Singapore's Goodbye Guy

The resignation of Charles "Chip" Goodyear halfway through the period between his appointment in March as chief executive designate of Temasek and his assumption of the post in October is yet another illustration of a long established principle: never disagree with a member of the ruling family.

Whether or not he was a good choice for the job, the appointment of this investment banker and former boss of BHP-Billiton was hailed as a sincere effort to bring fresh thinking to the management of a massive fund which had suffered badly from Ho Ching's overenthusiasm for financial sector – particularly western financial sector – assets. Not only were many of these acquired at high prices, some such as Barclays and Bank of America (which had acquired the bankrupt Merrill Lynch) were sold off near the bottom of the market earlier this year while with UBS Temasek had to help out with rescue packages. Ho Ching herself seemed to recognize that someone with wider experience of the world might be needed to run a fund which now has two-thirds of its assets outside Singapore.

But acceptance in theory and practice can be very different. Exactly what Goodyear was proposing to do when he became actual chief executive is not clear. Some suggest he wanted to move into resources, others that he wanted to shake up the managements of the local state owned entities which are a major part of his portfolio but also the holy of holies for the small group of top bureaucrats who run things on behalf of the Lees.

But one thing is clear: there is no such thing as being chief executive of one of the myriad state enterprises in Singapore if a Lee family member, naturally supported by the cohorts of intelligent yes-men, has a different view. That has now been shown to be as much the case with Temasek as it was when Lee Kuan Yew's daughter Lee Wei Ling had a policy dispute with a distinguished UK neurologist, Simon Shorvon, hired to head up Singapore's National Neuroscience Institute of which she was a director.

She of course knew far more about neurology than he did and he was hounded out of Singapore and subject to the usual travesty of justice handed out by Singapore authorities in cases involving the Lees. Investigations by the UK's General Medical Council, later endorsed by the High Court, cleared Shorvon of any misconduct. He is now a professor at University College London.

Foreign media continue to lap up Temasek's propaganda about its longer-term performance. One that surely ought to know better is the Lex column in the Financial Times which like to think of itself as rigorously analytical. It simply repeats the claim that Temasek's total return has averaged 18 percent since inception and 9 percent over the past decade. No attempt there to analyze Temasek's skimpy accounts -- for example to query the prices at which state assets were injected into it, or to ask about unconsolidated, unlisted subsidiaries such as Astrea which borrowed US$810 million to invest in private equity funds at the height of the fund bubble. A real story about Temasek might earn a writ, or the expulsion of the correspondent, or a quiet ban on Singaporean companies advertising in the paper.

Quite how badly Temasek has done is hard to figure out because the data presented is scanty and unconsolidated. For example, in 2007-08 the value of its portfolio increased by 13 percent to S$185 billion but it is unsure how much of that was simply a capital injection from the government. Meanwhile Temasek's local portfolio has been persistently trimmed and now represents only 33 percent of assets. Of course it may make more sense to invest in faster-growing countries rather than in low-growth Singapore where there are few new opportunities for a company which already controls so much. Nevertheless it hard not to conclude that some of these sales, such as the December 2008 sale of PowerSeraya to Malaysia's YTL for S$3.8 billion are not partly designed to generate capital profits readily available from long-held local assets.

The kid-gloves approach by the FT to Temasek is in keeping with its past groveling behavior. following comments on Temasek, Remember this from September 29, 2007, which Asia Sentinel reported on October 17 of that year:

"Last week Jimmy Phoon, Temasek's chief investment officer, announced he was leaving ‘to take a break and spend some time with the family'. Perhaps we shouldn't be surprised at the reasons. Singapore, after all, is built on strong family values. Lee Kuan Yew, founding father of the city-state, must be proud to see Lee Hsien Loong, his son, occupy the role of prime minister.

"Mr Lee (Jnr) himself will be pleased Ho Ching, his wife, has helped turn round the performance of Temasek after being appointed chief executive in 2002. "The rumour mill now suggests Lee Hsien Yang, the younger brother, could replace Mr Tai at DBS. The younger Mr Lee earned his spurs as chief executive of SingTel, also part of the Temasek firmament."

This innocuous comment produced the following absurd apology and yet more libel proceeds for the Lees.

"We recognize that the article meant or was understood to mean: that Minister Mentor Lee Kuan Yew secured, or was instrumental in securing, the appointment of his son, Mr Lee Hsien Loong, as Prime Minister, for nepotistic motives; that Prime Minister Lee Hsien Loong secured, or was instrumental in securing, the appointment of his wife, Ms Ho Ching, as the Chief Executive Officer of Temasek Holdings (Private) Limited for nepotistic motives; and, that Ms Ho Ching is promoting her brother-in-law Lee Hsien Yang's interests by securing or helping to secure his appointment as Mr Jackson Tai's replacement at DBS Bank for nepotistic motives.

"…We admit and acknowledge that these allegations are false and completely without foundation. We unreservedly apologize to Prime Minister Lee Hsien Loong, Minister Mentor Lee Kuan Yew and Ms Ho Ching for the distress and embarrassment caused to them by these allegations. We undertake not to make any further allegations to the same or similar effect.

"…We have agreed to pay Prime Minister Lee Hsien Loong, Minister Mentor Lee Kuan Yew and Ms Ho Ching damages, by way of compensation, and costs incurred by them in connection with this matter."

Doubtless the FT will apologize in a similar way to Kim Jong Il if the North Koreans can afford to buy enough ads in the pink paper.