MDA responds to AG’s report

My previous post on MDA’s funding discrepancies as reported by the Auditor General of AGO drew a record number of comments – a testament to the level of public concern at the oversight.  The report’s release also drew added flak for MDA, through ZDNet Asia’s coverage “Singapore’s MDA rapped over conflict of interest” that same day.  No surprises then, for MDA to respond promptly through an article by Straits Times reporter Nur Dianah Suhaimi in the most recent Sunday Times – thanks @chinyong for the heads-up.

MDA backed mentors' stakes in startups

Response muted, real issue nimbly sidestepped

Overdue collection of revenues and license fees aside, I would imagine most people were seeking answers on how such conflict of interests could have slipped past the radar screen of the implementing team at MDA.  Michael Yap, Executive Director for the IDM Research & Development Programme Office said MDA’s efforts over the last two to three years have been to encourage experimentation and supporting young start-ups and entrepreneurs in their innovations.

Critical to their success is matching them with more experienced incubators; that is mentors, who can value-add, provide networks and advice on their growth.

This being a young industry, the pool of incubators is small and it is common for incubators to have ownership in start-ups.  This can help further the growth of the industry as it gives them a stake of the success of the IDM ventures.

Logical, and fair.

(On the four start-ups in question) the incubators had fully declared their involvement with the start-ups during the application process.  Their applications were approved on their own merits and the participation of the incubators was viewed as positive.

To the laymen, it would appear the issue has been resolved and addressed.  What’s interesting to me would be knowing whether the ownership in question was in the form of (1) preference shares, (2) ordinary shares, or (3) stock options.  (1) would have been a big boo boo, and (2) wasn’t any less serious.  If it had been (3), it shouldn’t have been an issue in the first place.

Anyone has any clue?

Too Little, Too Late

I quote from the ZDNet Asia article dated 15 July 2009:

The MDA has informed the AGO it will not approve funding for a startup in which its mentor has direct ownership, in future, and “agreed with [the] AGO that an expert must not have vested interest in the startup company” being evaluated, according to the report.

The article on the Sunday Times would appear to be a step backwards to some folks who were hoping to simply hear a “sorry, we screwed up”.  With the agency presumably coming under fire on many fronts, I wondered if MDA should have swung into damage control mode earlier, and adopted a different stance to win over the hearts and minds of disgrunted entrepreneurs who perceived the presence of an uneven playing field.  It’s important not to lose that trust that the team has painstakingly built up over the past 2 years, lest it all be for nought.

Sunshine after the Rain

Since 2007, MDA’s initiatives have been like a breath of fresh air to the IDM industry.  Let’s hope this incident will spur the team on positively, to improve its processes and governance, and continue to do good for the ecosystem.  I’m not going to join the bandwagon to call for heads to roll – that’s not very effective use of my time.  I’d just let sleeping dogs lie, and urge future beneficiaries of MDA’s funding and programmes to trust in their own good judgment.

Caveat emptor!

About James Chan

James Chan is an entrepreneur, investor, geek, photographer and husband/father based out of Singapore. Apart from frequent travels to Vietnam, Myanmar and Indonesia for work, James can also be found online via his trusty 15" Retina MacBook Pro or iPhone 6+.