Non-Constituency Member of Parliament (NCMP) Leong Mun Wai expressed his surprise and concern following the government’s intervention to block the proposed acquisition of NTUC Income’s majority shares by German insurer Allianz.

The deal, announced on 17 July 2024, would have allowed Allianz to acquire a 51% majority stake in the Singapore-based insurer.

However, concerns about NTUC Income’s ability to uphold its social mission triggered a public outcry, with prominent voices speaking out against the transaction.

In his 14 October 2024 statement to Parliament, Edwin Tong, Singapore’s Minister for Culture, Community, and Youth, explained that the government found the deal “not in the public interest.”

The Ministry of Culture, Community, and Youth (MCCY) had specific concerns regarding its impact on NTUC Income and the broader cooperative movement in Singapore.

One of MCCY’s primary issues was the capital reduction proposed in the transaction, which contradicted earlier representations made during NTUC Income’s 2022 corporatisation.

Minister Tong noted that when NTUC Income transitioned from a co-op to a corporate entity, it carried over S$2 billion in surplus with the understanding that it would bolster its financial strength.

The proposed capital extraction contradicted this objective, casting doubt on NTUC Income’s long-term ability to fulfil its social role.

“If not for the ministerial exemption in 2023, NTUC Income’s accumulated surplus of some S$2 billion would have gone to the Co-operative Societies Liquidation Account (CSLA) to benefit Singapore’s co-op movement,” said Tong, adding that MCCY saw no concrete plans to safeguard this sum for social purposes in the current deal.

NCMP Leong voiced his shock over the disclosure of the capital extraction plan, a key aspect of the deal that had not been made public.

The Progress Singapore Party NCMP called for greater transparency in financial transactions, saying, “This information should be available to all Singaporeans.”

He added, “For months, we believed the provided information was complete, only to discover the capital extraction plan now. This is a crucial condition in any financial deal, and it was not disclosed to the public when we discussed the deal.”

Mr Leong pressed for accountability, asking who was responsible for withholding this critical information and whether the government would take steps to address the oversight.

He stressed the importance of transparency, particularly in transactions involving organisations with social missions, like NTUC Income.

Mr. Chee Hong Tat, Second Minister for Finance and Deputy Chairman of the Monetary Authority of Singapore (MAS) Board of Directors, emphasised that the proposed capital reduction was initiated by Allianz and had yet to receive approval from MAS.

He noted that it is standard practice for regulators to evaluate all aspects of a proposal before reaching a conclusion.

Mr. Chee reassured Parliament that discussions and concerns regarding the capital reduction had been communicated transparently. He referenced Minister Tong’s earlier speech, which outlined the key considerations behind the government’s concerns, particularly regarding the potential impact on NTUC Income’s social mission.

In response to Mr. Leong, Minister Tong urged him not to mischaracterise the situation and reiterated that the government had been transparent in its assessment of the transaction.

Government’s Response and Minister Tong’s Position

Minister Tong said the government’s decision to block the transaction was unrelated to Allianz’s standing as a buyer but focused on the structure of the deal.

The government was concerned about the lack of safeguards ensuring that NTUC Income could continue fulfilling its social mission. While NTUC Enterprise had committed to maintaining this mission, the MCCY remained unconvinced that such commitments were backed by legally binding provisions.

Minister Tong also revealed that after the transaction, NTUC Enterprise would have become a minority shareholder, with limited influence on NTUC Income’s future direction, holding fewer board seats and losing its ability to appoint the chairman. Though these factors alone did not trigger government opposition, combined with the capital extraction and lack of structural protections, they posed a significant risk.

Minister Tong confirmed that while the government would not allow the current deal to proceed, it remained open to future proposals involving Allianz or other partners if the concerns raised were addressed.

“The government’s view is not that NTUC Income should not seek partnerships or external capital; rather, we must ensure that any deal preserves NTUC Income’s ability to fulfil its social mission and does not undermine the cooperative movement as a whole,” Tong stated.

MAS’s Role and Response from Finance Ministry

During the same Parliamentary session, Tanjong Pagar GRC MP Joan Pereira questioned why the Monetary Authority of Singapore (MAS) had not shared Allianz’s capital extraction plan with MCCY earlier, given its significance to the Income-Allianz transaction. This raised further concerns about coordination between government agencies overseeing critical financial transactions.

Responding to Pereira’s query, Minister Chee explained that MAS had received the capital extraction proposal in mid-July 2024. At that time, MAS was primarily focused on Allianz’s financial strength and ensuring protection for NTUC Income’s policyholders. MAS did not immediately see the relevance of the capital reduction to MCCY’s earlier decision to grant NTUC Income an exemption during its corporatisation.

It was only after the 6 August 2024 Parliamentary session that MAS identified potential implications for MCCY’s oversight of NTUC Income. Minister Chee added that regulatory information gathered by MAS is typically shared with other government agencies only when necessary. The decision to inform MCCY was made once the broader implications became clear.

Public Outcry and Concerns

The controversy surrounding the deal largely revolved around concerns that Allianz, as a multinational corporation, would not be aligned with NTUC Income’s mission to serve the needs of lower-income Singaporeans.

NTUC Income was established with a clear mandate to provide affordable insurance options, especially for those in the labour movement and the lower-income segments of society.

Several prominent voices spoke out against the transaction.

Former NTUC Income CEO Tan Kin Lian expressed concerns about the potential shift in NTUC Income’s priorities, stating that the proposed deal could undermine its original purpose.

Similarly, ambassador-at-large Tommy Koh and former Group CEO of NTUC Enterprise Tan Suee Chieh voiced their opposition.

Mr Tan Suee Chieh went as far as to call the deal a “breach of good faith” and urged government regulators to intervene.

The key fear was that Allianz’s corporate objectives, which are driven by profit motives typical of global insurers, would lead to a reduction in NTUC Income’s commitment to affordable and accessible insurance for Singapore’s working class.

There were worries that under Allianz’s ownership, insurance premiums could increase, pricing out low-income individuals who depend on NTUC Income’s services.

NTUC Income, Singapore’s one and only insurance co-operative, was corporatised in 2022 into Income Insurance Limited “to achieve operational flexibility and gain access to strategic growth options to compete on an equal footing with other insurers locally and regionally”.

Shareholders were assured at the 2022 annual general meeting that NTUC Enterprise will continue to be the majority shareholder of the new company post-corporatisation.

Minister Chee informed the House that the LTA is investigating the root cause of the axle box failure while reviewing fault detection and incident-handling procedures.

Additionally, to supplement its efforts, the LTA will be supported by an Expert Advisory Panel chaired by Malcolm Dobell, former Head of Train Systems for the London Underground, and five other local and international experts.

The Ministry of Transport’s Transport Safety Investigation Bureau (TSIB) will also conduct an independent safety investigation.

“We expect the investigations to be completed in the next few months, and the findings will be released publicly. LTA will mete out penalties if the investigations reveal lapses,” Minister Chee added.

In a supplementary question, Ms Hazel Poa, Non-Constituency Member of Parliament (NCMP) from the Progress Singapore Party (PSP), sought clarification on the differences between the LTA’s investigation approach for the EWL disruption and a COI.

Minister Chee acknowledged the distinctions between various types of investigations but emphasised that all approaches share common elements: thoroughness, evidence-based methodologies, and a focus on understanding what happened, determining root causes, and identifying areas for improvement.

Ms Poa colleague, NCMP Leong Mun Wai further challenged the Minsiter to explain the difference between this incident and the 2011 breakdown, which led to a COI, and whether a new COI would help ensure that recommendations from the 2011 COI have been fully implemented, including any non-technical factors that should be considered.

Minister Chee responded by reiterating his earlier assurance that thorough investigations would be conducted by the LTA and TSIB, upported by an Expert Advisory Panel.

He explained that although both the 2011 breakdown and the current incident involved serious disruptions, the operational context and performance of the MRT system today are vastly different.

In 2011, the mean kilometers between failures (MKBF) was only 60,000 km, whereas today, all MRT lines exceed the target of 1 million MKBF, he said.

Minister Chee further argued that other significant incidents, such as the flooding at Bishan and the Joo Koon collision, did not result in COIs but were still thoroughly investigated by LTA, leading to improvements.

He assured Mr Leong that the findings from the 2011 COI had been implemented, as evidenced by the overall reliability improvements in the MRT system.

Ms Poa, persistently on the issue, in a supplementary question reminded the MInsiter that under COI, it allows for the public hearing of inputs from experts, rather than reading about it in a summarized version in a report.

She again pressed whether Minister would allowing such public hearings due to greater transparency will be helpful to what’s building and maintaining public trust and confidence.

Without addressing the issue of transparency, Mr Chee reaffirmed his confidence in the thoroughness of the ongoing investigations by the LTA and TSIB, underscoring that the ultimate goal remains to ascertain the facts, determine the root causes, and identify areas for future enhancement.