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Public Governance Needs Re-evaluation
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Asia has been hit recently by three irregularities involving an upstart IT entrepreneur, a renowned scientist and a national charity in its three most developed economies: Japan, the Republic of Korea (ROK) and Singapore.

All three examples point to the need for these nations to examine key issues of their governance.

In Japan, the Livedoor scandal broke out amidst a spectacular fraud. The now-disgraced IT entrepreneur, Takafumi Horie was accused by his former chief financial officer of cooking the books, so as to buy a local baseball team and propel himself into celebrity status.

This scandal even struck political chords, as Japanese Prime Minister Junichiro Koizumi had to answer to Parliament on how and why he and the ruling LDP had even been taken in to sponsor Horie as a LDP candidate during the last September's legislative elections.

But more importantly, a lively debate erupted in Japan over the increasing gap between the rich and the poor, and the urgent necessity to close or narrow this gap, for social stability and ethical reasons.

At 33, Horie had become a national hero of sorts and a symbol of both Japan's re-emergence as an economic power. He was also an example of the new rising class of techno-entrepreneurs, who also symbolize Koizumi's new Japan.

This Livedoor scandal affected Japanese stocks and the Tokyo Stock Exchange, which took a spectacular plunge the day after it unfolded.

It could also cause further ripples at a time when Japanese society seems to be in increasing angst over a host of social and political issues, ranging from constitutional reforms, royal succession and its future role in engaging the world in tax cuts, domestic reforms and its crucial relations with China and the Koreas.

In the ROK, a recent scandal broke out around controversial scientist Hwang Woo Suk, over the admittance that his ground-breaking stem cell research was indeed fraud.

Following his apology for a moot 2004 claim of deriving the world's first stem cell from a cloned human embryo, as well as a subsequent 2005 paper saying he could speed up the stem cell deriving process, Hwang came out publicly to blame his researchers, who he alleged had misled him.

This fall from grace of a national hero in a country known for its excellence and meritocracy was stunning. Some observers surmised that this national disgrace had emanated from Seoul's traditional meritocratic pressure thanks to its no-time-to-lose drive for success, amidst rising pride.

Korean society may be changing too fast, exemplified by the Hwang scandal, as the ROK's soul search amidst globalization and a fast-developing economy.

Near the end of last year, Singapore was also hit by a scandal in one of its most prominent national charities.

The National Kidney Foundation (NKF) saga involved its former CEO, TT Durai, when he took a journalist from the nation's top English paper, the Straits Times, to court after it alleged Durai's extravagant lifestyle at the national charity.

Durai, a man respected for his fund-raising prowess and entrepreneurship ended up paying the political price when he only lost the case and later got investigated by the Corrupt Practices Investigation Bureau (or CPIB).

The whole NKF Board was forced to resign, as investigations were launched, but the Health Minister was firm and fast in tackling potential political fall-outs from such a scandal.

The government is determined to rebuild confidence in national charities amongst Singaporeans, but more importantly, as part of a social transition gripping the Republic, the Durai/NKF saga could also result in a serious rethink of Singapore's drive for entrepreneurship.

Durai clearly embodied a very successful and effective fund-raiser, but perhaps with questionable moral ethics, which have yet to be fully proven by the CPIB and law courts. Future entrepreneurs would surely be assessed not only by meritocratic and entrepreneurial success alone, but also by ethical and moral yardsticks as well.

But in reality, has the meritocratic pressure been too high in Singapore, just like in the ROK and Japan to produce such an unfortunate scandal?

From these three scandals that shook up Asia's three most developed countries, there can be many concerns and questions to draw, which Asian societies should seriously ponder, as their economies develop frantically.
 
These three developed economies may be leading Asia in developing a real sense of professionalism in public and corporate governance, which is the true positive aspect here. This tendency appears to be gaining ground regionally, as the general public now places greater emphasis on public and corporate governance, amidst the rise of people's and small shareholders' power in Asia.

Also, there is now a fundamental question posed on whether Asian societies have truly come to terms with the increasing meritocratic pressure that is mounting, amidst a more competitive society, whereas its social mores and cohesiveness still smack of Asian conservatism and hierarchization. This is indeed a challenging phenomenon for transitional societies in Asia.

There is also a need to address the issue of ethics in Asian societies, as too much emphasis may have been placed on success and meritocracy at all costs, without investing much into the moral side of society, a part from the strict enforcement of laws, as in Singapore. Perhaps, a religious safeguard and ethics should usefully complement the rule of law in Asian societies.

Lastly, Asian societies in transition must address the fundamental issue of the kind of society they really want, either the liberal, competitive American model or a more social and cohesive Asian society. Or could there be a healthy balance of both, to achieve a sort of enlightened Asian society?

These three irregularities would certainly be a sound occasion for China to revisit fundamental issues of meritocracy, competition, moral ethics and governance too, just as the State Council champions good corporate and public governance.

The author is a business consultant and strategist and Council Member of the Singapore Institute for International Affairs.

(China Daily March 18, 2006)

 

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