The brilliance of a family jewel that needed
polishing.
The Sydney Morining Herald – Business Day – 30 July
2009
SINGAPOREANS aren’t usually given to open criticism of the Lee
family that has ruled them for half a century. Rightly or wrongly,
some presume that in their tightly controlled island state, walls
have ears, and one never knows who is listening.
But this time it’s different. Singaporeans are deeply displeased
with their Prime Minister’s wife, Ho Ching. She has run Temasek
Holdings, the state-owned fund, since 2002, and has presided over a
spectacular series of misjudgments that have lost Singaporeans
billions.
There was the murky $3 billion deal she made in Bangkok in 2006, to
buy then Thai PM Thaksin Shinawatra out of his telco. Ho’s massive plunges into European and American
banks ended in tears last year when Temasek lost a
third of its $100
billion portfolio. In
Australia, Ho lost Temasek’s entire $400 million stake she’d
plunged into Eddie Groves’ ABC Learning Centres, among other
missteps.
So much for her much-lauded ‘‘Superwoman’’ smarts and vision when
the state appointed her, even though her pre-Temasek record at
Temasek-owned arms supplier Singapore Technologies was hardly
Sorosesque. Today, Singaporeans are sick of Ho and have been for
some time. They want her out of Temasek, lest she create any more
financial havoc for them.
Except she’s not going. In a February ‘‘transition’’ — not a
sacking, as Temasek spun furiously — Ho was supposed to hand over
Temasek to Chip Goodyear, the 51-year-old American (and North
Melbourne supporter) who pointed BHP-Billiton at China for four
years and made billions.
The big idea was that Goodyear would
fix the mess Ho made in banking and tilt Singapore into the booming
China and India growth stories, which meant placing Temasek at the
middle of big regional resources plays. But that, too, has
ended in tears, when Temasek last week cited ‘‘strategic
differences,’’ announcing it was "mutually agreed" Goodyear would
not become CEO.
It seems clear that after five months hanging around the Temasek
office, Goodyear has been paid millions for his life-long
silence.
But only a few days earlier, Goodyear was doing the rounds of
Temasek satellites mapping out his vision. One CEO I spoke to
expressed shock, saying he had been on the ‘‘same page’’ as
Goodyear and was looking forward to working with him. The
implication was clear: Goodyear was a
genuine businessperson whereas Ho was
not.
That was mid-July. A week later, Chip was chopped. Temasek’s board
met the weekend before last, then announced Goodyear was gone.
So what
happened?
The
Government-controlled Straits Times said Goodyear’s proposals to shake up Temasek
were viewed as "too risky" by the board. Too risky? Ho’s bad bets in banks lost Temasek around $30
billion. What could be
riskier than that?
More likely is the take doing the rounds of Singapore’s banking and
business communities. Local insiders, under few illusions that
little happens at Temasek without Government say-so, say the
Government has been spooked by the arrest in China of Rio-Tinto
executive Stern Hu.
Temasek hired Goodyear because they
wanted him to do for it what he had done at BHP, expertly play
China, which is far more politically important for an Asian nation
such as tiny Chinese-dominated Singapore than it is for a global
mining giant. But after the Chinese Government arrested Hu and sent
a message it was taking back control of its resources management,
it wouldn’t do now, they say, for a foreigner who knows so much
about Chinese resources to front mostly Singapore Inc’s ambitions
in China.
The handling of Goodyear has deeply
embarrassed Singapore and seems to give lie to the fiction that
Temasek operates transparently and separately from Government
policy. And knowing how deep runs the anger among its
readers that Ho has squandered a big chunk of their nest egg, even
the normally lap-dog Straits Times was moved to
ask how ‘‘private sector’’ can Temasek really be, commenting:
‘‘Like it or not, Temasek
cannot get away from the fact that it is inextricably linked to the
Singapore Government’’.
It’s shaken up the arcane world of sovereign wealth funds too,
where Temasek liked to portray itself as the model for emerging
wealthy states. Delegations from around the world made pilgrimages
to Singapore to see how it was done, how their state’s strategic
jewels can be packaged and managed into an investment vehicle that
maintained the illusion it was somehow separated from the
Government. Journalists describing Temasek as
"Government-controlled" invited a welter of complaints to their
editors from Temasek’s spinners who demanded it be benignly
referenced as an "Asian investment company" with no references to
the Government whatsoever, and certainly not to describe the family
connections of Ho’s. Failure to comply would mean an outlet would
be blackballed by Temasek, which in Singapore ultimately suggests a
libel suit no media company has ever won there.
East Timor decided the Temasek model
wasn’t for them, and chose a Norwegian-inspired transparent route
for its now $6 billion petroleum royalties pile. In many
respects, it’s actually a model for Temasek. Certainly, the East Timorese fund made more money
than Temasek has recently — it invested in boring US treasury bonds
while Ho was plunging billions into Merrill Lynch.
Unsurprisingly, Temasek’s model appeals more to the more
authoritarian and less democratic of states, such as Kazakhstan
which, like Singapore, is run along family lines.
Now Singapore Inc is in a pickle. It said it wants to
internationalise Temasek, and appointing the much-respected
Goodyear was a huge – and widely welcomed – statement. Now it’s
stuck with the bumbling Ho, for at least another year, which simply
deepens the market’s conviction that dealing with Temasek is akin
to de facto dealing with the Government.
Temasek says it is continuing its international search for a new
boss. But after Goodyear’s bad year at Temasek, why would anyone
want to go there?
Eric Ellis is a business writer based in Singapore
