Staff Papers
Published Date: 01 July 2004

Case Study on Pan-Electric Crisis.

MAS Staff Paper No. 32, July 2004 - By Mimi Ho, Christina Aw, Ng Yew Kwong, Tang Ming Yang, Gene Wong and Mindy Han


The Pan-Electric crisis is significant, if nothing else, as the reason the Singapore Stock Exchange (SES) was closed for the first and only time in its history.  The collapse of Pan-El following its huge debts and inability to make good on forward contracts precipitated a systemic crisis that threatened the entire then-nascent stockbroking industry. 

What makes the Pan-El crisis memorable to most people, as well, is the human and political drama it involved - minority shareholders, with whom Pan-El had been a hot favourite for its many price fluctuations, saw their savings wiped out, while Tan Koon Swan's involvement as a leader on the Malaysian political scene brought about no small amount of cross-straits tension when he was arrested and convicted for fraudulent dealings involving Pan-El.

This paper examines and evaluates the three main policies enacted by MAS in the face of the Pan-El crisis - closure of the SES, setting up of the lifeboat fund, and our communications strategy.  This exercise is carried out in the context of the regulatory regime at the time of the crisis, using a crisis management framework that focuses on two criteria - effectiveness and cost.  By the end of the paper, the reader should have a much better idea of the facts surrounding the Pan-El crisis and, more significantly, the lessons that should be learnt from such an experience as they apply to crisis prevention and crisis management.