January 10, 2010 by admin
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Written by Our Correspondent
Singapore’s Government Investment Corp. (GIC) faces potential
losses of more than SGD$1 billion dollars in another failed
overseas investment, this time in an upscale apartment complex in
New York – Stuyvesant Town.
The sprawling Manhattan apartment complex known as Peter Cooper
Village and Stuyvesant Town was acquired for $5.4 billion in
2006 by Tishman Speyer Properties and a unit of BlackRock Inc.
According to a Wall Street Journal report in September 2009,
Singapore’s GIC owns a $575 million mezzanine loan backed by the
property, and about $100 million to $200 million in equity which
amounts to roughly SGD$1 billion dollars or more.
On 8 January 2010, Tishman Speyer and BlackRock Inc released an
official statement saying that “they wouldn’t make a full
scheduled debt payment to senior lenders on Stuyvesant Town and
Peter Cooper Village.” (read report here)
CWCapital, the special servicer acting on behalf of the lenders
is expected to issue a notice of default over the payment which
amounts to $16 million dollars.
GIC risks having its entire investment wiped out unless it buys
up more senior debt. As usual, GIC has declined to comment on the
matter which was not reported in the Singapore media.
Though GIC proclaimed itself to be a global investment
management company established in 1981 to manage Singapore’s
foreign reserves”, its primary source of funds come from
Singapore taxpayers. It is not a private equity company, but a
sovereign wealth fund owned by the Ministry of Finance.
The Chairman of GIC is a former Prime Minister of Singapore who
currently holds the position of “Minister Mentor” – Lee Kuan Yew.
His daughter-in-law Ho Ching heads the other sovereign wealth fund
Temasek Holdings. His son is the present Prime Minister of
Singapore Lee Hsien Loong.
Still, the potential $1 billion loss pales in comparison to the
losses it suffered in the fiscal year ended March 2009 – estimated
at around $59 billion Singapore dollars by Wall Street Journal.
(read article here)
GIC is the world’s fourth largest sovereign fund in terms of
money managed, according to Deutsche Bank, with high-profile
investments in Western financial institutions like Citigroup and
UBS.
Though he is a lawyer by training and has little experience in
the finance industry, MM Lee was appointed as a “special advisor”
by Citigroup in 2006. He has since relinquished the position.
Despite losing billions of dollars, MM Lee remains in charge of
GIC and nobody knows its exact losses to this day. There is no
opposition in Parliament to check on the ruling party to hold it
accountable to the people.
Singapore’s Elected President is supposed to safeguard the
nation’s reserves. However when former President Ong Teng Cheong
tried to find out the real figures, he was told by the Accountant
General that it would take 52-man years to produce the list of
assets held by the Government.
In the corporate sector, CEOs who lost so as much money will
probably be sacked immediately. In Singapore, nobody has stepped
forward to assume responsibility for the losses.
In a famous interview with Channel News Asia on 4 April 2007, MM
Lee warned that the Singapore economy would be in jeopardy if it
does not pay top dollar for top people.
“So for the average family earning S$1,500-S$3,000, we are
talking of astronomical figures but for people like me in
government, to deal with the money which we have accumulated by the
sweat of our brow over the last 40 years, you have to pay the
market rate or the man will up stakes and join Morgan Stanley,
Lehman Brothers or Goldman Sachs and you would have an incompetent
man and you would have lost money by the billions………..If you are
going to quarrel about S$46 million – up or down another S$10 to
S$20 million – I say you don’t have a sense of
proportion.”
Singaporeans really have no sense of “proportion” of the losses
suffered by their two sovereign wealth funds so far.
Makes you numb dosen't it...
the amount of tax-payers' money they keep donating to Uncle
Sam.
