The three traders had earlier been fined S$715,000 (US$436,000, €329,000) for their actions but were kept in their posts.

GIC, chaired by modern Singapore founder Lee Kuan Yew, was cleared of any wrongdoing by the Monetary Authority of Singapore.

There had been criticism, however, within the local investment industry about the government's handling of the case, with questions about why the traders did not receive a tougher punishment and the legal interpretation of GIC's liability.

GIC said yesterday it had given further consideration to the matter and decided to suspend the three employees, who include its head of Japan equities, the GIC Tokyo office representative and a senior investment manager, for a period of three to six months without pay. They were also relieved of their responsibilities for Japanese financial markets.

MAS disclosed last month that the three were found guilty of using non-public information in February 2003 on a planned share offering by Sumitomo Mitsui Financial Group to sell the stock ahead of a formal announcement to avoid losses.

MAS said it had been informed by Japanese authorities about the case earlier this year and had conducted an investigation.

GIC has said it initially decided only to fine the three traders because they did not personally benefit from the transaction.

GIC, which manages more than US$100bn for the government by investing in overseas equities, bonds and property, volunteered to pay MAS S$710,000, the estimated gain from the insider transaction, although MAS said GIC had not been in breach of Singapore's Securities and Futures Act.

MAS recently said GIC was not liable because its senior management was unaware of the insider transaction since the three traders did not have executive posts.

The MAS legal ruling, however, has been criticised by some local legal scholars for narrowly defining the securities laws. Alexander Loke, associate law professor at the National University of Singapore, said the MAS ruling suggested that "a corporation that shields its executive officers and directors from its trading arm will be free to profit from insider trading".

Singapore has been seeking to become a main financial centre in Asia, partly based on its reputation for integrity and transparent enforcement of laws governing financial transactions.

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