Lim Chih Yang / Writer
On 31 October 2008, I wrote an article for The Online Citizen entitled, Town Councils – be accountable to constituents. That was when the first whiff of trouble that Town Council had invested in toxic products by Lehman-link structured products first raises its ugly stench.
In today’s Parliament sitting, as reported by Channel News Asia, Dr Teo Ho Pin revealed that Holland – Bukit Panjang and Pasir Ris – Punggol invested a total of $12 million from the sinking fund in failed investments products. In addition, there were 6 PAP run town councils that had an exposure of about $4 million in Lehman Brothers through their fund managers’ portfolio.
Three questions naturally arose from the whole saga.
- Beside the failed investment in Lehman Brothers – link structured products; did the Town Council rake up any losses that had not been reported to Parliament? Could Dr Teo Ho Pin give a detailed account of the losses in other investment products that Town Councils could have mistakenly invested the sinking fund?
- Channel News Asia highlighted that “…During a six-year period starting from 2002, the return on its investments totalled about S$24 million…” Any finance sophomore will be able to highlight to you that the period of 2002 to 2007 was the uptrend period in economic cycle, where the world economy is about to start the bull run which ended spectacularly in 2007. In investment reporting, the time period for accounting is of paramount importance as it could mean the difference between losses or gains. Could the Town Council provide the net investment gained or loss in the period from 2006 to 2002? Could the Town Council give us the net gain or loss of the town councils’ sinking fund investments since the day they started their foray into investing residents’ sinking fund.
- What are the checks and balances in place to prevent any rogue investment adviser from blowing away the sinking fund? Senior Minister of State for National Development Grace Fu told Parliament that “… it was not practical nor desirable for the ministry to be overly prescriptive in enforcing the guidelines, which seek to achieve an optimal balance between reasonable returns and financial prudence…” If a rogue trader, Nick Leeson, could cause the downfall of England’s oldest bank, what checks and balances are there within the Town Councils’ controls to ensure that there will not be any embarrassing failed investments by the town councils?
The stench arising from losses by PAP-run town councils in Lehman link structured products has rouse the anger of many residents who feel that the town councils had been irresponsible with the stewardship of the sinking funds. While the current stench can be attributed only to Lehman link structured products, are there more variety of stench to arise from other failed products that may have resulted in losses? Are there more skeletons in the closet yet to be revealed?
Perhaps all the 16 PAP Town Council would like to come clean on their investments gains or losses to lay all the ghosts of its investment past to rest. Perhaps then the stench will be blown away and the skeletons permanently buried.
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Joe:
Ok maybe they have a formula to do it whcih we don’t know about? Maybe the MPs should ask the Town Councils how they operate. I doubt much will be shed here.
Latest from Parliament:
More state companies are exposed to the toxic investments:
Singapore Land Authority
Professional Engineers’ Board
Civil Service College
47) Joe on November 18th, 2008 5.03 pm
A lot of us are good in doing complex maths problems – E-maths, A-Maths, Engineering Maths, Financial Maths, etc.
But It is quite strange that when it comes to simple everyday things in life which do not quite add up, some people just happen to gloss it over and provide all the rationale for such silly myopia.
1) smallvice585 on November 18th, 2008 12.54 am
Even the Loyal Opposition Town Councils are doing a better job in managing the sinking funds. Despite the sheer amount of resources commanded by PAP, PAP can still make big mistakes. We are getting more value for our money with the Loyal Opposition.
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Is it ??
If so, then can we say that the Alternative party town councils in this aspect has performed better than them?
I no idea wor.
Chiam reported that his town council only buy bonds from government and government agencies. It was on Channel News Asia.
34) Volunteer 84 wannabe alternative MPs for coming GE on November 18th, 2008 12.41 pm
WANTED: 84 genuine care for Singapore democracy Nominees for POLLING DAY.
…..
If 2 weeks before the election,
IF 20 – 50 independent and / or new alternative political party candidates spring to the scene, would there be enough time to ‘check’ on their ‘weak areas’ that if found may invalidate their election chance?
Singapore has more than 50 MP-level talents who are singaporeans, i am sure.
Look at our MPs like lee bee wah. so talented, maybe only a few tens of singaporean out of 4 million can match her calibre.
So, imagine if at last minute, 50 new faces spring up. Pleasantly surprising singaporeans who want to vote by way of not having WALKOVERs. Imagine!
Is 2 weeks sufficient to ‘check’ and comment on all the 50 new talents who step forward? I mean check by our highly unbiased and world renowned MSM ?
And if Walkovers are reduced, or eliminated by this, what would the results be like?
Will this surprise enable the many who did not vote due to walkovers finally get the chance to vote?
what if more than 50? Anything is possible. :)
“Latest from Parliament:
More state companies are exposed to the toxic investments:
Singapore Land Authority
Professional Engineers’ Board
Civil Service College”
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Did our gov spout half-truth again ? Is this the best list they can give ?
How about the most ultimate company of all times ?
Temasek Holding and GIC ? Didn’t TH invest in some of these companies that buy or sell these toxic financial products ?
Isn’t TH also a company ?
http://en.wikipedia.org/wiki/Temasek_Holdings
“Temasek Holdings is an investment company owned by the government of Singapore. With a multinational staff of more than 300 people, it manages a portfolio of about S$185 billion, or more than US$127 billion, focused primarily in Asia. It is an active shareholder and investor in such sectors as banking & financial services, real estate, transportation & logistics, infrastructure, telecommunications & media, bioscience & healthcare, education, consumer & lifestyle, engineering & technology, as well as energy & resources. In 2008, The Economist reported that Morgan Stanley had estimated the fund’s assets at US$159.2 billion[1].”
Must be a honest mistake from the gov to leave TH out !
What if more were invested in the loss-making investment?
Luckily, it was not the whole 35%.
But then this fiasco worries me.
Past, present, future.
“Luckily, it was not the whole 35%.”
Since when the government is capable of telling the truth ?
The founding father turned out to be the evil stepfather, for whom we, true sons and daughters of Singapore, are nothing more than an avenue for his lust and greed. We have been abused, prostituted and sold cheap. We can choose to remain in chains for a few more decades, or we can be brave to fight for our freedom and future. Come on, we have nothing to lose and everything to gain when we vote to break their stranglehold
According to ST today, 5 statutory boards bought credit-linked notes:
Monetary Authority of Singapore
Infocomm Development Authority of Singapore
Singapore Land Authority
Professional Engineers’ Board
Civil Service College
YA the news just get sicker isnt it? Who knows maybe MAS and other state companies may even buy into other stocks and shares that they have not declared at all.
I think it is true now that our transparency is very shallow and they have hide away alot of state accounts. So far, no one, noteven the Presdient, can have access to these accounts.
How to make them reveal more of these dark secrets?
You realise how LSL is so quiet these days?
I’ve been trying to locate the town council financial rules on the web. i tried the statutes but have been unable to find. would anyone know where I can find them? thanks.
49) Gilbert Goh Keow Wah on November 18th, 2008 5.10 pm
In your list of hiccups there are seven items. Of these seven items, only the first one does not have anything in common with the other six.
The first one talks about a one-party system of governance that translates directly to one party harbouring absolute power. The absolute power being held by this party will eventually go to one man – the one who is at the top. This is absolute danger..
How can anyone not think and consider this is beyond my comprehension.
The common feature of the other six points is; MONEY. Everything boils down to money. When a family talks about money day in and day out, what does it tell you about such a family? Yes; it no longer is a family but a business. And this is what Singapore has become.
The more money the better they proclaim. The more money the easier to solve problems, they shout from on high. The more money we make, the more we can distribute and share, they promised. The more money, the more first class we become, or so they hoped.
Whatever happened to: Money being the root of ALL evils?. Absolute power blinds the one who has good intentions, even.
You are right that the GRC is another devil disguised as an angel. Those who walked through the back doors will be more interested in running Singapore, the business, rather than Singapore, the family.
I have always thought about what Observer (SG-HK) said in one of his many posts; that the spirit of camaraderie of an age gone by is the missing ingredient in today’s society. I thought I understood what he meant but in all truthfulness, only now do I get a glimpse of what he had actually meant.
We have lost it haven’t we?
We need to take back what belongs to us. It is a LONG and HARD road ahead and the first step is always the most difficult but taking that first step is not a choice.
IT IS NECESSARY!.
Singaporeans. Let us all take this first step together. Let us take back our home. Let us cast our vote for the Opposition, never mind who it may be. Never mind the danger it will bring. Because we are already in dangerous waters and are already drowning. What difference will it make if we cling on to a leaf or a log? As long as there is a glimmer of hope, it will keep us alive.
I have said my mind and made my peace with myself.
What about you, my fellow Singaporeans and family?
Hi Meng,
TOWN COUNCILS ACT (CHAPTER 329A)
LINK to the Act
A few points from the Act:
Power of investment
41. A Town Council may invest its funds in accordance with the standard investment power of statutory bodies as defined in section 33A of the Interpretation Act (Cap. 1).
Grants
42. For the purposes of enabling a Town Council to carry out its functions under this Act or any other Act, the Minister may from time to time make grants-in-aid to the Town Council of such sums of money and subject to such conditions as the Minister may determine out of moneys to be provided by Parliament.
For your information.
hi Joe, thanks, i checked that site too. Unfortunately, they do not talk about the specific investment rules e.g. 35% max in riskier investments, etc.?
Hi Meng,
I am also looking for that part too. I am still searching but I found some hints from an old ST news article:
Ministry of National Development is the one that set the 35% rule. Before the 35% rule, TCs were using the Trustee Act to “play” with the sinking funds. Now, the trace somehow needs to start from MND. We need to find where is the starting point.
It is going to be a long day.
I felt really sad when our PM said we have no place for a two party system.
What has already been said, absolute power at the top, abuse of power, no check and balances etc. is one side of the story, but I think PM has raised us to a laughing stock amoung the democracies! This is really sad, not only insulting but intelligence but a shame to the world of nations. My goodness a man of his stature and intelligence and experience, what is he thinking of.
Really sad and I feel sorry for our country.
68) ACACIA
Can’t agree more.
This is another manifestation of Uniquely (U NEED LEE) Singapore.
the town councils had too much $$$$ surpluse
should reduce 60% of monthly conservancy charges
Looks like TC are only allowed to invest in stocks and bonds. CDS/CDO/CLN underlying the structured products are derivatives. Therefore the TC/fund managers appear to breach the investment mandate. The fund managers should be revealed and sacked if this is the case.
Link to comment (2:46AM, unedited) on Mr Tan Kin Lian’s Blog on the post of “Town councils should take legal action for mis-selling” dated Wednesday, November 19, 2008
Politically, there is no way that a legal action will be allowed to succeed in the Singapore’s courts. The Singapore courts are fair 99% of the time. However in the 1% of the time that the decision has significant political implications, then there will be executive guidance on what the “correct” decision should be. – comment on TKL’s blog (#72)
If the Court rules in favour of financial institutions, the Singapore Judiciary looses its standing in society as an impartial forum to address grievances. If the Court rules in favour of victimised investors, MAS looks bad. Either way, the PAP government looks bad.
Plus you are suggesting that PAP is politicising the issue by airing that they made losses over the Lehman debacle. On the contrary, it actually highlighted why PAP government does not want to investigate. The PAP government themselves had made losses from the Lehman debacle, so they cannot be an impartial investigator.
It is not only retail investors such as Ah Gong and Ah Ma that have lost money. Other victims who had lost money due to the Lehman bankruptcy includes the PAP Town Councils, Monetary Authority of Singapore, Singapore Civil Service College, Singapore Land Authority, Infocomm Development Authority of Singapore and Professional Engineers Board.
Source: http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_303765.html?vgnmr=1
73) smallvice585 on November 20th, 2008 10.09 pm
It is not only retail investors such as Ah Gong and Ah Ma that have lost money. Other victims who had lost money due to the Lehman bankruptcy includes the PAP Town Councils, Monetary Authority of Singapore, Singapore Civil Service College, Singapore Land Authority, Infocomm Development Authority of Singapore and Professional Engineers Board.
A lost is still a lost, whether its paper or cupboard, so don’t confuse the public which all these idiots are good at, always never admitting to their mistakes!
tiredsingaporean (#74),
I stress again: On the contrary, it actually highlighted why PAP government does not want to investigate. The PAP government themselves had made losses from the Lehman debacle, so they cannot be an impartial investigator.
smallvice585,
this gov is deadlocked on doing the right now in the minibomb saga. As you have said, the court obviously cannot rule positively and partially for the investors as it means that the bank needs to compensate Town Council and other GLC companies who invested in the minibomb. Note that these entities prudently avoid quoting the risk level of the minibomb (high/low risk) when they first invested in the product. If they said low risk then it is obviously mis-selling and mis-representation have occurred and legal investigation must be conducted as it involves illegal use of the public fund to purchase a product that is not what it is. If they quote high risk, it means they are incompetent and greedy because they invest “WITH THEIR EYES WIDE OPEN” for such a highly risky and poor return using public money, and therefore the management team must step down.
But from the press, it is obvious that they consider it low risk not high risk for minibomb, hence a thorough investigation must be conducted otherwise they just prove to us they are nothing but a kangaroo government. We are talking about abusement of public fund now.
they are incompetent and greedy because they invest “WITH THEIR EYES WIDE OPEN” 76) Daniel .
You are absolutely spot on! Teo SL knew the structured products were complex.
The Town Councils did not foresee the financial tsunami and its impact on complex structured products. Teo Ser Luck, MP Pasir-Ris Punggol GRC.
Yet, he found it wise to invest public funds into it. Whether he foresaw the tsunami or not is another thing altogether. Why use public funds for complex investments with high risks?
You are therefore right that “legal investigation must be conducted as it involves illegal use of the public fund”. Walter Woon has also gone into hiding.
With reference to ST Forum letter by:
Simon Koh
General Manager
Tanjong Pagar Town Council
TC does not invest in LB directly but FM did. Er, it seems like TC pushing the blame to FM. You mean that TC did not know what FM invested in, till now? Again, TC is using the percentage tactic.
Another spinning effort.
see! alot of push here and push there gong fu masters trying to eh_lak the responsibity.
i wonder why “highly-intelligent” people are deluding themselves into thinking that they must be the best because they are MPs. they tell you they have your interest at heart and will decide what is good for others. If someone has decided that he is the best and he knows everything, nobody can help him. The best way to learn and succeed is to know that we may know nothing because the universe out there is really complex (as shown by recent global financial crisis). Ego, arrogance and overconfidence in our MPs are very lethal to SG.
Aiyah dodo,
I remembered LHL telling Singaporeans during the so-called Marxist plot that his father, the Whiter-than-white Immortal, had read the bible a couple of times and he knows everything about the bible.
See, he knows everything. He is already God! No wonder his son takes after him, declaring that he is also the second God. With the gods in power, who needs mortal men to oppose them, let alone stand side by side with them.
Pui! to these fake gods!
68)ACACIA:
I wrote an article on the merits of the two parties system and was published in ST forum page two days ago.
Today, there are three letters published there advocating for one party politics! What a shock.
Frankly, I am not so bothered by the loss or exposure by the Pasir Ris-Punggol council. High risk comes with High returns. What I am troubled is that the estate committee and finance committee at this Town council are a “Bunch of Crowns” .
They are totally out of touch concerning the real needs of the residence at this estate.
Not to long ago, they splash over a million dollars building bicycle tracks on an experimental move that they hope would revolutionize the precinct afterwhich others Town councils would emulate. Till today, they have not openly admitted that the funds( million $$) could have been put to more productive use.
Recently, a basketball court next to my executive flat in Pasir Ris was resurfaced closed to S$30k. This court is hardly used by over a dozen kids daily. Prior to their massive resurfacing, the court looks relatively good and in an excellent condition . I wonder if they are enriching the contractors at the residents expense.
Like the bicycle tracks, did they seriously conduct a prolong period of observation and headcount to assume the viability and accountability of such projects.
Anyway the GM of Pasir Ris-Punnggol is totally hopeless, arrogance and a truth snob. She should start s analysising her priority and duties to the residents.
I am also concerned with the composition of TC finance committee. What are their experience and qualifications with fund management, and how do they select fund managers. How much are fund managers paid and how are the aggregate returns computed? These are very specialised skillsets and I wonder how able is the finance committee to tackle these issues.