Concerns about a repetition of a Jardine Fleming-style scandal in Singapore have prompted its financial authorities to write to fund management companies urging them to review their systems and controls. In a leaked copy of the circular, Monetary Authority of Singapore banking and financial institutions deputy-managing director Koh Beng Sengsaid: 'In order to protect the reputation of, and enhance investors' confidence in your institution, as well as to maintain the soundness and integrity of the financial system in Singapore, the authority would like to emphasise the need for fund management companies to have in place sound management policies and strong internal control procedures to ensure their operations are conducted at the highest professional and ethical standards expected of institutions operating in Singapore.' Fund management receiving the circular are urged to acknowledge its receipt. Singapore authorities are particularly sensitive to irregularities arising in its fund management industry following the collapse of Barings Bank and the jailing of rogue trader Nick Leeson. Singapore has ambitions to supplant Hong Kong as the financial capital of Asia and has been using promises of mandates for managing tranches of its Central Provident Fund (CPF) as an incentive. An ability to demonstrate standards at least as rigid as any other regulatory regime is a key factor in its strategy. Fund management groups, while appearing to be attracted to the stability and prospects of CPF mandates, are also concerned about restrictions on the freedom of comment, particularly on the Singapore economy and its companies. In the circular, Mr Koh urged senior management to 'review the necessary systems and controls' that are in place. He called on the companies to ensure there was strict segregation between securities dealing and fund management activities and segregation between proprietary trading and client-related activities. He said: 'Management is reminded not to assign job responsibilities to their employees which may give rise to possible conflicts of interest, and hence create opportunities for front-running, misallocation of deals and concealed personal account dealing by their employees.' In a veiled reference to the troubles at Morgan Grenfell, Mr Koh stressed that fund managers must act in accordance with their trust deeds and investment guidelines. He said: 'There should be procedures for senior management to be kept informed, to investigate and to ensure timely and appropriate rectification of any deviation which may arise.' In addition, companies must have effective operational controls such as risk management systems and centralised account dealing procedures. 'There should also be regular internal audits performed on fund management activities in your institution to minimise the opportunity for fraud and mismanagement,' Mr Koh said. He said market prices and rates used in the revaluation process should be independently sourced. 'Particular care should be exercised in the valuation of unlisted or unquoted securities for which there are no readily available and transparent prices.'