TR EMERITUS

His name is Cecil. He is a seven-year-old golden-doodle. But don’t let that disarm you. Take a long hard look at that face. This is literally a case of “my dog ate my homework.” But this time, it’s cash. Cecil chowed down US$4,000. No joke. That’s $5,300 in Singapore currency. Bad dog. His owner Carrie Law, 33, said she “almost had a heart attack.” The young couple, the Laws, withdrew their saving from the bank and left it on the kitchen counter. This happened in Pennsylvania, in December last year. What happens next is Cecil, and his expensive appetite. It didn’t take long for the little devourer to finish the meal. Just half an hour was all it took for the money to disappear. The news posted on social media became a sensation, but it was a nightmare for the Laws on the beat. They had to monitor the clueless sheepdog for bowel movements. That was their vet’s advice: what goes in must come out. Cecil must be wondering, why the extra care and attention all of a sudden? I can’t imagine what the Laws have to go through. US$4000 cash is not a small sum. I also wonder how they withdrew the money. If it’s from the ATM, fast and swift, then this time, this much anticipated withdrawal, so to speak, would take much longer, and go way beyond pressing a few buttons. I am sure they would have received many advice on the extraction from netizens. Many have cheered them on. The bank was kind enough to assure the Laws that “they would accept the damaged bills if the serial numbers were still visible.” They said such incidents are not rare. The good news came out eventually, every drop of it. “Despite the unpleasant process, which involved washing the remnants of the money retrieved from Cecil’s faecal matter, the couple managed to recover nearly all the money, losing only US$450.” I supposed it was a price worth paying for. I am happy for the Laws. They got their just deserts. I guess it was served on a silvery platter. They said that Cecil has been forgiven and described him as a “very fancy fellow” with “very expensive taste.” I bother to post this because it’s funny. Sharing a laugh is a good way to kickstart the morning. It’s called taking a walk on the lighter side of life. For the Laws, it was taking their dog for a walk, while longing for a good outcome. But, it’s not always funny ending. More than one year ago, the same thing happened to another couple. Their Labrador puppy chewed up $2700, leaving undamaged a sum of $300. The wife posted it on social media and was crying as she recounted it. It was her husband’s hard earned money from a side hustle as a construction worker. The Laws should therefore count their blessings. It was a blessing worth every dollar bestowed. You can say that the light at the end of the tunnel for them was the silver linings. And that’s life, right? You win some, you lose some. At times, you’re lucky, when shit happens.   Michael Jan    Read More →

Back in mid 1990 I was at a training course for Civil Defence reservist manpower officers. It coincided with a dinner the Civil Defence hosted for foreign defence attaches who had attended some displays put up by the camp. That event had nothing to do with my group but the organisers decided to volunteer us not as escorts, but simply to fill up the seats at the dinner table amongst the guests. The reason as explained to us was their reluctance to use the camp's junior officer cohort of mostly 19 or 20 year old kids who would be totally out of place with these extremely senior defence attaches. We were actually a group of pathetic low ranking reservist lieutenants but a motley crew of C-suites and business owners. Egos aside, we were there simply to help 'save face' for Singapore Inc.. On that Tuesday evening, we were spread out over various dining tables. I had an Admiral from the Indian Navy on my right. In the course of the evening's conversation he learnt I worked for the local branch of a Kuwaiti bank. Whereupon he inquired of my opinion on the million dollar question of Middle East geopolitics at the time - whether Saddam Hussein would invade Kuwait. Working for a Kuwaiti bank didn't make me an expert on the Middle East, but as opinions are free, I told him I thought no, on grounds that Kuwait was a benefactor to Iraq during their war with Iran. Kuwait had extended US$13b to Iraq in their war effort. Well as everybody knows, the next day Wednesday 2 Aug 1990, Iraq invaded Kuwait. What happens to a branch office of a bank when its Head Office country has fallen? All commercial entities will try to operate as going concerns until the occupation is resolved. In this, banks face tremendous unique challenges. First, all counterparty trading lines will no longer be available as everyone in the market pulls the rug. This means the front office cannot manage the market risks. Second, the bank's accounts in countries all over the world will be frozen, which means it looses the ability to receive or move money either for itself, customers or depositors. Fortunately, war is a 'force majeure' event that frustrates contracts so there is no issue of the bank being sued for non-performance. Third, the bank's books contain thousands of transactions with various value or maturity dates. While the bank cannot make any settlement as each value date arrives, the system continues to churn out transactions that matured each day. An analogy of the situation is a massive pile up at an escalator. Each day, hundreds of foreign exchange deals, options, futures, repos, money market deposits, etc, mature. Since they cannot be settled, what needs to be done and how are the maturing entries to be? This is an insider story of what happened to a Singapore branch when Kuwait was over run by Iraq, a story you never hear anywhere else.. The first few days went relatively well as the markets have not yet reacted to the situation. As soon as central banks worldwide started shutting us down and banks cancelled counterparty lines, the escalator started piling up and chaos ensued. Our correspondent bank accounts all over the world were suspended and it became impossible for us to pay or receive in any currency. The bank's computerised system continued to auto-route all maturing transaction settlement entries to pre-coded correspondent bank accounts and the back office, which was one of my responsibilities, had to amend all instructions to divert to suspend accounts pending resolution. A good fortune was shortly after the invasion, some executives managed to escape Iraq-occupied Kuwait and smuggled out the Head Office's database files to our London branch. I was not privy to the details so I'm guessing it was either some smart spur of the moment act or a Plan B put in place months earlier when Saddam Hussein was postering his offensive moves. This incident serves to illustrate it is critical to maintain cloud-based back-up, or off-site contingency files. The government of Kuwait had a citizenship database back-up in a foreign location which greatly facilitated their reconstruction after they regained sovereignty. Another fortunate coincidence was our Singapore Treasury Manager was on home leave in Ireland at the time. He made his way to our London branch office from where he coordinated with Singapore front office to unravel the jam. We sent over whatever data that was necessary to him on a daily basis. I cannot recall whether we had prior clearance from Monetary Authority of Singapore to release information to London. The Banking Secrecy Act is touchy on the release of deanonymised data to outside parties. Although not specified in the Act, the MAS takes a very restrictive view of such matters even in information sharing between branch and head offices. A practice had evolved that deanonymised data of depositors is strictly forbidden, and this includes interbank deposits received. The situation required of us to submit all data to London. I like to think we did obtain MAS clearance. . Our London office was thus able to function as sort of Head Office in exile. This was a crucial factor in our favour. In banking, all branches operate as independent entities within specified parameters. With London as de facto Head Office, the bank was able to work with various counter-parties on a consolidated basis making it easier to resolve the entanglements under the circumstances, and more opportunities for netting off transactions. We were also fortunate to have UBS taking a long term credit view on the bank and continued to extend us some trading lines. The fact our bank was one of the best run banks in the Middle East must have weighed heavily in UBS' assessment. Just like the escalator pile up, our unsettled deals caused receipts and payments to pile up. The solution was for all receipts and payments, whether from foreign exchange trades, money market, and others, that fell due and could not be delivered, to be taken up in the books as term deposits with or from each other. This was a temporary arrangement till the conflict is resolved. In the meantime, pretty much all counter-parties must have found their trading and credit limits with us breached many times over, as we of them. Forward deals afforded more leeway, so where it suits our books, a position could be squared off with a matching deal in the opposite direction. Basically, it was more or less an exercise in restructuring, netting, squaring positions and rollover. New transactions had to be written but it in no way represented any new trading activities or commitment. However, technically, our books reflected a transactional volume increase. Very surprisingly, of all parties, we faced some difficulties with the MAS. We were called up for some meetings with the central bank, as were other banks from the UAE. Quite rightly so as the supervising authority, MAS needed to be in front of the curve. Myself, my American branch General Manager, and another senior expat manager, attended those meetings. Seating across the table were a young female executive who apparently had our bank under her portfolio of reporting responsibility, and chief of the International Dept, someone known in the market as the Dragon Lady. And yes, the lady breathes out fire. In the previous administration of Wong Park Shiong and Elizabeth Sam, I am certain we would have met with a more sympathetic reception, one that would have wanted to know how we were faring, what our difficulties were, how do we resolve them and was there anything the central bank can assist with. Instead, we entered the dragon's lair and got interrogated much like we were criminals with potential to unleash some financial fireworks in Singapore. We could not comprehend the Dragon Lady vetting a collection of our cleared cheques on the table. Basically, we operate only in the ACU (Asian Currency Unit). Not being a member of the Singapore Clearing House, we maintained a S$ current account with UOB. The S$ cheques we drew on this account was for purely administrative purposes to pay for overheads like electricity bills, stationeries, rent, coffee, etc. Whilst our wholesale banking transactions were in tens of millions of US$ each, she was scrutinising our S$50 cheque to a friendly stationery shop. What started off by the Federal Reserve, and soon followed by other central banks, to disallow payments by our bank, turned out to have the effect of a sanction on us. The purpose of it was actually to protect Kuwaitis, our depositors and our bank from unauthorised disbursement of funds as the country had been overrun. This was a danger that did not exist in the Singapore jurisdiction. It was very clear to us the Dragon Lady had no idea of her role in the meeting. The regulator's naivete of banking operations became all apparent when she pointed out our foreign exchange volume had in fact increased. It was exasperating since there was no order nor regulation that barred us from writing any new deals. I withheld my urge to challenge her the legality. She had no idea of the escalator chaos effect nor the resolution necessitated writing new transactions. Instead I explained that increased FX transactions was a way to square out forward positions. The Dragon Lady's reaction was one for history books. She turned to her young executive and addressed us, her words still fresh in my memory. "Our Miss Tan here is a qualified accountant. She can tell you if you squared a deal the transactions cancel out. The outstanding foreign exchange balances should be reduced, not increased". This is typical impasse of administrators who think they know better than practitioners. She had no understanding interbank foreign exchange is an OTC (over the counter) market with deliveries. In any case, gains and losses will be realised on the forward date. A squared position may be canceled out (subject to a difference being FX gains or loss) but the two transactions remain in the system till value date. Her comment was a call out on my professionalism and I was about to blast out my response when I received a kick under the table. My relationship manager sitting next to me must have felt the temperature rising. The kick was his way of telling me not to bother with a supercilious regulator. We had three meaningless meetings with the Dragon Lady. As a Singaporean, I was terribly embarrassed in the company of my foreign managers at the disgusting display of ineptitude from MAS senior representative. In the minds of my foreign managers, MAS must have suffered a huge reputational damage. I can imagine how these two gentlemen will laugh at cocktail rounds when they narrate their personal experience with the MAS. The nightmare ended when the US led coalition forces drove the Iraqis out of Kuwait in Gulf War I by February 1991. Our bank came out of the war relatively unscathed with reputation intact.   Patrick Low * Article first appeared on Down The Rabbit Hole.    Read More →

Israel is reportedly planning to launch a diplomatic offensive ahead of hearing at the International Court of Justice on South Africa's 'Genocide in Gaza' claim. The Israeli foreign ministry has instructed its embassies to push diplomats and politicians to issue statements against South Africa's case to pressurise the ICJ to not issue an injunction that orders Israel to halt its military operations in Gaza, Axios reported, citing cables. Watch this video to know more.    Read More →