For one-party rule, the city-state has few peers, writes
Eric Ellis.
IN THE fomenting debate over Singapore Inc’s bid to buy a most
vital pillar of Australia’s economic architecture, there’s
something deliciously apt that the decisive call on the Australian
Stock Exchange will probably be made by Canberra’s independent
members of parliament.
Singapore doesn’t do independents, Mr Oakeshott.
Indeed, it would be aghast at – and quite likely arrest – anyone
compelled to spend 17 minutes publicly justifying democracy and why
it matters. The mere notion is abhorrent to Singapore’s very ethos,
its effortless merging of mammon and political muscle into a
formidable money-making machine known as Singapore Inc.
Singapore doesn’t really do parliament either. Yes, it has one,
where hand-picked loyalists occasionally convene in a brutal
modernist edifice to rubber-stamp edicts from above. In the last
election in 2006 the People’s Action Party won 82 of 84 seats with
a gerrymandered 66 per cent of the trackable votes.
Only North Korea, China and (just) Cuba from 1959 outrank
Singapore in single-party-rule longevity. Which may explain why the
average Singaporean is more likely to know Sony’s head office over
the peoples’ chamber.
Conflicts of interest? Not in Singapore, where independent
thinking complicates and slows its real business, which is
business. Real power at every critical institution in this rich,
urgent little place gathers efficiently and pyramidally, peaking at
one of the most powerful families in the world, the Lees. And their
power prints are everywhere, even at the Singapore stock
exchange.
It’s not corruption – Singapore ranks well on that score – but
rather an intimidating, and often intimidated, power network of
trusted, well-rewarded hands (cronies?) who know what side their
bread’s buttered on and don’t step out of line. All easy to manage
in a small, highly wired town like Singapore. Compliant
Singaporeans don’t have to be told what to do, they just know.
Far from the non-interventionist paradise advancing the world’s
best practices of governance and transparency, the Lees have
finessed probably the world’s most capable dirigiste economy, a
top-down model to impress the most rusted-on French enarque.
It impacts elsewhere too; autocrats from places like Kazakhstan,
Russia, Zimbabwe, Rwanda and Sri Lanka rush to embrace the
”Singapore model” as if it were some miracle philosophy, when it’s
more like The Truman Show. And clearly some Australian
stockbrokers are impressed, too, though likely more so with the
millions they seem set to pocket from the SGX deal.
It doesn’t take long navigating Singapore Inc to bump into a
Lee. There’s even one on the board of the SGX bidding $8.1 billion
to buy the ASX, the deal known as Project Avatar. That’s Lee Hsien
Yang, the youngest son of former long-time prime minister and
Singapore’s ”philosopher-king”, Lee Kuan Yew.
A shy man, Hsien Yang knows Australia well enough, though those
who have dealt with him say he struggles with our robust press and
public life. He was for 12 years the CEO at Singapore Telecom,
which bought Optus on his watch in 2001, the last time economic
nationalism flared with such fervour over a controversial Singapore
Inc purchase of a strategic Australian asset.
Like the SGX now, Lee and SingTel were hammered. Australian
critics cried ”national interest” about the farm being sold to
Asian autocrats, but ultimately the deal got done. Two things
helped: that the seller was a foreign company, Cable and Wireless
of Britain, and that the deal did not require parliamentary
approval.
The ”Singapore premium” helped too. SingTel’s $14 billion was a
lot for a company that had made just $400 million. But even though
Lee Hsien Yang was lavishly spending Singaporeans’ money in
Australia, because of who he was few Singaporeans dared take him on
back home.
Singapore Inc and the Lees were on their best legal behaviour,
resisting their infamous instinct to sue anyone who dares criticise
them. But most of that criticism was outside Singapore. The Lees
tend to bring their cases in Singapore, where a win seems
guaranteed.
SingTel-Optus’s major shareholder is Temasek Holdings, which by
some estimates – such as the US government’s – controls as much as
half the Singaporean economy. Temasek is the leviathan state-owned
investor run by Hsien Yang’s sister-in-law, Ho Ching, and serves as
a key lever in Singapore’s economy.
Indeed, many analysts argue that Temasek’s over-arching
influence in Singapore’s economy deters the genuine grass-roots
entrepreneurism of say, a Hong Kong, and that Temasek’s breadth is
too wide and its pockets too deep to spark genuine competition and
reform. Singapore has a great many things, but a vigorous
competition commission is not one of them.
Ho Ching’s record is patchy, and her dealmaking controversial
elsewhere in the region, notably in Thailand, where its $4 billion
2006 purchase of then Thai prime minster Thaksin Shinawatra’s
telecoms and media empire precipitated a coup, Thaksin’s ouster,
four years of political turmoil, a $2 billion paper loss and a
legal stoush with the current government angling to take the
Thaksin empire back.
That fight is led by the Thai finance minister, Korn
Chatikavanij, who once remarked of the Thaksin deal that Singapore
Inc’s purchase of the private Thaksin assets was ”akin to
nationalisation” of a private company acquired by a state.
That it wasn’t the Thai state didn’t make it any less a
nationalisation, Korn argued. Cranky Thais delighted in setting
fire to Ho’s effigy, such were the passions aroused by her
ill-advised Thaksin play, which puts Australian economic
parochialism over the ASX in telling perspective.
Madam Ho is married to Lee Hsien Loong, Singapore’s Prime
Minister since 2004 and finance minister for six years until 2007.
The Finance Ministry owns Temasek, which also controls Singapore
Airlines (SIA), another key power circle. SIA is ”regulated” by
Singapore’s civil aviation authority, which also ministers every
airline, like Qantas, flying into Changi’s strategic regional hub.
Apart from being an SGX director, Lee Hsien Yang is the aviation
authority chairman, completing that Singapore Inc circle.
But Hsien Yang does not get to sit on the board of Singapore
Inc’s other great sovereign wealth fund, the Government Investment
Corporation. That job is reserved for his father, the GIC chairman,
and his Prime Minister brother, GIC’s deputy chairman, as well as
the Finance Minister Tharman, also of the MAS. (If Lee Kuan Yew’s
memoirs are any guide, his eldest son and political heir is clearly
his favourite, Hsien Loong being cited 19 times by his father in
two volumes versus just three for his younger brother.)
With an estimated $350 billion in assets – including vast tracts
of Australia’s CBDs – the GIC ranks among the world’s top five
sovereign wealth funds. But it was not so long ago that
Singaporeans knew who was stewarding their foreign exchange
reserves, when the GIC first revealed who composed its board.
It still doesn’t make public its full accounts, which might be a
good idea lest Singaporeans start blogging their wrath at its
recent ill-fated forays into Western banking – that blogging done
anonymously lest the wrath be returned by authorities, who don’t
like having their failures pointed out.
The Australian lawyer David Gonski is an SIA director, and is
chairman of the ASX. There are other key members of that SIA-SGX
power vortex. Chew Choon Seng is the SIA chief executive. But he is
about to become the SGX’s chairman, and would head the combined
SGX-ASX if Singapore Inc prevailed in Australia, with Gonski as his
deputy. He is also a GIC director.
There is also the banker Euleen Goh, the former chief executive
of Standard Chartered’s Singapore operation. She is now a director
of Singapore’s DBS Bank, the Temasek-controlled bank that came
close to buying Westpac a few years back, and she sits on both the
SGX and SIA boards.
Then there is Tharman Shanmugaratnam, Singapore’s Finance
Minister, who took over from the Prime Minister Lee in 2007. Of Sri
Lankan Tamil origin, he is a director of Temasek, the GIC and also
of the Monetary Authority of Singapore, the central bank that is
ultimately the SGX’s major shareholder as well as its
regulator.
Singapore may play as an entree to Asia but Singapore Inc is
relatively lightly invested in its ASEAN backyard, where its
state-backed corporate thrusts have not always been welcome – pace
Thailand – or have bumped up against the similar Asian
politico-corporate power networks like its own, such as in
cronified Malaysia and Indonesia.
In Australia’s open economy Singapore has become one of the top
five investors over the past decade, accumulating assets from
property to power generation in deals totalling more than $100
billion.
It has been a happy hunting ground and Singapore a good
corporate citizen, with Australia providing experience for other
big deals away from Singapore’s own hermetically controlled
economy.
But one place pragmatic Singapore is well-invested is in the
pariah state Burma. The SGX hosts a number of Burma plays, as it
does low-level Chinese listings of often dubious provenance and
governance, products of an attempt to compete with Hong Kong and
Shanghai, an initiative of mixed results that it does not much like
having pointed out, certainly not now as it sells itself to
Australia as its ticket to Asia’s wealth.
Indeed, Singapore Inc manages its image very carefully,
studiously avoiding having its executives interviewed by locally
resident foreign journalists and analysts who tend to be aware of
where the proverbial bodies are buried.
Rather, Singapore Inc likes to host lesser-informed editors and
academics from abroad, sometimes paying for their passage and stay,
and banning local colleagues who might ask difficult questions
about its clubby networks.
The American Tom Kloet ran the SGX for just under three years
until early 2003. He says the proposed SGX-ASX tie-up is a “very
interesting development” being closely observed in North America,
where he is chief executive of the Toronto Stock Exchange’s parent,
TMX.
“Any time two major exchanges start having a serious
conversation about combining, it’s a surprise. To me, it’s the
natural evolution of financial markets, but this doesn’t move the
needle for us in terms of our own strategy.”
Kloet was one of Singapore Inc’s first experiences with ”foreign
talent”, a program championed by the Lees to deepen Singapore’s
executive pool and counter criticisms of its clubby power networks.
Kloet was nanny in the SGX’s first years after the 1999 merger of
the Singapore Stock Exchange with the Simex futures market.
He took SGX public in 2000 in a $1 billion float, a move partly
inspired by the ASX’s successful listing two years earlier.
But Kloet did not last long, leaving the SGX four months before
his contract expired amid a local whispering campaign about lax
regulation and – ironic this – his “ill-conceived” cross-border
trading tie-up with the ASX.
Contrary to market chatter of the day and unflattering articles
in the state-controlled media, Kloet says he left Singapore early
because “I had accomplished what I had come to do … to combine the
stock exchange and Simex, complete the IPO, restructure the
management and set a ‘for-profit’ mindset into the organisation
converting it from a member association to a commercial entity.” He
says he loved working for Singapore Inc.
Asked by Weekend Business who he felt was his boss in Singapore
and if he was cognisant of how and from where power flowed, Kloet
said: “The way I looked at being in Singapore, I thought I was an
invited guest to the wedding so I behaved like somebody who was an
invited guest. I never got a phone call saying you have to do this
because it’s related to the Lee family. Was I aware of it? Of
course I was.
“One had to work their way through the fact that in the
structuring of the exchange, the monetary authority had to approve
the chairman and myself. It wasn’t like it was hidden. I came away
very impressed with the way Singapore Inc operates.”
.
Source:
Sydney Morning Herald
* Eric Ellis was the Singapore-based correspondent for
Fortune magazine from 2000 to 2007