February 4, 2010 - Temasek
Review
Written by Our Correspondent
GIC’s $14 billion investment in UBS in jeopardy after it
faces collapse over tax dispute with U.S.
Government of Singapore Investment Corporation (GIC)’s S$14
billion dollar investment in giant Swiss bank UBS appeared to be in
serious jeopardy following fresh concerns that UBS may face
collapse if it loses its license in the United States after a
protracted tax dispute.
GIC made its initial investment of S$14 billion to buy a 9 per
cent stake in UBS on the same day that it was hit by a S$14 billion
in losses from the sub-prime mortgage crisis in the United States
in December 2007.
Dr Tony Tan, a former PAP minister and Deputy Chairman of GIC
said he believes in the “long-term prospects” of UBS:
“We take a long view. This is not an investment (for) which
we have any fixed time frame. Of course, we’ll review it from time
to time. Our intention is to remain responsible, supportive
investors… hopefully for the long-term.”
[Straits Times, 11 December 2007]
GIC’s UBS investments now look set to be wiped out unless the
Swiss government manage to reach a settlement with the U.S. over a
protracted tax dispute which erupted in 2008.
UBS has initially agreed to transfer data on 4,450 clients
suspected of tax evasion to U.S. tax authorities.
However, a Swiss court ruled last month that most of the data
cannot be transferred as this would break Swiss law.
The United States has threatened to revoke UBS’s license if the
deal fails to go through and UBS will face collapse as a
result.
As expected, there were no immediate comments from GIC or Dr
Tony Tan. Neither did the mainstream media report on the
matter.
Set up in 1981 to manage Singapore’s growing national reserves,
GIC has been led ever since by Singapore’s strongman Lee Kuan Yew,
who is a lawyer by training.
His daughter-in-law Ho Ching heads Singapore’s other sovereign
wealth fund, Temasek Holdings.
Both GIC and Temasek Holdings were hit by billions of dollars of
investment losses recently.
Despite calls from Singaporeans to establish an independent
Commission of Inquiry to investigate into the losses, the ruling
party has blatantly refused to do so.
Till today, nobody knows the exact amount of losses suffered by
the two sovereign wealth funds.
There is no opposition in the Singapore parliament to hold the
ruling party accountable.
All the printed newspapers in Singapore are owned by a single
media agency – SPH whose Chairman is none other than Dr Tony Tan
himself.
