By JAMIE LEE

There is a limit to how much information former Airocean director Peter Madhavan could have ascertained about the investigations of the Corrupt Practices Investigation Bureau (CPIB) on ex-CEO Thomas Tay, Singapore Exchange (SGX) testified yesterday.

Former independent directors (IDs) had relied on information from Mr Tay and legal advice to decide if the firm should make an announcement about CPIB's interview with Mr Tay, argued Senior Counsel Davinder Singh.

'(Mr Madhavan)'s ability to ascertain the information is limited by what those involved in the investigations want to tell him or feel able to tell him,' he argued in day two of the trial charging three ex-directors for a breach of duty.

'Thomas Tay's position all along, even up to the time he met (SGX) in December, was that he was not the subject of the investigations,' he added.

SGX's Lorraine Chay - then the team leader looking after compliance issues of Airocean - agreed to these during yesterday's cross-examination.

Lawyers from Tan Rajah & Cheah - whom the board of directors hired - said 'it is not entirely clear at this stage what CPIB are investigating' in a letter dated Nov 28, 2005, following the lawyers' investigations.

But around Sept 16, a lawyer from Tan Rajah & Cheah had already advised Mr Madhavan that there was no need to make an announcement since the information was vague, argued Mr Singh.

SGX also agreed that clarification of a November 2005 announcement that was alleged to be 'misleading', was instead indicating that the company believes that there may or may not have been wrongdoing on Mr Tay's part.

The public clarification was in response to a Straits Times report that said Mr Tay was being subjected to a CPIB probe.

Mr Singh argued that the newspaper report had offered two views - one from the reporter's sources saying that Mr Tay was the subject of investigations from CPIB, and a denial from Mr Tay, which is consistent with the denial that he gave to the lawyers.

'So at this point of time, the public would conclude that he may or may not be the subject of investigations,' he argued.

In the allegedly misleading clarification, the company stated that 'the scope of the CPIB investigations was uncertain but on the information presently available, there did not appear to be any impropriety on the part of the company or Mr Tay'.

'I suggest to you . . . on the basis of what they then knew there did not appear to be impropriety, but they were not ruling out anything,' argued Mr Singh.

'Not that you would ever make the mistake of inviting me, but let's say you asked for dinner and you asked me, 'am I coming for dinner with you tonight?', I say, 'maybe', that also means 'maybe not', right?' asked Mr Singh.

'Maybe' is 'maybe not',' replied Ms Chay.

Based on comparisons with other disclosures from Linair Technologies and Accord Customer Care Solutions - which had announced the companies were involved in certain corrupt practices investigations, Mr Singh questioned if telling the public of an inconclusive wrongdoing is 'good enough for disclosure purposes'.

'Would you agree with me that if the message to the public was that there could be, or there may not be, and that it is inconclusive, such a message is insufficiently definite?' asked Mr Singh.

'It adds a dimension of risk to a company,' said Ms Chay.

The hearing continues today.

This article was first published in The Business Times.