i doubt he will be allowed to reveal more than what the gahmen
want.
Goodyear
Will he bring change?
He has run firms accountable to shareholders; does his presence
signal leadership willingness for greater transparency?
AWSJ comment.
Feb 15, 2009
Wall Street Journal Asia.
Singapore’s state-owned investment fund Temasek announced a change
in leadership last week to a non-Singaporean CEO. We hope his appointment heralds a new era of
openness.
Temasek manages public monies, yet much of what it does is
hidden from the public it aims to serve.
Its stated mission is “to create and maximise long-term
shareholder value as an active investor and shareholder of
successful enterprises.” But to what end? To support Singaporeans
in times of recession, like now?
Government officials in the past said they are accumulating
reserves for an unspecified “rainy day.”
In a speech this month, Senior Minister Goh Chok Tong said
reserves should be used only “under dire circumstances when one-off
extraordinary measures are required to ward off catastrophe or
prevent irreparable damage to the economy.”
A spokesman tells us that, “Temasek’s charter is to manage these
investments independent of the Singapore government on a purely
commercial basis in order to generate sustainable returns for the
benefit of future generations.”
But who decides when to use the reserves, and under what
metrics?
Temasek’s murky goals are part and parcel of Singapore Inc,
where the line between public and private firms is often
blurred.
This corporatist approach worked for Singapore in its early
years – though of course we’ll never know whether the market might
have done a better job.
Temasek was set up in 1974 as a holding company to manage
state-owned firms and has nurtured successful, world-class
companies such as Singapore Airlines and DBS
Group, a major bank.
The current CEO, Ho Ching, is the wife of
Prime Minister Lee Hsien Loong.
Today, however, Singapore needs to develop a more vibrant
private sector that encourages entrepreneurship and innovation.
The city-state is in the throes of the worst recession in its
modern history, with GDP forecast to contract
as much as 5% this year.
Expatriates are fleeing and the government, for the first time,
is going to tap its reserves to the tune of S$4.9 billion (US$3.3
billion) to help fund a stimulus package.
But if this is the “rainy day” Temasek is there for, why not
give back the fund’s piles of cash to taxpayers and let
Singaporeans invest their own money?
As of March 31 – its last public annual statement – Temasek’s
portfolio totalled S$185 billion.
During the course of a parliamentary debate Tuesday, the
government announced a 31% drop in the company’s net portfolio
value between March 31 and November 30 last year.
The decline was not unexpected, given the world financial crisis
and some poorly timed investments, including $5.8 billion in
Merrill Lynch and £975 million ($2 billion) in Barclays.
Temasek says it oversees its portfolio prudently. But it has
never provided historical financials to back up its claim of an 18%
compounded annual “total shareholder return” by “market value.”
Nor has it released detailed results showing how money flows
among its subsidiaries, the holding company and its government
shareholder.
Temasek outlines its compensation arrangements but doesn’t say
how much it pays its top executives.
Temasek is 100% government-owned and isn’t required to release
publicly audited financial statements.
The President of Singapore must sign off on the “appointment or
removal” of the CEO and board members,
according to Temasek’s annual report.
It cannot “draw on or diminish our past reserves without the
President’s concurrence.”
So even while it is a “commercially disciplined investment
firm,” as the company says, Temasek still answers to the Singapore
executive.
This system would be more effective if Singapore boasted a more
vibrant democracy with better checks and balances.
All of which makes last week’s change at the top of Temasek all
the more intriguing, and an opportunity.
Replacing Ms Ho in October will be American Charles “Chip”
Goodyear, who will be Temasek’s first foreign CEO in its 35-year history.
Mr Goodyear is a Wall Street veteran – not always a compliment
these days – and the former head of BHP
Billiton, the world’s largest mining firm.
He has run firms accountable to their shareholders, and run them
well.
The hiring of a foreign CEO is a notable
change, and we hope it’s a signal that Temasek and Singapore’s
leaders understand the need for more transparency in the company’s
operations.
The world is demanding more openness and accountability from
sovereign-wealth funds, and the shareholder-voters of Singapore
deserve nothing less.
http://online.wsj.com/article/SB123436899991073…