By Lambert Strether of Corrente.
In this short post, I’m not going to be able to answer the question posed in the headline. Readers, if you can, feel free to jump right to comments, and do so! What I will do is present an interesting whistleblower case you probably don’t know about, and then add some commentary.
The case is Strategic Marine, and I read about because I follow shipping news in Splash 247. The headline:
When the masks came off: An exposé into financial misdoings in Singapore
Perhaps naively, I thought “WTF? Singapore?” In a neighborhood that includes Malaysia and Thailand, I had thought that Singapore was the nice house with the well-kept lawn, but perhaps appearances decieve. Be that as it may, let’s introduce the whistleblower and the story of Strategic Marine:s
Julie O’Connor is on a mission to right investment wrongs in Singapore and Australia – and she’s willing to go very public about the ills of the local financial scene.
“I would like to say, that I harboured dreams of being an author, but frankly that wouldn’t be true,” she tells Maritime CEO.
In reality [her] book came to life when her husband purchased 4% of Strategic Marine in 2011, an investment that went badly wrong.
“My story is not about money lost, it’s about poor corporate governance, lack of transparency, forgeries, threats, false information and much more,” she says, adding: “I never thought in a million years that I would become embroiled in the situation that I have found myself in, a David having to stand up to the financial and legal might of the Singapore Goliaths.
The book entitled When the masks came off has taken on a life of its own and continues to be a work in progress.
“I want people to read the story and say, ‘that’s unbelievable’, ” the author says.
Hmm. Isn’t it all too believable?
O’Connor is demanding change. “Corporate legislation needs to be changed,” she says, “and, the Australian Securities and Investment Commission (ASIC) and the Singapore Exchange need to be become the organisations that much of the populous [sic] aspire them to be. Companies whether private or listed need to be more transparent and their directors and executives held to account for their actions.”‘
Pretty mild stuff, at that. The energetic O’Connor has created a website. Now, as we know from the painstaking (and at times paingiving, to the bad guys) work of our Richard Smith, international financial scams are extremely complex; the perps conceal themselves and their asset shifting behind sticky webs of obfuscation. So, rather than parse out the scam, as Richard Smith would do, I’ll quote O’Connor’s summary in her open letter to Strategic Marine’s (former) directors, which gives the flavor:
In addition, the company lawyer advised that “off-set against the “increase in salary” was the forfeiture by the directors of $300,000 in bonuses to which each of them had been entitled under a shareholders’ bonus scheme for the year ending 30 June 2009″.
My understanding is that shareholders are paid dividends, were these not paid to you in 2009? (see point 10. above). Also would a salary increase to off-set the forfeiture of dividends, have been a benefit that no other shareholder would have received?
In light of the above statements which were made with regards to your significant salary increases, why were you and the COO to share dividends of at least A$5,070,984 on special class shares which only you and the COO held? You had after all received the significant salary increases below, purportedly for your endeavours in order for shareholders to benefit.
To poor shlubs like us, $300,000 is real money, even in Australian dollars. To me (and I’m not Richard) it looks to me like the directors looted the company and then wound it up. More flavor:
WHY should my husband not have relied on information which was contained in the audited 2008 and 2009 Special Financial Reports, before investing in the Company?
WHY did a shareholder have to resort to issuing a Statutory Demand before being provided with information which should have been included in the above reports regarding the recipients of dividends?
WHY when the holder of the ‘F’ Special Class Share resigned as a Director, even though he remained a 20% shareholder and continued to hold that Special Class ‘F’ Share, did he appear from Company records to receive no further dividends?
WHO on 31st March 2008 do company records show voted on behalf of a 20% shareholder to ratify the dividend payments to the holders of Special Class Shares? On whose authority did this individual vote?
WHO purchased the ‘F’ Special Class Share for $1 in 2015 and did they receive any dividends/bonuses from this Special Class Share from the NPAT FY2014 and the proceeds of the assets sale to Triyards Holding Ltd in October 2014?
WHY wasn’t the opportunity to purchase the ‘F’ Special Class Share stated above, offered to all shareholders and not just a member of the Executive Team?
And that’s only the beginning; I count 72 questions in total. It’s complicated, as we say on Facebook. (Experts may answer, but is sale and purchase of special class shared for one dollar by insiders a good look? Done every day?)
And O’Connor’s situation, in her own words:
Yes, I was bitter finding our family in that situation, yes I felt betrayed by those we trusted, yes I was afraid of becoming embroiled in a legal issue, yes I felt anger at selling the family home, yes I felt regret at investing money, yes I was overwhelmed with the amount of data to sift through, yes the threats frightened me, yes I felt sorrow at losing my dad and brother and at the same time anger that I didn’t give 100% to the grieving process. At times I have become so determined that I’ve lost sight of everything else in my life, I was all consumed and I’m not ashamed to say that I went and sought help to rid myself of the bitterness and anger that I felt. …
I’m a different person now and for that I thank my late mum. For three months March – June this year, my sister and I went to stay in the UK and were given the privilege to nurse our mum through terminal cancer and for me that was a life-changing event. My mum had been my greatest supporter in my fight for justice, just as passionate as me, and here I was having to grieve the loss of my mum, my best friend and my number one supporter. The dignity with which she fought that terrible disease was humbling and I was in awe of her courage when facing death. …
I no longer hold any anger or hatred and that’s one message I would like to get across, anger only hurts you, it only hurts your body and mind, so let it go. I know from personal experience that it’s not easy to do, but I can promise you it will be worth the effort, don’t be afraid to seek help. Instead of anger, bitterness and hatred, I now feel sympathy for the people who went to great lengths to do what they did to me and my family, perhaps they just didn’t know any better….
Does the above mean I have lost the will to continue my journey to remove the masks, definitely not, now I am more focussed on the task at hand. I continue to seek transparency, justice and to offer support to those who may find themselves in similar positions. They may just be starting their journey and perhaps I can offer help ……….
We come into, and leave this world with nothing we can’t change that, but we can determine the person we are in-between those dates and that will be our legacy. Don’t wait until entering the final phase of your life, being terrified of being judged and then asking for forgiveness, that would be too late. We all make mistakes, but it takes courage to admit them and apologize to those you have wronged. Do it, you will feel better for it and so will they.
I’m sure that there are NC readers who have been in the same situation.
We know from Akerloff’s work on phishing equilibria that if fraud can happen, it is happening. It follows, then, from the nature of our ginormous globalized and financialized economies, and the multijurisdictional and opaque business entities that undergird our political economy, that there are many more Strategic Marines; see, again, the work of Richard Smith, as well as the Panama Papers, Naked Capitalism on the foreclosure crisis, Naked Capitalism on robosigning, Naked Capitalism on private equity, Bill Black on accounting control fraud, the daily news, et cetera, et cetera, et cetera ad infinitum and ad nauseum.
We also know that there are brave souls — in every case we know about — who are blowing the whistle on the frauds (just as we know that there are people in the looting professional classes who have no interest in blowing the whistle at all). And yet the work of being a whistleblower is extremely time-consuming and stressful. Being a whistleblower means speaking out against people of wealth and power. Being a whistleblower involves disentangling and documenting complex frauds. (Our work up here on the landfill, which involved frauds committed by the Democratic nomenklatura, has been going on for thirteen years.) Being a whistleblower means becoming a subject matter expert in the field of the fraud, beside becoming familiar with case law and regulations, all without being a lawyer and unable to afford one. Being a whistleblower means doing all that while a family member — for example — is dying of cancer. Being a whistleblower can often mean financial disaster, on top of the loss from the original fraud. And being a whistleblower means doing all those things within the silo of your own whistleblowing case, because simply disentangling the fraud is enough to consume most of one’s life, without the additional effort of reaching out to others in similar predicaments for support. And it’s very rare that anybody makes a movie about you!
Can we as a society create a way to support whistleblowers better than we do? Surely that wouldn’t be hard! Instead of leaving whistleblowers to struggle in isolation, we should be giving them medals of honor for acting in the collective interest to stomp out as much phishing as they could. It’s very strange that we reward the accumulation of capital by any means necessary, and the quest for justice hardly at all.
But how? Whistleblowers Anonymous? Who you gonna call?
 Strategic Marine looks legit. But then, they all do!
 There are existing institutions, like this blog, or Pro Publica, or, even today, some newspapers that support whistleblowers in the sense that they transform whistleblower content into more widely distributed narratives. That’s distinct from supporting whistleblowing as such, in the same way that supporting gardening is different from writing a gardening column.