How do leading trade finance professionals get to where they are? In this Spotlight, we sit down with Soh Chee Seng — Singapore’s top technical expert in trade finance operations and IIBLP Associate Director — to talk about how he gained inspiration in a field he once considered boring and ultimately expanded his knowledge scope beyond the banking side of the business.
Looking back, how did you first come into this business — and what do you think originally drew you to it?
I first came into this business in 1976 with OCBC Singapore. As my first degree, I majored in Economics and business finance (including trade financing) was one of the subjects that I studied. With my academic qualification, I thought working in a bank may be useful.
Over the course of your career, what has changed most in how you see the industry or your role within it?
The most fundamental change is the shift from a manual, paper-based system to a digital, data driven and multi-player ecosystem. With automation, the efficiency of document examination under LC as well as electronic presentation have greatly improved the turn-around. This has helped importers save costs, especially demurrage charges as they no longer need to wait for paper documents for customs clearance and cargo possession.
What has kept you engaged in this field over the long term, even as the work and the rules have evolved?
Initially, I found it uninteresting and boring, especially in the trade finance operations. The potential and opportunities for career development and promotion seemed to be narrowing, which was the main reason for high turnover rates. Until one day, I unintentionally came across a court judgment regarding an LC dispute. After reading it, I found it very interesting. This sparked my interest in the field.
Initially, I found trade finance operations uninteresting and boring. One day I came across a court judgment regarding an LC dispute. This sparked my interest in the field.
When I met Prof James E Byrne in the early 1990s, I saw a glimmer of hope in this business through him. From then, I started representing the Singapore National Committee in the ICC Banking Commission and being active in its general meetings.
From your vantage point today, what do you think the industry gets right — and what do you think it still struggles with?
Though the rules and practice standards have been revised through the decades, they are still too complicated. Due to high turnover, complexity in practice and lack of awareness, it seems that there is a setback on the standard of LC issuing and document checking. Because of this, payments under LCs become delayed and costs increase. Most traders have shied away from using LCs for trade settlement. They either settle their payments by open account arrangement or documentary collection with the support of a standby LC or independent guarantee issued by a bank. As banks are dealing only with documents and assuming no liability and responsibility of the genuineness of the documents, the rules and LC terms should be simple and not too complicated.
Is there a particular moment, case, deal, or decision that meaningfully shaped how you approach your work now?
Yes, as what Prof James E Byrne frequently mentioned in annual LC surveys, many court decisions are wrong. Before I left the bank, I saw a case involving one of my customers reported in the newspaper that he and a bank manager were charged for conspiracy using a synthetic LC to cheat the banks. The amount involved was huge and both of them were on bail pending trial. I contacted my client and I was told the government charged him and the bank manager for using a synthetic LC to mislead the bank paying under an LC which did not have an underlying transaction as the LC merely called for photocopies of documents and accepted all discrepancies with the exception of the amount and expiry date. His lawyer advised him to plead guilty as it was difficult to contest the case against the government.
After reading the details, I told him not to plead guilty and introduced him to a famous law firm to take over the case. I was requested to provide my opinion to the court. In fact though it was a synthetic LC, evidence showed that the actual shipment had been effected and original documents had been couriered directly to the buyer in China for clearance. The payment term was 90 days after shipment. The synthetic LC was used as a settlement instrument. Subsequently, the court ruled in favour of my client. I told myself maybe I need to provide such service after leaving the bank. With the encouragement of Prof James E Byrne, I pursued my further study to gain more deeper knowledge of LC law after I left the bank.
What responsibility do experienced professionals have to the next generation entering trade finance and compliance?
Other than training and on-the-job learning, it is important for bank management to recognize the contribution of trade finance operations, though it is classified as a cost centre.
If you could give your younger self one piece of advice on day one, what would it be?
Other than attending more trade finance related meetings and conferences, it is important to read and study more related court cases. To learn more how the practice could be in line with the legal.
Fun one to end on: What is your favorite hobby outside of work?
Haha, play more sports. I am still active in golf.
Michael is the CEO of IIBLP and the Publisher of DCW. Michael has over 25 years of professional experience including 15 in trade finance and compliance, and has written and spoken extensively.
