http://business.theage.com.au/business/world-turns-disapproving-eyes-on-singapore-banquet-20090908-fg2n.html
The Age, 9 Sep 2009, Eric Ellis
World turns disapproving
eyes on Singapore banquet
WERE every high school as wonderful as Singapore's United World
College.
Each morning, a convoy of chauffeur-driven Mercedes, BMWs and SUVs
sweep up to the expansive campus, dropping well-shod students
dangling all manner of modish teenage bling; mobile phones,
computers, designer this and that. The sumptuous grounds are more
suggestive of a five-star resort than a secondary school.
With yearly fees of more than $40,000, UWC is where Singapore's
well-heeled foreign residents send their kids. That's the common or garden expat
professionals on an Asian posting, as well as Tay Za, regarded by
Washington as bagman to the Burmese junta. Tay Za's teenage boy
Htet is dropped off in a chauffeur-driven Lamborghini, as his
father evades US sanctions.
Some teachers are disquieted by all this but Singapore seems to subscribe to a
''don't ask, don't tell'' policy on where money comes
from. In recent years, Singapore has actively
sought to become Asia's Switzerland, the discreet depository of the
super-rich, however they made their money. That led to a boom in
private banking, with an attendant boom in property and high-end
services for this monied elite, including education.
While the vast majority of Singaporean depositors are
squeaky-clean, as anywhere, some are not. The Burmese junta banks in Singapore
and the money of some of North Korea and Zimbabwe's potentates is
widely thought to be salted away here.
The big money comes from Indonesia, whose tycoons have regarded
Singapore as a refuge from volatility at home. The two countries
have no extradition treaty and there's good reason for it to remain
that way. Merrill Lynch estimated
a third of Singapore's 60,000-odd millionaires were Indonesian,
making the city-state Jakarta's affluent northern
suburb. Re-elected on an anti-corruption ticket,
Jakarta's Yudhoyono Government suspects a good few of its
countrymen in Singapore have salted away tarnished money
there.
But while markets were roaring,
no one really much cared.
Singapore's private client relationship managers (RMs) were pushing
high-margin exotic derivative products created by their investment
banks, and the rich got richer. The atmosphere was perhaps best
exemplified by the appearance of UBS executive director James
Tulley, known to friends as ''Tulley Tubby'', in Singapore Tatler
magazine boasting about his 30 pairs of spectacles and 100 pairs of
shoes.
But the financial crisis changed everything. It devastated values,
banks and depositors, and Western governments sought to crack down
on tax havens and regimes reluctant to adequately disclose their
financial affairs. Earlier this year, Singapore was threatened with
a blacklist of financial shelters compiled by the G20. Germany's
Angela Merkel, Britain's Gordon Brown, France's Nicolas Sarkozy and
the new US president Barack Obama linked arms against international
tax havens and secretive financial regimes, seeking scalps to make
up for their own economies' failings.
Now the Europeans are pressing Singapore and other financial
centres to open their books. Just 3 per cent to 5 per cent of
Singapore's private banking clients are regarded as European, most
of them thought to be Russian. That's incidental in the private
banking scene in Singapore but the implications beyond Europe are
acute.
What Singapore doesn't want is the same rules as the EU and the US.
It also doesn't want to be singled out among Asian financial
centres if Hong Kong doesn't face the same rules. But Singapore
cherishes a self-styled reputation as an exemplary international
corporate citizen, operating by globally accepted norms.
Complicating the picture is a spate of court actions in Singapore's
courts where the big Asian tycoons Singapore loves are at war with
big international banks it also covets over who's responsible for
the massive GFC trading losses in their private accounts.
Several cases involve
''accumulators'' which involve banks signing clients to a long
program of buying stocks, often bank stocks, at fixed discounted
prices. That was great when Citibank was trading at
$90 and the client bought shares at $45, but not much fun when Citi
shares slumped to under $10, but the contracted accumulators kept,
well, accumulating at $45. Banks claim caveat emptor, but no wonder
clients dub the contracts ''I kill you later''.
Private banking consultant Roman Scott of Calamander Capital says
private banks are in denial over the extent of the problem. And, he
says, Singapore faces a tricky dilemma. He likens Indonesia and
countries like it to diners in a restaurant where various
regulators, unfamiliar with the menu, look to the smaller European
table and chorus ''We'll have what they're having.'' And, as it
struggles to again economically re-invent itself, Singapore is
hoping everyone somehow is well fed.
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