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Zilingo liquidation: Chee says EDBI and Temasek do engage with investee companies to monitor performance

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SINGAPORE — Last Tuesday (7 Feb 2023), Non-constituency Member of Parliament Leong Mun Wai asked the government with regard to the financial losses suffered by EDBI and Temasek in the recent liquidation of Zilingo, a high-profile online fashion start-up started by Ankiti Bose, a resident in Singapore.

Mr Chee Hong Tat, the Senior Minister of State for Finance, replied to Mr Leong, acknowledging that both EDBI and Temasek did invest in Zilingo, with EDBI in 2018 and Temasek in 2020.

“These investment decisions were made independently by the two entities,” Mr Chee said.

“EDBI and Temasek typically do not comment on their investments in specific companies, or the performance of these individual investments. The Government’s approach is to review the overall performance of EDBI’s and Temasek’s portfolios, rather than the performance of specific investments, to ensure that they are meeting their respective investment mandates.”

In other words, the government would not be commenting on the financial losses suffered by EDBI and Temasek in Zilingo, side-stepping Mr Leong’s questions. However, Mr Chee said that EDBI and Temasek do recognise the inherent risks of investing in startups and do take steps to mitigate these risks.

“Both entities follow industry practice to assess financial and corporate governance risks, such as having a structured due diligence process and engaging the management of investee companies to monitor their business strategy and performance,” he said.

Mr Leong followed up with a supplementary question, “Given the recent events, whether the Temasek and EDB, the review, their due diligence processes, especially when it comes to charismatic founders and whether they plan to engage founders and the board more regularly to ensure good governance.”

In response, Mr Chee said, “I think we have explained this both in the House and also on other occasions, that for them to say, for example, they do have a process to assess the risk of the various companies that are invested and they will also, as part of this process, engage the board and the management of these companies regularly and for the process to work well.”

“I think it’s important, and I hope Mr Leong agrees with me on this point, that we have to pay attention to what is the performance of the overall portfolio and not just on specific investments, because on specific investments there will be some that will make money and there will be some that will not make money.”

“Serious financial irregularities”

Last April, news broke that Zilingo’s CEO Ankiti Bose was fired over irregularities found in her company’s accounting.

“Following an investigation led by an independent forensics firm that was commissioned to look into complaints of serious financial irregularities, the company has decided to terminate Ms Ankiti Bose’s employment with cause, and reserves the right to pursue appropriate legal action,” the company issued a public statement last May.

During fundraising last year, investors began questioning its finances as part of the due diligence process.

It led to Temasek and Sequoia Capital starting an internal investigation into the financial practices of the company. It was found that, in fact, the company had not filed any annual financial returns since 2019.

Investigators also questioned the way Zilingo had accounted for transactions and revenue. When the fracas started, Temasek pulled back one of its staff who was sitting on the board of Zilingo.

In addition to questions about Zilingo’s accounting practices, it was found that payments to several service providers of more than US$7 million were quietly signed by Ms Bose without the knowledge of other senior executives. The payments were said to have gone to about five IT and consulting firms.

And according to insiders, it wasn’t clear what services they delivered. The investigators did not identify whether there were links between the Zilingo payments and the CEO. Such a task would require access to bank accounts, which was beyond the scope of the forensic investigation led by the internally appointed investigating team.

Still, despite Mr Chee’s assurance that EDBI and Temasek do “engage” the management of investee companies to monitor their performance, somehow they weren’t able to spot the “serious financial irregularities” in Zilingo until it was too late.

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Parliament

Minister Shanmugam rejects request for detailed information on visa-free visitor offences: Cites bilateral considerations

Minister for Home Affairs K Shanmugam rejected Workers’ Party MP He Ting Ru’s request for detailed statistics on visa-free visitors involved in crimes, citing bilateral concerns. He affirmed current screening measures are sufficient, with no plans for an electronic travel authorisation system.

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On 10 September 2024, Minister for Home Affairs and Law, Mr K Shanmugam, refused to provide detailed information requested by Workers’ Party Member of Parliament (MP) for Sengkang GRC, Ms He Ting Ru, regarding visa-free visitors involved in criminal offences in Singapore.

Ms He had asked for statistics on how many visa-free visitors had been arrested or identified as persons of interest for criminal activities from 2021 to June 2024, along with a breakdown of offences by type, number, and country of origin.

She also queried the consideration of enhanced screening measures and the possibility of introducing an electronic travel authorisation system similar to those in other jurisdictions.

In his written response, Mr Shanmugam stated that with over 150 countries on the visa-free entry list, it would not be practical or meaningful to publish crime statistics specific to visitors from these nations.

He added that doing so could carry bilateral implications and potentially send the wrong message to bona fide visitors from these countries.

Mr Shanmugam affirmed that Singapore’s Immigration & Checkpoints Authority (ICA) employs a risk-based, multi-layered approach to balance border security with traveller facilitation and assured that the current measures are sufficient. He reiterated that there were no immediate plans to implement an electronic travel authorisation regime, as it would increase inconvenience for visitors.

“We are satisfied with the current measures, and for now, do not see a need for an additional electronic travel authorisation regime. Also, such a regime will make visiting Singapore more inconvenient,” said Mr Shanmugam.

This response followed an oral reply delivered earlier that day by Minister of State (MOS) for Home Affairs, Ms Sun Xueling, who addressed a related question posed by Non-Constituency Member of Parliament (NCMP) Mr Leong Mun Wai from the Progress Singapore Party (PSP).

Mr Leong had expressed concerns about the potential rise in crime following the introduction of a 30-day visa exemption arrangement for Chinese nationals in February 2024. He specifically questioned whether the recent burglaries involving foreign syndicates had any link to this exemption and whether automated lanes at Changi Airport increased the risk of non-bona fide travellers entering the country.

Ms Sun refuted Mr Leong’s concerns, clarifying that there had been no increase in arrests among short-term visitors from China since the visa exemption came into effect.

She noted that the arrest rate of Chinese visitors had, in fact, decreased compared to the previous year. While acknowledging the involvement of some foreign nationals in criminal activity, she highlighted that the visa regime alone cannot eliminate all risks. Instead, ICA employs enhanced technology, such as biometrics and advanced data analytics, to screen travellers.

Ms Sun also emphasised the importance of the tourism sector to Singapore’s economy, generating S$27.2 billion in receipts in 2023 and employing over 71,000 workers. She argued that closing borders to prevent crimes would not be a viable solution, especially given Singapore’s competition with neighbouring countries like Malaysia and Thailand, which are also working to attract Chinese visitors.

Despite further calls from Mr Leong for additional security measures and tougher penalties for cross-border crimes, Ms Sun reassured that the government continually reviews its laws, including the Criminal Procedure Code and Penal Code, to address transnational crimes such as human trafficking, drug trafficking, and online scams.

She affirmed that Singapore remains vigilant in adapting its laws and measures to combat evolving criminal trends.

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Parliament

Leong Mun Wai questions why NTUC leaders often come from the ruling party

During the Platform Workers Bill debate on 10 Sept, Mr Leong Mun Wai, NCMP from the Progress Singapore Party, backed WP MP Gerald Giam’s call for an independent NTUC. He expressed concerns about NTUC’s ties to the ruling party, questioning its independence given that its leaders are often from the PAP.

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SINGAPORE: Mr Leong Mun Wai, Non-Constituency Member of Parliament (NCMP) from the Progress Singapore Party, voiced support for the Workers’ Party and its MP Gerald Giam’s call for an independent and non-partisan NTUC, separate from the ruling People’s Action Party (PAP).

During a parliamentary debate on the Platform Workers Bill on Tuesday (10 Sept), Mr Leong acknowledged that tripartism is a fundamental aspect of governance that all parties, including opposition ones, seek to foster.

He noted that unions naturally seek political power to effect change but expressed concerns about the extent of NTUC’s relationship with the ruling party.

However he questioned the level of NTUC’s independence from the government.

He pointed out that the NTUC’s secretary-general is often a minister or former minister and that many NTUC leaders come from the ruling party.

“Can you find another trade union in the world where the trade union chief is a minister? Are there any countries? Please let me know if there are,” Mr Leong asked, further noting that few opposition politicians are given appointments in NTUC.

“I think we are entitled to think that the independence of NTUC ought to be better than this.”

Earlier, PAP MP Christopher De Souza criticized MP Gerald Giam for using the term “tether” to describe the NTUC-PAP relationship, emphasizing that the NTUC operates through partnership, alliance, and solidarity rather than subordination.

In response, Mr Giam clarified that when he used the terms “tether” or “untether,” he meant that the NTUC and the PAP should be separate and independent organizations.

He sought to ensure that NTUC does not appear to be biased towards the ruling party.

Mr Giam also raised concerns about NTUC’s structure, particularly questioning why the Platform Associations need a Council of Advisors with the power to dismiss the Executive Council and why these advisors are predominantly PAP members or MPs.

He suggested that this structure indicates a lack of independence for NTUC.

The current NTUC secretary-general is Ng Chee Meng, a former PAP minister who assumed the position in 2018 and continues to hold it despite losing to WP’s new team in GE2020.

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