The film ‘The Big Short’ opens with bankers going “from the country club to the strip club”. For multinational investment opportunities the safest location is not a golden city but legal counsel’s chambers. It neatly encapsulates the need for due diligence in investment opportunities. Since the 2008 crash that the movie explores, investment compliance has become a great deal more complex, with a visible overlap in criminal law that makes it prudent to seek legal advice from experts in criminal and human rights law – as Emerging Towns & Cities Singapore (ETC) has learned to its cost. For multinational investment opportunities, the Golden City scheme in Myanmar serves as a lesson on the range of international law and guidance applicable to any arrangement, particularly when the investment concerns states vulnerable to corruption and associated with international sanctions or other geopolitical risks.The costs of a lack of due diligence can be steep. Understanding the modern connection between criminal law and corporate compliance not only helps to ensure investments do not contribute to human rights violations, but also allows those involved in the opportunities to identify the geese from the golden eggs. The Singapore Exchange (SGX)-listed company Emerging Towns & Cities Singapore (ETC) has announced the sale of its stake in the Golden City real estate development in Myanmar for S$4 million, which involved a reported loss of S$80.2 million. The company’s announcement on 1 July 2023 to sell its controlling stake follows our legal memo, which explained the compliance mesh that international law and guidance places on companies, sponsors and those who provide the listings on the Singapore Stock Exchange (SGX). The overarching question related to the consideration that SGX may need to give to risks of potential legal liability, reputational damage and any consequential cost implications of being connected to Golden City. ETC had obtained some limited consultancy reports, but sought more time after our memo to address the concerns raised. Eventually, the scheme was divested. The memo provides a due diligence outline for all investment and trading 44 LAWYER MONTHLY OCTOBER 2023 Special Feature In this special feature, barrister Felicity Gerry KC discusses the Golden City debacle, arguing that it serves as a warning to investment schemes to consult international criminal lawyers before doing business with those connected to human rights abuses and atrocity crimes. There is an emerging compliance mesh that creates a connection between criminal law and financial risk. Golden City Divested After Due Diligence Memo
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