Dr. Tony Tan's headache in counting losses in GIC losses

robertteh SG

Perhaps ex-minister Dr. Tony Tan, Deputy Chairman of GIC will have a big headache how to disclose figures as there are too much losses.

The normal accounting practice is to value the stocks and shares at yearly interval at current market values recognizing those counters hopelessly lost as losses e.g. Micropolis (-S$600 mil) Shin Corp (-$1.5 bil) and Global Crossing (-$1.0 bil).

These counters actually cannot be treated as long-term investments or paper losses because of too many years in the red against normal accounting principles.

Most likely Micropolis or Shin Corp will be treated as long-term investment and remain closeted as paper losses to avoid queries.

One way out perhaps is for them to wait to sell certain counters for gains in order to eventually cover up or offset the heavy losses in counters like Micropolis or Shin Corp or wait longer to find some talents to turn around such companies.

In other words, he will have to use creative accounting called codes of practice to delay realizing losses from Micropolis or Shin Corp or Global Crossing as the board can then give some excuses like long-term investments to delay counting such losses until some other counters make monies to cover up or liquidate such irretrievable losses.

TCH05 SG

robert, GIC and Temasek are different investment vehicle. Are you confused?

deathbait SG

not sure you understand how investments work

you don't zoom in on a few failed investments and declare failure. What matters is the overall record. Do you have any examples of successful investments in the recent years?

robertteh SG

TCH05

I am aware of the difference between these two entities. The principle of accounting should still be applied in recognizing losses which are beyond redemption or irretrievable whether the losses are incurred by GIC or Temasek. Both entitles are managing taxpayers' monies as trustees. As trustees they are bound by laws and regulations under Company Act etc to avoid investing trust monies in such a over-hasty and emotional manner as seen in Micropolis or Shin Corp.

Records do not speak well of their judgment in both entities whether they are done by Temasek or GIC.

Both entities have an tendency to invest people's trust monies in over-risky investments full of worms which they know nothing or next to nothing about.

Now in the latest acquisitions of UBS or Citibank again they are being emotional or headstrong going in to acquire loss-making companies at the beginning of a down cycle or financial crisis.

As trustees they are not acting with prudence or wisdom or strategy as it has been proven now again after Micropolis and Shin Corp they do not understand much about worms or downside risk.

Lin Yu SG

there's such a thing call CREATIVE ACCOUNTING!!!. Just like how HDB worked out the SUBSIDIES to HDB housing

TCH05 SG

robert, Temasek is the one that invest in Shin Corp not GIC. Whatever tony tan were saying in the DAVOS meeting is concerning GIC not Temasek.

And it is a known fact the GIC is a more conservative investor as compared to Temasek.

lionnoisy SG

no worry.Tony Tan said after the review,

SWF of Spore may review results every 10 years.

Dunt be navie.The world is a jungle.

Will other SWF and private fungs follow exactly what

Temasek and GIC disclose??

2.SG is a gentleman to deliver what she may promise.

i dunt trust other SWF and private funds.

Like France SG US$7 billions case,

UK Barings brought down by 1.5 b fraud.

Has SG learnt the lesson from Lesson.

Do u believe the bank cant detect the US7 billion fraund.

read today news .France police cant prosecute the guy,who

said the bank knew his dealings and DID NOT stop him.

SevenEleven SG

from an investor point of view, the timing for this purchase is timely, given that the cost is lower and that GIC is at the advantage and that they have done their homework carefully.

However, we have yet to be told how all these investment had really benefited the nation given that no one really know what is going on.

Can't say for the Temasek past investment.

JLennon SG

TCH05

Records do not speak well of their judgment in both entities whether they are done by Temasek or GIC.

Both entities have an tendency to invest people's trust monies in over-risky investments full of worms which they know nothing or next to nothing about.

Now in the latest acquisitions of UBS or Citibank again they are being emotional or headstrong going in to acquire loss-making companies at the beginning of a down cycle or financial crisis.

As trustees they are not acting with prudence or wisdom or strategy as it has been proven now again after Micropolis and Shin Corp they do not understand much about worms or downside risk.

robertteh SG

Seven Eleven,

On what basis do you consider buying a stock at the beginning of a crisis good buy based on good timing?

Based on what good experiences or track records of the past would you say that Temasek CEO or its investment team were capable of buying into good strategic stock with good judgment and good timing?

Without showing citizens they have this uncanny ability to gaze the crystal ball would you not be merely saying that Temasek is merely buying such stocks like Citibank or UBS based on gut feel or emotionalism or being headstrong ?

If Temasek claims it has such uncanny ability to gaze into the crystal ball for good timing why was it not capable of seeing that the disk drive industry was being phased out at the time it purchased Micropolis or that Thaksin and his family were being investigated for corruption over transfer of monies without paying taxes from Shin Corp.

So what is due diligence after all and what is the "so called good-timing".

Was not such a tendency to go buy on impulse yet another example of emotionalism or being headstrong?

TCH05 SG

robert, this is not buying stocks, this is buying a big stake in a hundred over years old blue chip company and such window opportunity only appear when the company is in its worst stage.

FYI, market always price itself ahead of results and on rumour and if you are thinking of buying in when you see the light at the end of the tunnel, you will be one step too late.

robertteh SG

JLennon,

I am not privy to the due diligence and decision making process in the acquisitions of UBS or Citibank.

If someone causes big losses of trust monies or public funds due to carelessness in investment or making of investment decisions without complying with certain codes of practice is he immune from prosecution?

Can such a person simply claim due diligence and hopes to be spared the jail sentence for a crime? If he is simply pleading mitigation, we can understand and would like to know whether he has been following a certain codes of practice in doing so before excusing him of liability or criminality.

Without such standard of transparency or accountability how couldTemasek or GIC be taking charge of people's assets with professionalism as stated in its annual reports or prospectus to overseas clients or its own citizens as presented by Temasek's Executive Director Mr. Israel?

If Temasek or GIC is to invest people's hard-earned monies by billions surely it has to have greater calibre than pleading honest mistakes or diligence for the lost billions in Micropolis or Shin Corp.

Dr. Tony Tan by announcing GIC's intention to put up a code of practice obviously has relented on its past defiance in refusing to disclose relevant investment processes and decision making codes of practices based on some flimsy excuses like classified information or avoidance of rogue currency manipulators' predations.

So it is clear that the so-called due diligence exercised in such cases like Micropolis or Shin Corp as mentioned in the foregoing is as good as crystal ball gazings, gut feel or emotionalism.

There is a common saying "bluff me once shame on you, bluff me twice shame on me" Citizens must be wondering among themselves why up to now they are still having so much wool pulled over their eyes and could do nothing to stop such repeated wrongful investment practices at the highest level claimed to be our talents.

Now whether UBS or Citibank buys are eventually good buy or bad buy few people can tell or agree. What is certain is that buying stocks at the beginning of major financial crisis is certainly not being strategic or prudent or wise or exercise of due diligence.

robertteh SG

TCH05

How do you differentiate between short and long term investment? Is there a definite and fool-proof method of determining when a buy should be long term from one which should be short.

Warren Buffet also buys on long term but recently before the Sub-Prime Crisis, he shrewdly sold his long-term stocks in China Oil to some other long-term buyers like Temasek laughing all the way to the bank with an extraordinary gain of some S$20 billions.

In such a situation would you have considered Warren buying long term or Temasek buying long term. Whose term is longer?

TCH05 SG

TCH05

How do you differentiate between short and long term investment? Is there a definite and fool-proof method of determining when a buy should be long term from one which should be short.

In such a situation would you have considered Warren buying long term or Temasek buying long term. Whose term is longer?

An typical economic cycle last for about 10 to 12 years. If I am investing during the down cycle, I would expect to hold the share for at least 5 years.

Warren Buffet part his stake in petrolchina somewhere in Nov07, subprime crisis surface somewhere in Jul07. Reason why WB sold his stake in PC is because of the high risk in Shanghai Stock exchange. If Warren buffet is short term opportunist investor like what you said, I am sure he would have exit his entire equity portfolio before the global market meltdown in Nov07 isnt it? Why didnt he do that?

If you want to give credit to WB, howcome you dont praise Temasek for reducing their stake in Bank of China and ICB before the major meltdown in stock market?

robertteh SG

TCH05

If you want to say that Temasek has the right to deem any big losses on stocks due to over-hasty purchase made at the beginning of a financial crisis as long term investment all any one needs to do to disprove such a claim is to show that there is no hard and fast rule about what constitute long term and what short term period.

It is simply not that professional for any fund or institution to deem a stock as long term investment when it is losing big.

TCH05 SG

TCH05

It is simply not that professional for any fund or institution to deem a stock as long term investment when it is losing big.

AFAIK, both GIC and Temasek have not run into -ve rate of return situation in the overall portfolio. As long as they are delivering the goods, I dont see why you should be so concern. Unless of course you are confident that you can do better.

Lets me put you a challenge. Why dont you mark in your diary and we revisit this discussion in 3 years time and then we see what is Temasek and GIC rate of return from their UBS, ML, Citibank investment?

robertteh SG

You should not just mark on your diary these two counters UBS, Citibank, you should have marked on the same diary Micropolis, Shin Corp, Tecomsel, Global Crossing, so that those who are in charge claiming to have talents will always see for themselves that they have not been making good return in the past hitherto as compared with Warren Buffet or Harvard University.

So they should not be making all those claims of success. As for the future we shall only wait and see but for now we could see that they have acted without much insight or prudence in rushing into stocks even for long term in the beginning of major financial crisis.

jeez88 SG

I will just like to make a simple point.

I might get flamed - but please this is something which all of you might want to consider in your hearts.

During the 2006, who did you vote for?

If it's the opposition you had supported, fine - complain all you want.

If it's the ruling government which you had voted for - please do not complain and make a hu-ha about prices being upped and everything.

Remember the carrot and stick rule, or the dog and man rule.

Ultimately, you would want to think - whether do you want your money to be put to productive use or not.

Sinking investments, and what not - it's your call.

One example, if a composite gambler needs money and borrows from you saying that he will pay the amount back to you - do you think he will ever do so?

If you do want to make a difference, vote in the 2011 elections. Smartly and Wisely,

Choose wisely, and face the consequences squarely.

Ultimately at the end of the day, it is your choice.

kramnave SG

I will just like to make a simple point.

I might get flamed - but please this is something which all of you might want to consider in your hearts.

During the 2006, who did you vote for?

If it's the opposition you had supported, fine - complain all you want.

If it's the ruling government which you had voted for - please do not complain and make a hu-ha about prices being upped and everything.

Remember the carrot and stick rule, or the dog and man rule.

Ultimately, you would want to think - whether do you want your money to be put to productive use or not.

Sinking investments, and what not - it's your call.

One example, if a composite gambler needs money and borrows from you saying that he will pay the amount back to you - do you think he will ever do so?

If you do want to make a difference, vote in the 2011 elections. Smartly and Wisely,

Choose wisely, and face the consequences squarely.

Ultimately at the end of the day, it is your choice.

Not flaming you but seriously, the only reason why I would vote for the opposition would be that I'm pissed with the PAP and would want to give a promising opposition party a chance. I wouldn't call that a smart or wise choice because the opposition will be a question mark as well.

Today if i take up your offer and think: "whether do you want your money to be put to productive use or not", I would find myself asking another question: "What can the opposition do with my money"?

SevenEleven SG

Seven Eleven,

On what basis do you consider buying a stock at the beginning of a crisis good buy based on good timing?

Based on what good experiences or track records of the past would you say that Temasek CEO or its investment team were capable of buying into good strategic stock with good judgment and good timing?

So what is due diligence after all and what is the "so called good-timing".

Was not such a tendency to go buy on impulse yet another example of emotionalism or being headstrong?

buy american stocks are different from buying local stock. there's no dividend annually and you make your returns when you sell the shares. this warrant a good timing as in 危机- 尤危比有机。