Just like thousands of Singapore investors who have lost money on failed Lehman-linked structured products, the Holland-Bukit Panjang Town Council may lose its S$8 million investment. – Channel NewsAsia.
From the Straits Times:
TWO town councils – Holland-Bukit Panjang and Pasir Ris-Punggol – have about $12 million invested in troubled structured products.
These products include Lehman Minibonds and Merrill Lynch Jubilee Series 3.
Senior Minister of State (National Development and Education) Grace Fu gave this update in Parliament on Monday, in response to a question from Nominated MP Eunice Olsen.
Since Dec 1 last year, the amount that town councils can invest in non-government stocks, funds or securities has been capped at 35 per cent of the sinking fund.
Holland-Bukit Panjang invested about 6.7 per cent of its total funds available for investment in the structured products, and Pasir Ris-Punggol, about 2.6 per cent.
The sinking funds are used to pay for long-term or cyclical expenditure, such as replacing lifts, pumps and pipes, re-roofing, and repairing and redecorating blocks.
The funds are also used to pay for lift upgrading, so that residents pay a smaller percentage of the total lift upgrading cost.
The sinking fund is distinct from the operating fund, which is used for short term expenditures.
Ms Fu said town councils need to invest their funds prudently so that the accumulated funds are not eroded by inflation.
The investment guidelines – which her ministry has no plans to change – seek to achieve an optimal balance between reasonable returns and financial prudence, she added.
She noted that investments in stocks, funds or securities must be on the advice of a qualified person, such as an investment adviser holding a licence under the Securities and Futures Act, and an approved bank or a merchant bank approved as a financial institution under the Monetary Authority of Singapore Act.
The 16 town councils manage more than $1 billion in sinking funds.
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Holland Bukit Panjang? well…should ask that union chief Mr. Lim to enlighten us further…maybe now he can use a small fraction of his “cpf” to repay the longkang!
sorry…”repair”
at the end, who is going to suffer, ultimately? singaporeans be prepared to pay higher SC&C charges, sooner or later. . .
Even the town councils are seeking to invest in their funds in order to prevent the erosion of their money by inflation. Surely individual investors are also seeking a decent return, not so much for profit (or as a result of greed) but to mitigate the impact of inflation. It is therefore unfair for LKY to say that because the returns are “high”, the risks are high too. In the first place, a 5% p.a interest cannot even cover the impact of the recent spike in inflation. I do not see how seeking a 5% interest rate is greedy. The fixed deposit interest rate in Singapore is pathetic, to say the least. If fixed deposit interest rates are substantial, the town councils will probably not be putting their money in these structured products.
I think we’ll soon be hearing “It was an honest mistake. Let’s move on”
So now what is next?
It seems like PAP is making a point: PAP is just as unsympathetic to the victimised investors as toward their own losses. However, unlike PAP, the victimised investors cannot afford these losses.
“Maybe a couple of percentage out of the total investment portfolio (were used in those investments), so the exposure will not affect the overall investment portfolio or the sinking funds per se. There’s definitely no fear that any of the PAP town councils’ sinking funds will be wiped out. All the supporting PAP town councils’ sinking funds are in safe hands,” assured Dr Teo Ho Pin, Coordinating Chairman of the 14 PAP Town Councils.
Dr Teo Ho Pin
Mayor of North West District
MP for Holland-Bukit Panjang Constituency
Chairman of Holland-Bukit Panjang
Town Council
I was just waiting for this minibond buble to burst, I think it just did. So what ever execuse are they going to say this time. “Town councils went in with their eyes open?!” And people can still say not to politised this issue, I think the government has shot itself in the foot this time. They have the whole nation to explain the losses in the minibonds.
And this is very shocking, why do we pay conservancy tax so that these goons can use excess money for the minibond? Who gave the go ahead to use extra money in investments. And worse, who recommended lehmand minibonds?! Who gave the green light to invest in these toxic products?! Isn’t the tax collected to pay for foriegn workers to keep our estates in working condition?!
And I just heard that Temesek Holdings investment in Australia’s ABC Learning Centre went bust. In all, 500 million was pumped into this learning centre and is now reported gone.!? Did Temesek go into this with open eyes too!?
These Town council who have been over charging us and invested the “extra-extra” money to even make more money from it . This greedy behaviour is not to serve the residents for we know how they make us pay even more and more. At least , the financial turmoil gets back on them and if they go bankrupt, who is to be accounted for?
Now, this proves that even ‘educated’ ppl could also make mistakes. So, it makes no sense to say that ppl go in with their eyes open.Even sophisticated investors like John templeton and peter lynch also make errors in believing a con-guy who was raising money for ‘charity’ years ago.
Why wasn’t the opposition party raising this question instead of an NMP? Shame on the opposition party, can’t even score a political goal when the goalkeeper is sleeping.
Well, PAP town councils are not alone, they have company all around the world, just ask other countries pension funds, insurance cos,municipal authorities.They also bought similar toxic assets.
It is best that the govt legislates that town council should only invest in government bonds, government agency bonds or index funds and prevent these things happening again.
I always find it strange that Town Council need to accumulate so much “reserved” so they can act like investment bankers — i.e. investing in Creative Technology.
The basic function of a reserved is to even out budgetary cycles not to collect money for its own sake.
So I can’t understand why is there a need for a guideline to “optimise return on investment”?
Basically, what a Town council needs to do is to estimate what is needed to be spent over a financial cycle and then estimate what it needs to collect over the financial cycle. Than stick to that spending limits. That’s all it needs to do.
Leave any “optimisations of returns” to the rates payers themselves. It is not the job of the town council to be investment bankers!
genuis..???
thinking time..
7) smallvice585: “It seems like PAP is making a point: PAP is just as unsympathetic to the victimised investors as toward their own losses. However, unlike PAP, the victimised investors cannot afford these losses.”
THESE ARE NOT PAP’s OWN LOSSES. TOWN COUNCIL’s LOSSES ARE RESIDENTS’ LOSSES!!!
Now, I think this is one issue that should be mentioned in Speaker’s Corner..
Or to demand accountability on the TownCouncil.
Someone have to take the fall.. Be the fall guy…
Even if it’s not the MPs, it must be one of the committee in the town council.
Anonymous (#14),
Since when PAP admitted that Town Council’s losses are Residents’ losses? Even Temesak Holdings is runned like a family business.
MM Lee once said, have a sense of proportion lah. SM Goh said, must see things in perspective lah.
So let’s move on lah.
On a separate note, the Swiss government has unveiled a 60bn bailout for UBS. I wonder what the worth of GIC’s stake in UBS is now…..
If town councils cannot even manage our money wisely, how can we trust Temasek and GLC which are make from the same mould- PAP?
P.B. Looks like our ‘top’ leaders,PM,MM,SM town councils all invested in these toxic assets.
From insiders, other TCs also invested millions in other structured products that now worth less than 20%.
The fact that there is legislation to allow TCs to invest up to 35% of sinking fund in riskier financial products means that there is too much sinking fund in the first place.
The role of the TCs should be very clear, ie to manage and maintain the towns under their charge. They are NOT mini-GIC or mini-Temasek tasked with managing reserves. Sinking funds are not reserves. Sinking funds are collected for a specific purpose, ie. to carry cyclical repairs.
LTK/SL/CST should introduce a bill in parliament to put a cap in the amount of sinking fund TCs are allowed to accumulate. I suggest the cap be 1.5 times the amount required to carry out 1 cycle of cyclical repairs. This law must ensure every TCs estimate and publish the amount required to carry out these works and just collect sufficient funds from residents for the said purpose over that period.
If any TCs have excess sinking funds should the cap be legislated, then the TCs should propose a reduction in S&Cs to gradually bring down the sinking funds to be in line with the allowed figures over several (say 5) years.
All TCs must also publish their accounts every financial year.
Holland-Bukit Panjang town council looks to be the one with their eyes most wide-open. They invested on both Minibonds and Creative company. Both are failed investment.
hongjun
“replacing lifts, pumps and pipes, re-roofing, and repairing and redecorating blocks.”
With so much money in sinking funds, are we getting discounts for the price we need to pay for lift upgrading? lift upgrading costs around 700 or more per household, based on my understanding.
How is lift upgrade cost calculated ?
They probably gave you market subsidy.
TWO PAP town councils “downed”. Twelve more to go …
Aljunied Town Council
Ang Mo Kio – Yio Chu Kang Town Council
Bishan-Toa Payoh Town Council
East Coast Town Council
Holland-Bukit Panjang Town Council
Hong Kah Town Council
Jalan Besar Town Council
Jurong Town Council
Marine Parade Town Council
Pasir Ris-Punggol Town Council
Sembawang Town Council
Tampines Town Council
Tanjong Pagar Town Council
West Coast Town Council
Looking forward to see Ang Mo Kio – Yio Chu Kang Town Council fail!
Other town councils such as Aljunied, Ang Mo Kio-Yio Chu Kang, Hong Kah, Marine Parade, Tampines and Tanjong Pagar also have exposure to Lehman Brothers.
http://www.channelnewsasia.com/stories/singaporelocalnews/view/390407/1/.html
hongjun
MM Lee’s Tanjong Pagar also went in with eyes open!
Yes, another $4 million from the TCs such as Aljunied, AMK-YCK, Marine Parade, Tampines & Tanjong Pagar. The total is $16 million from all PAP TCs.
Instead headlining $16 million from all PAP TCs, the MSMs chose to highlight just $12 million from 2 TCs and buried the other $4 million in fine prints.
Guys,
I am not gonna discuss anything other than to ask:
IS ANYONE RESPONSIBLE AND ACCOUNTABLE ?
YES / NO .
tough question ???
In case PAP decides to re-write past records, I post the CNA report here. That’s what the Ministry of Truth does in George Orwell’s 1984.
———————————
2 town councils invested S$12m in Lehman-related structured products
By Dominique Loh, Channel NewsAsia
Posted: 17 November 2008 1646 hrs
SINGAPORE: Two out of 14 PAP-run town councils in Singapore have invested in Lehman-linked structured products.
Holland-Bukit Panjang and Pasir Ris-Punggol town councils have invested a total of S$12 million in DBS High Notes, Lehman Brothers’ Minibond Notes and Merrill Lynch’s Jubilee Series 3.
That is about 0.6 per cent of the total funds available for investments.
Senior Minister of State for National Development and Education Grace Fu gave this update in Parliament on Monday.
Town councils can invest up to 35 per cent of their sinking funds in corporate bonds and equities.
Based on the financial statements for 2007 submitted to the National Development Ministry, Holland-Bukit Panjang Town Council invested about S$8 million or 6.7 per cent of its available funds, while Pasir Ris-Punggol Town Council invested some 2.6 per cent, totalling S$4 million.
Other town councils such as Aljunied, Ang Mo Kio-Yio Chu Kang, Hong Kah, Marine Parade, Tampines and Tanjong Pagar also have exposure to Lehman Brothers.
The fund managers appointed by these town councils invested S$4 million in Lehman Brothers through their investment portfolio. These account for less than one per cent of each town council’s funds available for investments. – CNA/vm
Well, if the individual is responsible and “went in with their eyes opened” then are we to expect that the TC losses be written off like these individual? Where is accountability? Who is answerable? the MP’s who is incharge of the GRC or are we to accept the “honest” mistakes and move on?
The funds are also used to pay for lift upgrading, so that residents pay a smaller percentage of the total lift upgrading cost. – Straits Times
That’s where HDB upgrade monies come from. So for people who voted PAP for HDB upgrade, you have actually voted PAP to use your money to upgrade your HDB.
Here’s how it goes…
If I give you $40,
1) You can keep it safely and save it. Or
2) You can participate in a game where you stand to win $2 and keep that $40! But, there’s a catch, the odds are, there a chance of 1 in 20 that you stand to lose your entire stake of $40.
Which would you choose? Minus madman and children, I think 99.9% would choose 1), but apparently our minister choose 2) Can they explain why?
Eligible voters,
Pasir Ris-Puggol GRC = 178,393
Holland-Bukit Timah GRC = 118,092
$12 milion / 296,485 = $40.47
31) SevenEleven on November 17th, 2008 9.44 pm Well, if the individual is responsible and “went in with their eyes opened” then are we to expect that the TC losses be written off like these individual? Where is accountability? Who is answerable? the MP’s who is incharge of the GRC or are we to accept the “honest” mistakes and move on?
The PAP MPs are in charge by way of being a consultant to the TCs, so you tell me who is in charge? definately no MPs from the ruling party are going to admit any of these blunders, right?
Hello guys!!! that our $$$ not PAP $$$!!! They keep their sky high pay in their pocket and invest our $$!!! Since they got so much reserve in TC and can invest in this mini bond y cun they give us more rebate in S&Cs!!! Wat a good garman!! They still can sue you for jus not paying S&Cs for only 2mths and asked you to pay peneaty n legal charges!!!
Please Singaporean!!! Open ur eyes and c b4 you vote this time!!! Vote the LEEs out of parliment and everything will changes…mayb you can c more if they are out!!! (maybe something similar you c in taiwan nw)
aiyah, no point talking. they will never admit their mistake except to say let’s move on.
Seriously, how can they have invested ONLY $12 millions when the scambomb is marketed as LOW RISK not HIGH RISK product ? So how much percent of fund go into HIGH RISK ? Don’t tell me that they invest more in high risk than low risk.
What kind of investment decision is in place ?
Can someone really “independent” check TC’s account book ?
Now, can we deduct the loss of these taxmoney from the ministars and Woody, PM’s pay ? It’s time they account and responsible because they fail to assure that the policy of market discipline and Caveat Emptor market works.
Holland-Bukit Panjang MP said not much overall losses wor!!! See today’s news?
hongjun
“Holland-Bukit Panjang MP said not much overall losses wor!!! See today’s news?”
Indeed that is not much loss consider that $600,000 is just a peanut as once said by Mrs Peanut. What are these few millions of loss anyway to those who earn millions per year siting in Ivory Tower, evade of any responsbility and accountability, and happily punish “little people” and happily quote caveat emptor to move on when shit under them happen.
12million/600,000 = 12 000 000 / 600 000 = 20 peanuts
Why are people upset over 20 peanuts ?
Senior Minister Goh Chok Tong recently addressed grassroots leaders at a National Day event in Hougang. In his address, he gave Hougang grassroots leaders an idea of how to play the role of an effective “opposition” in the ward. He suggested that they:
“Study the annual accounts of the town council to ensure that the funds are properly used. Check whether the arrears for S&C (service and conservancy) charges are piling up, and eating into their reserves. Make sure that enough money is put aside for cyclical maintenance.”
http://theonlinecitizen.com/2008/07/sm-goh-please-love-your-country-more-than-the-pap/
What an irony!!
Now is the proper time for Singaporeans to check PAP
Town Council’s books including TH and GIC as well.
As an old timer I am seeing the corrosion of the prudency of state financial activities from the time starting with the departure of Dr Goh Keng Swee.
What I am suprised is despite warnings and even one by Mr Tan Kin Lian as recent as a year ago, the government people in charge pay no heed to a more careful consideration.
The Government people in charge seem more to want to go on ego trips from investing in fanciful structured products to wanting to own a piece of failing western banks.
Is it possible to hold the MPs involved and the town councils in charge accountable in this latest disclosure ?
The Government seem to want to emphasize that the sums involved are relatively small; by the same token of agrument then all the MPs involved can afford and can collectively pay back all the wasted funds. It will be a nice gesture if all the MPs involved step forward and voluntarily do the honourable thing before moving on.
Over to you MPs involved and town councils in charge.
Eunice Olsen you are a hero.
town councils why not join forces with tan kin lian and party to sue to recover the money.
i know you are not old and educated but you are been misled also.
sue sue sue.
sinking funds are really sinking loh!!!
I remember that some banks were encouraging people to invest in minibonds with very attractive free gifts. For every $50000 invested in minibonds the bank gives you a free 37 inch flat screen TV or a professional digital camera or a set of top of the range cooker pots. I just wonder where are all these TVs and digital cameras and cooker pots now?
To #47
I know of an elderly investor in Minibonds who was not given the free gifts although she was entitled to. Her RM pocketed the free gifts for himself !! She was illiterate and the RM knowing that she cannot read, never told her about the free gifts, and kept the gifts for himself. She only found out much later but the RM had already left the bank.
yeah the rm will even pocket vouchers from shopping malls.
Despite all the many question marks found here,
where are the answers leh?
And maybe that is the way in the digital age?