist Jang Ha-sung, the dean of Korea University's business school and a corporate governance guru, the fund invests mostly in small-cap companies that are undervalued due to poor corporate governance. It is pressuring management to stop opaque business deals with related parties of controlling shareholders, to strengthen public disclosures and reinforce investor relations activities. KCGF has inspired other domestic fund managers to be more active, such as Shinyoung Investment Management which recently cast a dissenting vote on an outside director candidate at Ilshin Spinning, saying that the company's candidate missed more than half of its board meetings. According to analysts, rising shareholder activism would help resolve the Korea discount which restrains prices. The biggest reasons for the Korea discount are poor corporate governance and a lack of management transparency. Domestic fund managers' active stance could lower the discount rate and bring a re-rating of the local stock market, says Lee Chai-won, chief investment officer at Korea Value Asset Management. However, critics say big asset managers are changing slowly due to their business relations with their corporate customers. According to the Korea Exchange, domestic asset managers voted for more than 98 per cent of the AGM agenda last year, casting dissenting votes only in exceptional cases. ~ Adapted from Song Jung-a says asset managers are no

3 longer happy to rubber stamp corporate policies, Financial Times, 19 March Smithsonian Chief Resigns Amid Criticisms Of Excessive Spending (WASHINGTON) Lawrence Small, top official of the prestigious Smithsonian Institution, has resigned in the wake of reports that he inappropriately spent hundreds of thousands of dollars of the organisation's money. An internal audit had found that Small charged the Smithsonian more than $1.1 million for agreeing to use his 6,500-squarefoot home for official functions. The housing expenses over several years included $273,000 for housekeeping, $2,535 to clean a chandelier and $12,000 for service on his backyard swimming pool. The $1 billion annual budget for the Smithsonian, which comprises world-renowned research institutions and 19 museums and galleries, is 70 percent taxpayer supported, with the rest coming from private donors and commercial ventures. The announcement of Small s resignation was made four days after Sen. Charles E. Grassley, R-Iowa, persuaded the Senate to freeze a $17 million increase in the Smithsonian s funding, singling out what he called out-ofcontrol spending. During his seven-year tenure, Small nearly tripled his initial salary of $330,000. In response to criticism, the Smithsonian Board of Regents announced this month that they were setting up a new committee on governance, to be chaired by Patty Stonesifer, who co-chairs the Bill and Melinda Gates Foundation and has been on the Smithsonian board since December The new committee will compare the Smithsonian s governance with that of other institutions and present a best practices plan to the full board. ~ Adapted from Lavish spending chief quits Smithsonian, 27 March Former Livedoor Executives Sentenced; Company Fined Record $2.4m (TOKYO) Takafumi Horie, founder and former CEO of Japanese Internet services firm Livedoor Co, has been sentenced to two and a half years in prison for violating securities laws. Four other former executives were also convicted for inflating earnings reports. The executives were accused of setting up a number of funds to do stock swaps and other stock trading to pad their books. According to prosecutors, the complex set of schemes fabricated 5 billion yen in profit. Former CFO chief financial officer Ryoji Miyauchi was sentenced to 20 months; Fumito Okamoto, a former director, and Osanari Nakamura, former operating officer were both given a suspended prison term of one and a half years; and Fumito Kumagai, former representative director, was given a suspended prison term of one year. Horie is appealing the ruling and was released on a 500 million yen ($4.3 million) bond. The Tokyo District Court also sentenced Taishin Hisano, a certified public accountant, to 10 months in prison for taking part in the accounting fraud. According to the Japanese Institute of Certified Public Accountants, he is the first CPA to be given a custodial sentence for Securities and Exchange Law violations. The court also sentenced another CPA, Motoshi Kobayashi, to one year in prison with a four-year suspension for securities law violations. Both accountants had been indicted without arrest for certifying Livedoor's group earnings report for the business

4 year to September 2004 while they were allegedly aware of the firm's falsification of financial figures. Meanwhile, Livedoor Co. was ordered to pay a fine of 280 million yen, or $2.4 million - the largest fine ever in corporate Japanese history for violating securities laws. The Tokyo District Court also fined its subsidiary Livedoor Marketing $338,000. ~ Adapted from Japanese Internet wiz to go to prison for fraud, 16 March 2007; Four former Livedoor executives sentenced, 22 March 2007; Four ex-livedoor execs convicted, 22 March 2007; Internet startup Livedoor fined $2.4m, 23 March 2007; Livedoor auditor gets 10 months/internet firm hit with record fine; 2nd CPA handed suspended sentence, co.jp, 24 March Former CFO Of DVI Ordered To Pay $51m For Fraud And Sarbox Breach (US) Steven Garfinkel, former chief financial officer of defunct health-care finance company DVI, has been sentenced to 30 months in prison and ordered to pay $51 million in restitution for mail fraud and for violating the provision of Sarbanes-Oxley that requires CEOs and CFOs to certify financial reports filed with the Securities and Exchange Commission. According to prosecutors, Garfinkel had pledged the same assets as collateral for two different bank loans with Fleet Bank. The finance chief had then falsely certified a quarterly report. Though there was no evidence that Garfinkel embezzled or otherwise used DVI's money improperly for his own gain, prosecutors argued that he profited from the scheme by keeping his job, which netted him as much as $900,000 a year. The sentencing judge ordered Garfinkel to pay $200 a month toward restitution when he leaves prison. DVI had filed for Chapter 11 bankruptcy protection in ~ Adapted from CFO gets 30 months in fraud case, Associated Press, 28 March 2007; CFO to pay $51m for fraud, sarbox breach, 29 March Ex-IT Head Of BaFin Charged With Embezzling 6.8m (GERMANY) Michael Raumann, former head of information technology at Germany's financial watchdog BaFin, and Helmut Feuerstein, the manager of a consulting firm, have been charged with pocketing more than 6.8 million from the financial services regulator by forging information technology orders. The state prosecutor in Bonn, where BaFin is based, charged Raumann with 249 counts of Untreue, or breach of his fiduciary duties, and several counts of accepting bribes and tax evasion. The prosecutor also said Raumann received high-end electronics equipment worth 880,000 for his personal use, in return for placing fictitious orders with suppliers. He was arrested in April last year, following a nine-month investigation by the Federal Audit Office. Feuerstein has been charged with 215 counts of breaching his fiduciary duties and accepting bribes. A third person who owned a software company and allegedly supplied Raumann with some equipment and accepted falsified orders is being investigated. ~ Adapted from German Prosecutors Claim Ex-Bafin Manager Took EU6.8 Million, 26 March 2007; Bafin director charged with 6.8m fraud, 26 March 2007.

5 Fu Yu Files Report Against Former Chairman Over Possible Breaches (SINGAPORE) Mainboard-listed plastics manufacturer Fu Yu Corporation has filed a police report against former chairman and founder Lui Choon Hay over possible breaches of Sections 156 and 157 of the Companies Act. These sections deal with a director's duty to disclose to the board any interests he may have in companies or transactions that may be in conflict with his duties to the board. According to a statement released by Fu Yu, Lui had told the board he had 'facilitated advances of funds to his two daughters, one of whom is a shareholder of Great Success Investment'. Great Success Investment is a holding company of Great Success Electronics Company, which competes with Fu Yu Moulding and Tooling in Dongguan, China. However, a request by the board for full and unrestricted access to the financial and other records of Great Success Electronics Company had been declined by Lui. Due to this, Fu Yu said that it has been unable to determine the financial impact of Lui's actions in "aiding the start-up and funding" of its rival. Lui resigned as executive chairman and CEO of Fu Yu in last December and resigned as director in January. ~ Adapted from Fu Yu: ex-chairman may have breached disclosure laws, Business Times Singapore, 23 March 2007; Fu Yu founder helped daughter set up rival firm, Straits Times Singapore, 23 March 2007; Former chief executive may have helped in funding of rival: Fu Yu, Today (Singapore), 23 March Singapore Polo Club, President Face Lawsuits (SINGAPORE) The Singapore Polo Club and its president Wee Tiong Han are being sued by a member and a former president of the club in separate lawsuits over wrongful dismissal and defamation respectively. In one suit, businessman Frederick Rickard Robin William Hogberg is suing the club for wrongfully declaring him no longer a member of the club without giving him reasonable opportunity to respond to the charges. Hogberg claims that in a letter to Wee in early March 2006, he had expressed disappointment at Wee s performance as president and had subsequently put up his own slate of candidates for the club's election of office bearers towards the end of March that year. Then at a committee meeting held in late March 2006 without his presence, he claims that the club s committee declared that he had ceased to be a charter corporate nominee member and a member of the 2005/06 committee with immediate effect, on the grounds that he was neither a director, partner or employee of the charter corporate member that had nominated him. Hogberg claims that when he left his previous employer in 2003 after a serious legal dispute, he had duly informed the secretary to the club's general manager of the change of employer and that around mid-2004, he informed Wee, who was then the club's honorary secretary that he intended to transfer his charter corporate membership from his previous employer once the legal dispute was settled. Hogberg claims that after a discussion between Wee and then club president Brian John Miller, they had agreed to let him transfer the membership once the dispute had settled and that he could continue as a member.

6 Hogberg claims that he had been singled out for breaching the club's rules, although it had previously allowed persons who were no longer eligible to continue as charter corporate nominees. The decision was also made just five days before the club's annual general meeting and was therefore timed, he claimed, to prevent him and his slate from running against the incumbents. Hogberg also claims that when he attempted to transfer his corporate membership last year, the club had rejected the application despite having approved similar applications previously. Miller's suit against Wee arose from inquiries he made at the AGM about Hogberg's status. According to Miller, the replies by Wee and the minutes of the meeting which were posted on the club's notice board, depicted him as a liar and as having knowingly broken the rules of the club's constitution, and had conducted himself in a manner unbecoming of a committee member. He claims that as a result, he 'has been gravely injured in his character and reputation, and has suffered considerable distress, hurt and embarrassment. ~ Adapted from Controversies surface at S pore Polo Club, Business Times Singapore, 26 March This newsletter is prepared by the Corporate Governance & Financial Reporting Centre, NUS Business School, National University of Singapore and sponsored by Federal Insurance Company (FIC), Singapore. Federal Insurance Company is the largest writing company of the Chubb Group of Insurance Companies, and as at 1st April 2004, carries a financial rating of AA by S&P and A++ by AM Best. Federal Insurance Company is a leading insurer for Directors and Officers Liability Insurance. For more information, please contact their insurance broker or agent or Federal Insurance Company,18 Cross Street, #11-08 China Square Central, Singapore Telephone: +(65) , Facsimile: +(65) To unsubscribe from this newsletter service, please send us an stating your address at which this e-newsletter was sent. The news summaries are based on original reports in various media including newspapers, publications, websites and other sources. The views, opinions and content expressed herein are those of the authors and do not necessarily represent the views of National University of Singapore, NUS Business School, Corporate Governance and Financial Reporting Centre, or any insurer within the Chubb Group of Insurance Companies. The information should not be relied on as legal or other professional advice or a definitive statement of the law in any jurisdiction. For such advice, an applicant, insured, listener or reader should consult their own legal counsel or other professional adviser. It is not our intention to infringe on any copyrights in any way. Should we have done so unintentionally, please let us know by with the necessary guidelines. Thank you. Corporate Governance and Financial Reporting Centre, NUS Business School, 1 Business Link, Singapore Telephone: +(65) , Fax: +(65) , cgfrc@nus.edu.sg