Mr Lee and the conflict of
interest
Monday, 16 February 2009
Singapore Democrats
Mr Lee Kuan Yew's appointments as an
international advisor to corporations such as JP Morgan, Total,
DaimlerChrysler (now defunct) and Citigroup have gone largely
unnoticed by most in Singapore, until now that is. Especially
noteworthy for obvious reasons is Mr Lee's role in Citigroup. On
5 Sep 06, the American banking giant purred:
Minister Mentor Lee is a modern-day visionary and a unique
statesman who is respected world-wide, and it is a privilege for
Citigroup to benefit from his understanding, insights and
experience. I am honored that Minister Mentor Lee has chosen to be
a special advisor to Citigroup and look forward to having the
opportunity to work closely with him as we pursue our international
growth strategy.” (emphasis added)
Few Singaporeans really cared when the announcement was made. How
can anyone take issue with such an accolade especially one coming
from the world's biggest bank? In fact, then DPM Lee Hsien Loong
lauded his father's appointment in Parliament in 2000 when he
pointed out that Lee Sr's roles in these corporations would help to
promote Singapore globally.
Mr Lee holds the position of Minister Mentor now as he did in 2006
when he was appointed Citi's advisor. This much is clear. What is
ambiguous is whether Mr Lee holds the Citi portfolio in his
official capacity as Minister Mentor representing Singapore or
whether he does so in his personal capacity as a citizen, albeit a
prominent one.
There is no mention of Mr Lee's role in Citi in his profile shown
in the Singapore Government's
website which leads one to think that these extra-ministerial
appointments are a private matter.
But Citi's 2006
press release (and JP Morgan's website)
trumpets the fact that Mr Lee is the Minister Mentor of the
Republic of Singapore and makes no qualifications that he is
serving in a private capacity.
The ambiguity raises the following questions as naturally and
necessarily as the day follows night:
What is more disturbing, if that's actually possible, is that these
questions have never been asked of the PAP Government in any
meaningful manner. Ministers, MPs, state journalists, etc have this
uncanny ability to not notice the hyperactive, rainbow-coloured
gorilla jumping up and down, screaming and poking them in the eyes
right in the middle of the living room.
Maybe the reticence is because it didn't cross anyone's mind that
there is actually something called conflict of interest. Be that as
it may, that was then and this is now. The now is when we learn
that in January 2008 the GIC, chaired by Mr Lee, had poured into
Citigroup S$10 billion of our funds.
It transpired that GIC made the investment after it received an
“invitation” from Citi to invest in its equity. GIC dove in
because, according to its deputy chairman Dr Tony Tan (who, by the
way also controls all the Singaporean newspapers as chairman of the
SPH), it was “well within the risk limits which we had prescribed
for the finance sector.”
Not only were the risks reasonable,
Dr Tan assessed, Citi was a "sound bank..temporarily facing
significant problems. But their franchises are strong".
Nine months after Dr Tan made the endorsement Citigroup announced
that it was on the verge of bankruptcy and needed bail-out money
from the US Government. It received US$25
billion – the biggest bailout in history. In November, it came
back for more and got another US$20 billion. The bank was staring
into the abyss with a potential loss of US$306 billion in toxic
assets.
If the US Government had not stepped in, and there is every
possibility that the bailout could still fail, Citi would have
collapsed and our $10 billion would be no more. (If it's any
comfort, our money spread much good cheer among the many
millionaire executives of the bank.)
How can a sound bank with strong franchises collapse in just nine
months? Did everyone at GIC skip class the day the teacher went
through the chapter on Citi's troubles?
More important, did Citi seek its special advisor's advice before
it approached the GIC for funds? If it did, what was the advise
given? When the GIC received the invitation from Citi, what went
into the decision to go ahead with the investment? Did Mr Lee's
position in one organisation affect the decision made in the
other?
The conflict of interest is too jarring to even contemplate.
Now consider this: When former Senator Hillary Clinton's name was
put up for the post of US Secretary of State, there were concerns
that she could be influenced by big donors who gave to her
husband's presidential foundation. As a result former president
Bill Clinton suspended day-to-day responsibilities at the
foundation, revealed the identities of all his donors and the
amounts they gave, and promised to clear future donations with the
White House. And he's not even the one holding office.
But, of course, this is Singapore. Conflict of interest is defined
a little different here.
Incredible as it may seem the GIC still refuses to explain its
decisions or open up its books for scrutiny or even tell
Singaporeans how much it has lost in its investments. Obviously,
the Government is a little shy about revealing such information.
The question is: Should the people be shy about demanding it?
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