http://business.smh.com.au/business/lumbered-with-the-bosss-wife-20090729-e1oc.html?page=-1
The Sydney Morning Herald, 30 Jul 2009, Eric
Ellis
Lumbered with the boss's
wife
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?
.