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Temasek blames misplaced belief in FTX founder and CEO Bankman-Fried for its failed US$275m investment

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SINGAPORE — Temasek Holdings issued a statement yesterday (17 Nov 2022) to announce that it will be writing down its US$275 million into the cryptocurrency exchange FTX in light of FTX’s bankruptcy filing.

This statement by the Singapore investment firm which was issued a week after the news of the bankruptcy filing — might have been spurred by public criticism over its due diligence in investing in the ill-fated FTX exchange.

FTX was founded by arbitrage trader, Sam Bankman-Fried, in 2019.

Temasek defended itself saying, “Our investment discipline, centred around intrinsic value and our risk-return framework, guides our due diligence for new investments and ongoing engagement with our investee companies.”

“We do recognise the inherent risks of investing in early stage companies and take a very measured approach to such investments by applying an illiquidity risk premium on the cost of capital,” it added. “In addition, we also add on a venture risk premium for the early stage they are in.”

Temasek also claimed that it had conducted an extensive due diligence process on FTX, which took approximately 8 months from February to October 2021.

“During this time, we reviewed FTX’s audited financial statement, which showed it to be profitable,” it said. “Advice from external legal and cybersecurity specialists in key jurisdictions was sought, with legal and regulatory review done for the investments.”

“Separately, we also gathered qualitative feedback on the company and management team,” it assured but did say that it isn’t practicable to eliminate all risks.

Temasek then blamed Mr Bankman-Fried, “It is apparent from this investment that perhaps our belief in the actions, judgment and leadership of Sam Bankman-Fried, formed from our interactions with him and views expressed in our discussions with others, would appear to have been misplaced.” (emphasis ours)

It said it had expected FTX to act ethically always, “We expect companies that we invest in to comply with their obligations under the laws and regulations of jurisdictions in which they have investments or operations; abide by sound corporate governance; and above all act ethically always.”

While Temasek claims that its US$275 million investment was made across 2 funding rounds from October 2021 to January 2022, FTX itself said in a press statement that Temasek had participated in the previously announced Series B in July 2021 along with the Series B-1 fundraiser held in October 2021.

If what FTX said was true, then Mdm Ho Ching would have overseen the initial investment into FTX before she stepped out of her CEO position in Oct last year.

Bankman-Fried Accused Of Fraud

Mr Bankman-Fried has since resigned from FTX when the saga began.

He has since been replaced by a new CEO, John Ray, a restructuring expert appointed to oversee the liquidation process.

After taking over the company, Mr Ray expressed his shock by saying, “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”

Mr Ray said his immediate priorities are locating and securing assets, investigating claims against insiders like former FTX CEO Sam Bankman-Fried, and cooperating with dozens of regulatory investigations in the US and abroad.

Sources told Reuters that Mr Bankman-Fried had secretly used US$10 billion in customer funds to prop up his own trading company Alameda Research, and at least US$1 billion of those deposits have vanished.

Mr Ray said Mr Bankman-Fried had claimed in 2021 that customers held US$15 billion on FTX’s platform, but this cannot be verified.

Also, previously, FTX did not record customer deposits as balance sheet assets, and balance sheets prepared under Bankman-Fried’s leadership cannot be trusted, Mr Ray added. FTX is attempting to recover additional assets, including US$372 million that was withdrawn without authorization on the day of the company’s bankruptcy filing.

What is equally if not more alarming, is that FTX did not have an in-house accounting department and had its accounts audited by an unknown Certified Public Accountant (CPA) Prager Metis which refers to itself as the first-ever CPA firm to open its Metaverse headquarters in the metaverse platform Decentraland.

In any case, the bankruptcy might result in the publication of FTX customers’ names, email addresses and transaction history, something which crypto owners would rather not reveal in general.

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TJC issued 3rd POFMA order under Minister K Shanmugam for alleged falsehoods

The Transformative Justice Collective (TJC) was issued its third POFMA correction order on 5 October 2024 under the direction of Minister K Shanmugam for alleged falsehoods about death penalty processes. TJC has rejected the government’s claims, describing POFMA as a tool to suppress dissent.

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The Transformative Justice Collective (TJC), an advocacy group opposed to the death penalty, was issued its third Protection from Online Falsehoods and Manipulation Act (POFMA) correction direction on 5 October 2024.

The correction was ordered by Minister for Home Affairs and Law, K Shanmugam, following TJC’s publication of what the Ministry of Home Affairs (MHA) alleges to be false information regarding Singapore’s death row procedures and the prosecution of drug trafficking cases.

These statements were made on TJC’s website and across its social media platforms, including Facebook, Instagram, TikTok, and X (formerly Twitter).

In addition to TJC, civil activist Kokila Annamalai was also issued a correction direction by the minister over posts she made on Facebook and X between 4 and 5 October 2024.

According to MHA, these posts echoed similar views on the death penalty and the legal procedures for drug-related offences, and contained statements that the ministry claims are false concerning the treatment of death row prisoners and the state’s legal responsibilities in drug trafficking cases.

MHA stated that the posts suggested the government schedules and stays executions arbitrarily, without due regard to legal processes, and that the state does not bear the burden of proving drug trafficking charges.

However, these alleged falsehoods are contested by MHA, which maintains that the government strictly follows legal procedures, scheduling executions only after all legal avenues have been exhausted, and that the state always carries the burden of proof in such cases.

In its official release, MHA emphasised, “The prosecution always bears the legal burden of proving its case beyond a reasonable doubt, and this applies to all criminal offences, including drug trafficking.”

It also pointed to an article on the government fact-checking site Factually to provide further clarification on the issues raised.

As a result of these allegations, both TJC and Annamalai are now required to post correction notices. TJC must display these corrections on its website and social media platforms, while Annamalai is required to carry similar notices on her Facebook and X posts.

TikTok has also been issued a targeted correction direction, requiring the platform to communicate the correction to all Singapore-based users who viewed the related TJC post.

In a statement following the issuance of the correction direction, TJC strongly rejected the government’s claims. The group criticised the POFMA law, calling it a “political weapon used to crush dissent,” and argued that the order was more about the exercise of state power than the pursuit of truth. “We have put up the Correction Directions not because we accept any of what the government asserts, but because of the grossly unjust terms of the POFMA law,” TJC stated.

TJC further argued that the government’s control over Singapore’s media landscape enables it to push pro-death penalty views without opposition. The group also stated that it would not engage in prolonged legal battles over the POFMA correction orders, opting to focus on its abolitionist work instead.

This marks the third time TJC has been subject to a POFMA correction direction in recent months.

The group was previously issued two orders in August 2024 for making similar statements concerning death row prisoners.

In its latest statement, MHA noted that despite being corrected previously, TJC had repeated what the ministry views as falsehoods.

MHA also criticised TJC for presenting the perspective of a convicted drug trafficker without acknowledging the harm caused to victims of drug abuse.

Annamalai, a prominent civil rights activist, is also known for her involvement in various social justice campaigns. She was charged in June 2024 for her participation in a pro-Palestinian procession near the Istana. Her posts, now subject to correction, contained information similar to those presented by TJC regarding death penalty procedures and drug-related cases.

POFMA, which was introduced in 2019, allows the government to issue correction directions when it deems falsehoods are being spread online.

Critics of the law argue that it can be used to suppress dissent, while the government asserts that it is a necessary tool for combating misinformation. The law has been frequently invoked against opposition politicians and activists.

As of October 2024, Minister K Shanmugam has issued 17 POFMA directions, more than any other minister. Shanmugam, who was instrumental in introducing POFMA, is followed by National Development Minister Desmond Lee, who has issued 10 POFMA directions.

Major media outlets, including The Straits Times, Channel News Asia, and Mothership, have covered the POFMA directions. However, as of the time of writing, none have included TJC’s response rejecting the government’s allegations.

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Hotel Properties Limited suspends trading ahead of Ong Beng Seng’s court hearing

Hotel Properties Limited (HPL), co-founded by Mr Ong Beng Seng, has halted trading ahead of his court appearance today (4 October). The announcement was made by HPL’s company secretary at about 7.45am, citing a pending release of an announcement. Mr Ong faces one charge of abetting a public servant in obtaining gifts and another charge of obstruction of justice. He is due in court at 2.30pm.

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SINGAPORE: Hotel Properties Limited (HPL), the property and hotel developer co-founded by Mr Ong Beng Seng, has requested a trading halt ahead of the Singapore tycoon’s scheduled court appearance today (4 October) afternoon.

This announcement was made by HPL’s company secretary at approximately 7.45am, stating that the halt was due to a pending release of an announcement.

Mr Ong, who serves as HPL’s managing director and controlling shareholder, faces one charge under Section 165, accused of abetting a public servant in obtaining gifts, as well as one charge of obstruction of justice.

He is set to appear in court at 2.30pm on 4 October.

Ong’s charges stem from his involvement in a high-profile corruption case linked to former Singaporean transport minister S Iswaran.

The 80-year-old businessman was named in Iswaran’s initial graft charges earlier this year.

These charges alleged that Iswaran had corruptly received valuable gifts from Ong, including tickets to the 2022 Singapore Formula 1 Grand Prix, flights, and a hotel stay in Doha.

These gifts were allegedly provided to advance Ong’s business interests, particularly in securing contracts with the Singapore Tourism Board for the Singapore GP and the ABBA Voyage virtual concert.

Although Iswaran no longer faces the original corruption charges, the prosecution amended them to lesser charges under Section 165.

Iswaran pleaded guilty on 24 September, 2024, to four counts under this section, which covered over S$400,000 worth of gifts, including flight tickets, sports event access, and luxury items like whisky and wines.

Additionally, he faced one count of obstructing justice for repaying Ong for a Doha-Singapore flight shortly before the Corrupt Practices Investigation Bureau (CPIB) became involved.

On 3 October, Iswaran was sentenced to one year in jail by presiding judge Justice Vincent Hoong.

The prosecution had sought a sentence of six to seven months for all charges, while the defence had asked for a significantly reduced sentence of no more than eight weeks.

Ong, a Malaysian national based in Singapore, was arrested by CPIB in July 2023 and released on bail shortly thereafter. Although no charges were initially filed against him, Ong’s involvement in the case intensified following Iswaran’s guilty plea.

The Attorney-General’s Chambers (AGC) had earlier indicated that it would soon make a decision regarding Ong’s legal standing, which has now led to the current charges.

According to the statement of facts read during Iswaran’s conviction, Ong’s case came to light as part of a broader investigation into his associates, which revealed Iswaran’s use of Ong’s private jet for a flight from Singapore to Doha in December 2022.

CPIB investigators uncovered the flight manifest and seized the document.

Upon learning that the flight records had been obtained, Ong contacted Iswaran, advising him to arrange for Singapore GP to bill him for the flight.

Iswaran subsequently paid Singapore GP S$5,700 for the Doha-Singapore business class flight in May 2023, forming the basis of his obstruction of justice charge.

Mr Ong is recognised as the figure who brought Formula One to Singapore in 2008, marking the first night race in the sport’s history.

He holds the rights to the Singapore Grand Prix. Iswaran was the chairman of the F1 steering committee and acted as the chief negotiator with Singapore GP on business matters concerning the race.

 

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