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Temasek – Murky figures and unanswered questions

Temasek’s explanation is adding insult to injury. Leong Sze Hian.

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“We look at this speculation sometimes with irritation and sometimes with amusement because all of it is very far away from the truth, including those sources who claimed to be familiar with the situation.” – Temasek CEO Ho Ching on Charles Goodyear’s departure. (Straits Times)

Leong Sze Hian

In May this year, the Straits Times carried the following headlines on its front page:

Straits Times, Front Page, 29 May 2009

In Parliament in May, “The minister said Temasek’s $58 billion fall in value came after a ‘much greater gain’ of $114 billion over the preceding five years. ‘Even after taking into account the recent sharp decline, Temasek’s portfolio had still grown by $56 billion over the course of the cycle,’ he told the House” (“Temasek made big gains”, ST, May 28).

Now, we’re told Temasek Holdings has lost S$40 billion. (“Portfolio down $40b”, ST Breaking News, Jul 29).

So, does it mean that with the latest information available today, what took five years to accumulate ($114 billion from March 2003 to March 2008),  has  been lost  –  $58 billion  from  March  2008 to November 2008  and  at  least  $40 billion from  January 2009  to  March 2009 (over a total of just 11 months, excluding December 2008 for which we have no information) ?

This begs the question – when the Finance Minister gave the figure of a net gain of $56 billion in Parliament on May 27, did he know that at least $40 billion had already been lost from January to March this year – almost two months before his reply in Parliament?

The latest Straits Times report (29 July 09) says:

“Singapore state investor Temasek said its portfolio slid by at least $40 billion, or more than a fifth, in the year to March …  Ms Ho (CEO Ho Ching) did not give the exact portfolio level as of March 2009”.

Murky figures

Straits Times Online, 19 June 2009

I find it somewhat strange if not rather amusing to hear that we lost at least $40 billion. What does “at least $40 billion” mean? $41 billion,  $49 billion, or more? Why not tell Singaporeans the exact figure? And of course, without the exact portfolio level as of March 2009, we can’t even try to make any meaningful estimate, as we don’t have the figure for December last year. Since the “at least $40 billion” is “in the year to March”, we need the December 2008 figure. Why is it that we can be told the November 2008 figure, but not the December figure?

And what does “more than a fifth” mean? More than a fifth of what figure? We can’t tell much without knowing the relevant numbers.

Isn’t  Temasek’s losses, returns and portfolio values, like a never-ending jigsaw puzzle?

In the Wall Street Journal article, “Temasek recoups some losses” (Jul 29), it reported:

“We are certainly not happy with the negative wealth added in March last year as well as March this year,” Ms Ho said… However, the figures show that Temasek has recouped some of the initial losses made at the height of the financial crisis as global markets begin to rally on hopes that the worst of the downturn has passed.

Since the global equity markets have risen by about 50 per cent since 9 March 2009 (MSCI World Index), and “the figures show that Temasek has recouped some of the initial losses made at the height of the financial crisis”, why not tell us the losses to-date this year (June/July 2009), which surely must be much better than the “at least $40 billion” loss until March?

I hate to say this but not telling us more now will only make Singaporeans even more unhappy by not giving us the better figure now, compared to March.

I cannot understand the rationale for this . “We are certainly not happy” may be an understatement which is perhaps self-inflicted, with Singaporeans perhaps being subjected to more unhappiness than necessary.

Perks “deferred”?

As if to convince us that they would share the unhappiness of Singaporeans, “Ms. Ho said the bulk of incentives to senior management has been deferred by three to 12 years”. What exactly does this mean – no bonus, salary increments, performance incentives, etc, for years? Or just that they will still get them, only later (deferred)? What incentive is there for them to try to recoup the losses, if most incentives are deferred? What is “the bulk”? 51 per cent or 90 per cent?

I think it is probably about the best time now to disclose the remuneration and incentive packages for senior management. Otherwise, it may just fuel even more speculation and displeasure as to how people are being rewarded or penalised for losing so much of our reserves.

Exuberant confidence on hindsight

In her speech at the Institute of Policy Studies, Ms Ho said:

“In our Temasek Review last year, we reported an annual value-at-risk of almost $40 billion last March. This meant a 16 per cent probability for our portfolio value to drop more than $40 billion by March this year. Indeed, it has turned out to be so, and more.”

This sounds like exuberant confidence on hindsight – that we predicted and knew the risks.

In this context, given what has happend in this financial crisis, I think no financial institution CEO would have the gall to talk in such a manner about the veracity of its risk analysis model. Almost everyone may agree that with the near-death or collapse of some of the largest financial institutions in the world, nobody is boasting about their risk models, which have been shown to be almost useless as a predictive tool. I can’t help but feel that we may be the laughing stock of the world with such statements.

So, what are the probabilities and time frames for recouping the losses?

After Temasek said last week that Charles ‘Chip’ Goodyear will not become CEO due to differences over strategy”, there have been all kinds of speculation as to what these “differences over strategy” are. Nobody knows, but I can try to fathom a guess for one possible difference. If you are the new CEO and even you had difficulty figuring out the losses and returns, how would you ever be able to face Singaporeans, the world, and how would history judge you?

In the report, “Temasek to hang on to ‘family jewels’, allow public to invest” (Bloomberg, Jul 29), it says that:

“Temasek would consider over the long term creating one more group of stakeholders, and may invite the public to “co-invest” with the company. Ho said. It may seek “sophisticated investors” in five to eight years and retail investors in the next eight to 10 years, she added. “It is important to test this over at least one market cycle during the next five to eight years,” she said. “If this pilot is successful, we may then consider a co-investment platform for retail investors in perhaps eight to 10 years’ time”.

After all that has happened, I think the least that Temasek should do is to share its expertise and future returns with Singaporeans, instead of making us wait for up to 10 years, by allowing “sophisticated investors” to co-invest first.

Why does it take up to 10 years to test whether a simple concept like allowing others to co-invest can work?

It may be somewhat akin to adding insult to injury.

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Read also: Temasek losses: Enough is enough by Leong Sze Hian.

And: In a culture of secrecy, no courage is required by Ravi Philemon.

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Chee Soon Juan questions Shanmugam’s $88 million property sale amid silence from Mainstream Media

Dr Chee Soon Juan of the SDP raised concerns about the S$88 million sale of Mr K Shanmugam’s Good Class Bungalow at Astrid Hill, questioning transparency and the lack of mainstream media coverage. He called for clarity on the buyer, valuation, and potential conflicts of interest.

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On Sunday (22 Sep), Dr Chee Soon Juan, Secretary General of the Singapore Democratic Party (SDP), issued a public statement on Facebook, expressing concerns regarding the sale of Minister for Home Affairs and Law, Mr K Shanmugam’s Good Class Bungalow (GCB) at Astrid Hill.

Dr Chee questioned the transparency of the S$88 million transaction and the absence of mainstream media coverage despite widespread discussion online.

According to multiple reports cited by Dr Chee, Mr Shanmugam’s property was transferred in August 2023 to UBS Trustees (Singapore) Pte Ltd, which holds the property in trust under the Jasmine Villa Settlement.

Dr Chee’s statement focused on two primary concerns: the lack of response from Mr Shanmugam regarding the transaction and the silence of major media outlets, including Singapore Press Holdings and Mediacorp.

He argued that, given the ongoing public discourse and the relevance of property prices in Singapore, the sale of a high-value asset by a public official warranted further scrutiny.

In his Facebook post, Dr Chee posed several questions directed at Mr Shanmugam and the government:

  1. Who purchased the property, and is the buyer a Singaporean citizen?
  2. Who owns Jasmine Villa Settlement?
  3. Were former Prime Minister Lee Hsien Loong and current Prime Minister Lawrence Wong informed of the transaction, and what were their responses?
  4. How was it ensured that the funds were not linked to money laundering?
  5. How was the property’s valuation determined, and by whom?

The Astrid Hill property, originally purchased by Mr Shanmugam in 2003 for S$7.95 million, saw a significant increase in value, aligning with the high-end status of District 10, where it is located. The 3,170.7 square-meter property was sold for S$88 million in August 2023.

Dr Chee highlighted that, despite Mr Shanmugam’s detailed responses regarding the Ridout Road property, no such transparency had been offered in relation to the Astrid Hill sale.

He argued that the lack of mainstream media coverage was particularly concerning, as public interest in the sale is high. Dr Chee emphasized that property prices and housing affordability are critical issues in Singapore, and transparency from public officials is essential to maintain trust.

Dr Chee emphasized that the Ministerial Code of Conduct unambiguously states: “A Minister must scrupulously avoid any actual or apparent conflict of interest between his office and his private financial interests.”

He concluded his statement by reiterating the need for Mr Shanmugam to address the questions raised, as the matter involves not only the Minister himself but also the integrity of the government and its responsibility to the public.

The supposed sale of Mr Shamugam’s Astrid Hill property took place just a month after Mr Shanmugam spoke in Parliament over his rental of a state-owned bungalow at Ridout Road via a ministerial statement addressing potential conflicts of interest.

At that time, Mr Shanmugam explained that his decision to sell his home was due to concerns about over-investment in a single asset, noting that his financial planning prompted him to sell the property and move into rental accommodation.

The Ridout Road saga last year centred on concerns about Mr Shanmugam’s rental of a sprawling black-and-white colonial bungalow, occupying a massive plot of land, managed by the Singapore Land Authority (SLA), which he oversees in his capacity as Minister for Law. Minister for Foreign Affairs, Dr Vivian Balakrishnan, also rented a similarly expansive property nearby.

Mr Shanmugam is said to have recused himself from the decision-making process, and a subsequent investigation by the Corrupt Practices Investigation Bureau (CPIB) found no wrongdoing while Senior Minister Teo Chee Hean confirmed in Parliament that Mr Shanmugam had removed himself from any decisions involving the property.

As of now, Mr Shanmugam has not commented publicly on the sale of his Astrid Hill property.

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Redditors question support for PAP over perceived arrogance and authoritarian attitude

Despite Senior Minister Lee Hsien Loong’s warning that slimmer electoral margins would limit the government’s political space “to do the right things”, many Redditors questioned their support for the ruling PAP, criticising its perceived arrogance. They argued that SM Lee’s remarks show the party has ‘lost its ways’ and acts as if it alone can determine what is right. Others noted that the PAP’s supermajority allows for the passage of unfavourable policies without adequate scrutiny.

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In a recent speech, Senior Minister Lee Hsien Loong warned that “if electoral margins get slimmer, the government will have less political space to do the right things.”

Mr Lee, who served as Prime Minister for 20 years, highlighted the risks associated with increasingly competitive politics.

“It will become harder to disregard short-term considerations in decision-making. The political dynamics will become very different,” he stated during his speech at the Annual Public Service Leadership Ceremony 2024 on 17 September.

“Singaporeans must understand the dangers this creates, and so must the public service,” SM Lee stressed.

SM Lee pointed out that Singapore faces formidable internal and external challenges in the years ahead, with rising expectations and demands from citizens.

As growth becomes harder to achieve and politics becomes more fiercely contested, he warned, “Things can go wrong for Singapore too.”

He urged vigilance in preparing for an uncertain future, noting, “As the world changes, and as the generations change, we must do our best to renew our system – to ensure that it continues to work well for us, even as things change.”

Critique of PAP’s Arrogance and Disconnect from Singaporeans

The People’s Action Party (PAP) experienced a notable decline in its vote share during the 2020 General Election, securing 61.24% of the votes and winning 83 out of 93 seats, a drop from 69.9% in 2015.

A significant loss was in Sengkang GRC, where the PAP team, led by former Minister Ng Chee Meng, was defeated by the Workers’ Party (WP).

In discussions on Reddit, some users questioned why they should support the ruling PAP, criticising the party’s perceived arrogance.

They pointed out that SM Lee’s recent remarks illustrate that the party has strayed from effectively serving Singaporeans and seems to believe it has the sole authority to decide what is right.

Others highlighted that the PAP’s super-majority in Parliament enables the passage of unfavourable policies without sufficient scrutiny.

One comment acknowledged that while many older Singaporeans remain loyal to the PAP due to its past achievements, younger generations feel the party has failed to deliver similar results.

There is significant frustration that essentials like housing and the cost of living have become less affordable compared to previous generations.

The comment emphasised the importance of the 2011 election results, which they believe compelled the PAP to reassess its policies, especially concerning foreign labor and job security.

He suggested that to retain voter support, the PAP must continue to ensure a good material standard of living.

“Then, I ask you, vote PAP for what? They deserve to lose a supermajority. Or else why would they continue to deliver the same promises they delivered to our parents? What else would get a bunch of clueless bureaucrats to recognise their problems?”

Emphasising Government Accountability to the Public

Another Redditor argued that it is the government’s responsibility to be accountable to the people.

He further challenged SM Lee’s assertion about having less political space to do the right things, questioning his authority to define what is “right” for Singapore.

The comment criticised initiatives like the Founder’s Memorial and the NS Square, suggesting they may serve to boost the egos of a few rather than benefit the broader population. The Redditor also questioned the justification for GST hikes amid rising living costs.

“Policies should always be enacted to the benefit of the people, and it should always be the people who decide what is the best course of action for our country. No one should decide that other than us.”

The comment called for an end to narratives that present the PAP as the only party capable of rescuing Singapore from crises, stating that the country has moved past the existential challenges of its founding era and that innovative ideas can come from beyond a single political party.

Another comment echoed this sentiment, noting that by stating this, SM Lee seemingly expects Singaporeans to accept the PAP’s assumption that they—and by extension, the government and public service—will generally do the “right things.”

“What is conveniently overlooked is that the point of having elections is to have us examine for ourselves if we accept that very premise, and vote accordingly.”

A comment further argued that simply losing a supermajority does not equate to a lack of political space for the government to make the right decisions.

The Redditor express frustration with SM Lee’s rhetoric, suggesting that he is manipulating public perception to justify arbitrary changes to the constitution.

Concerns Over PAP’s Supermajority in Parliament

Another comment pointed out that the PAP’s supermajority in Parliament enables the passage of questionable and controversial policies, bypassing robust debate and discussion.

The comment highlighted the contentious constitutional amendments made in late 2016, which reserved the elected presidency for candidates from a specific racial group if no president from that group had served in the previous five terms.

A comment highlighted the contrast: in the past, the PAP enjoyed a wide electoral margin because citizens believed they governed effectively. Now, the PAP claims that without a substantial electoral margin, they cannot govern well.

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