TOC:Ministry of Finance replies to WSJ article

[Porfirio Rubirosa]

Ministry of Finance replies to WSJ article
Wednesday, 26 August 2009, 6:45 am | 2,555 views
From The Wall Street Journal:

Your editorial “Temasek and Transparency III” (Review & Outlook, Aug. 20) makes unfounded claims on disclosure regarding Temasek.

The government takes a principled approach in what it discloses on Temasek, not merely “what it deems acceptable.” It discloses all relevant information that Singaporeans need to judge Temasek’s performance as a long-term investor, favorable or otherwise. But it does not believe that either government or parliament should become engaged in Temasek’s investment strategies or internal governance. This would politicize Temasek’s operations and prevent it from managing its portfolio professionally and sustaining good, long-term performance.

Temasek itself discloses well beyond what it is required to under the law. It publishes annually its total shareholder returns over various time horizons from one to 30 years and since its inception in 1974, as well as the value of its portfolio for each year since inception. It also publishes the group’s financial summary including profit and loss statements and balance sheets. Temasek’s accounts are audited by reputable international auditors.

You cited Temasek’s losses since March last year as warranting greater scrutiny by parliament but omitted other facts disclosed by the government in parliament—that while Temasek’s portfolio value had fallen in line with the recent market decline, its annualized returns of 15% (in U.S. dollar terms and excluding capital injections) from the start of the market cycle in 2003 until the trough in November 2008 exceeded relevant market indices, as well as many comparable investment entities internationally.

On Charles Goodyear, what Temasek stated about the mutual agreement not to proceed with the planned CEO succession is no different from typical disclosure by large companies which make senior management changes.

Your editorial also gave the misimpression that the government did not favor a non-Singaporean as CEO of Temasek. As the finance minister told parliament, while it is ideal to have a Singaporean, this is not always possible, as the field of candidates with experience in running international operations is narrow. This is why the government wants Temasek to get the best person for the job and accepted the Temasek board’s decision to appoint Mr. Goodyear, a non-Singaporean, as CEO-designate.

Chin Sau Ho

Press Secretary to Minister for Finance

Ministry of Finance

Singapore

 

[TeeKee]

You cited Temasek’s losses since March last year as warranting greater scrutiny by parliament but omitted other facts disclosed by the government in parliament—that while Temasek’s portfolio value had fallen in line with the recent market decline, its annualized returns of 15% (in U.S. dollar terms and excluding capital injections) from the start of the market cycle in 2003 until the trough in November 2008 exceeded relevant market indices, as well as many comparable investment entities internationally.

annualized returns of 15% can lose freaking 260 billions?

this guy is withholding some information...

 

[Porfirio Rubirosa]

2) Lisa on August 26th, 2009 9.04 am The 2 statements from Temasek are confronting each other:

1. “This would politicize Temasek’s operations and prevent it from managing its portfolio professionally and sustaining good, long-term performance.”

2. ” As the finance minister told parliament, while it is ideal to have a Singaporean, this is not always possible, as the field of candidates with experience in running international operations is narrow. This is why the government wants Temasek to get the best person for the job and accepted the Temasek board’s decision to appoint Mr. Goodyear, a non-Singaporean, as CEO-designate.”

If Temases is free from politics, why does it need a Finance Minister to explain its management decision to parliament??
4) crowbar on August 26th, 2009 10.18 am Funny how the govt keep saying that it has nothing to do with the running of Temasek but then it keeps defending Temasek in letters like this one.

How come Temasek cannot defend itself?

13) woodpecker on August 26th, 2009 12.39 pm Will changing Temasek’s charter or disclosing any more financial information about itself change the fact that TH get its source of funding from Sg’s Min of Finance?

All this charades with selective disclosure of financial information and changing labels within TH are just a FUTILE attempts to convince the market that it is not related to the Sg gahmen.

If LHL selectively shows you just a selected few bank statements and wears a T-shirt proclaiming “I am not my father’s son”, will anyone believe that he is not LKY’s son?
15) Time for Change on August 26th, 2009 12.50 pm What long term bullshit is he talking about when they still have not explained why they sold their stakes in the banks earlier this year?

What’s the reason for incurring such a huge loss so eagerly? Didn’t someone mention they hold their investments for 20 or 30 years?
17) Jeez on August 26th, 2009 1.41 pm “Temasek itself discloses well beyond what it is required to under the law” (MOF)

Temasek is a 5th Schedule Company under the Companies Act and does NOT need to disclose ANY financial info.

MOF is just talking crap
18) Retired And Jobless on August 26th, 2009 1.45 pm Time For Change #15 is correct. All talks about long term investments (20 years down the road) is big BS. Long time ago someone also mentioned that if TLCs cannot gave a good ROIs, TH would rather invest somewhere else and get better ROIs. Now look what has happened ?. The fact is, except for some TLCs like NOL and lately SIA losing money because of the economic downturn, most of the other TLCs like SingTel, DBS are still providing reasonable ROIs for TH. On the other hand, TH have lost billions in their investments in other companies. Anyway, head they win.. tail they also win. What else can we say.
22) Steve Wu on August 26th, 2009 3.00 pm Jeez #17,

You are quite right that Temasek Holdings Pte Ltd is Fifth Schedule entity under the Constitution of Singapore (but not under the Comapnies Act).
http://statutes.agc.gov.sg/non_vers...ate=latest&method=part&segid=931158661-004006

As a Private Limited entity, Temasek is protected, under the Companies Act, against public disclosure. Its only legal shareholder is the Ministry for Finance.

However, under the Constitution, things are quite different.

You see that, in Article 2, the term “reserves” is defined as
“reserves” , in relation to the Government, a statutory board or Government company, means the excess of assets over liabilities of the Government, statutory board or Government company, as the case may be

Article 24(2) states that “Subject to the provisions of this Constitution, the Cabinet shall have the general direction and control of the Government and shall be collectively responsible to Parliament.”

By consistently stone-walling the questions in parliament, Tharman has consistently demonstrated that he is unresponsive and indeed irresponsible for the entity Temasek under his charge.

Furthermore, by the powers of Article 22F(2), The President may request —
(a) any Minister, or any senior officer of a Ministry or of a department of the Government; or
(b) the chief executive officer and any member of the governing board of any statutory board or the directors of any Government company to which Article 22A or 22C, as the case may be, applies, to furnish any information referred to in clause (1) concerning the reserves of the Government, the statutory
board or Government company, as the case may be, and the Minister, member, officer or director concerned shall be under a duty to provide the information.

That the president has NOT caused this to happen does NOT bode well with the efficacy of the checks and balances.
23) Jeez on August 26th, 2009 4.08 pm To: 22) Steve Wu on August 26th, 2009 3.00 pm

Your correction of my mistake and further elaboration of the Constitution with regards to Temasek & the other 5th Schedule Companies are much appreciated.

Quite clearly Tharman’s stonewalling is against the spirit if not the letters of the Constitution. People should seriously wonder why.

Many thanks.

Agree with you that it is rather disconcerting that the current President has not asked for accountability. Remember that when former President Ong had asked for details of our reserves he was told it would take 56 man-years

 

[Porfirio Rubirosa]

38) Passerby on August 27th, 2009 1.50 am It reminds me of Fannie Mae and Freddie Mac. They were above scrutiny of SEC, fully backed up by the federal government and the only two companies in Forbes 500 that are not liable to disclose their financial to the public. ….and just look at what happen now? Might not be the same thing but the formula for failure seems the same
42) JC on August 27th, 2009 3.26 am (1) “This is why the government wants Temasek to get the best person for the job and accepted the Temasek board’s decision to appoint Mr. Goodyear, a non-Singaporean, as CEO-designate.”
- Agree. Which is why there is a demand for transparency to understand why was there a sudden reversal on the same decision. Just as a corporation is answerable to its shareholders, we have the right to demand an answer to this reversal, as interest and stakeholders of Temasek.

(2) “It discloses all relevant information that Singaporeans need to judge Temasek’s performance as a long-term investor, favorable or otherwise.”
- Agree. Which is why there are many who voiced the opinion that Ms. Ho is not suitable and appropriate for her role in Temasek. Not suitable because of the dismal performance results and not appropriate because there is an OBVIOUS conflict-of-interest in her being the sleeping partner of the leader of this country.

(3) “This would politicize Temasek’s operations and prevent it from managing its portfolio professionally and sustaining good, long-term performance.”
- Agree. However I question the sincerity of this statement considering Ms. Ho (or Mrs. LHL) is the CEO of Temasek while her husband wields the most powerful policy-making post in the land! It is already an obvious politicizing of it’s operation!

There seems to be alot (obviously more than the three I raised) of contradiction in Ms. Chin’s rebuttal to WSJ. Comrades, this is just another example of arguing the relevance of Communism in today’s world. Not exactly your regular, run-of-the-mill 1st world country, wouldn’t you say?
46) Joseph Teo on August 27th, 2009 10.27 am An insight into Temasek’s returns.

If you understand Temasek’s history, you will understand why it is able to produce high historical returns. It was set up as a holding company for government assets. Companies like SIA, SIA Engg, Singtel, the ST group, Capitaland, DBS, etc would have formed a large proportion of its portfolio. These companies were built on the hard work and on the backs of many Singaporeans, and their value become monetised when they were listed and large investment houses bought into them. That is, their value was not created by Temasek, or by any investment decision made by Temaksek management. It is the management and employees of these companies that created value.

Because of the lack of transparency, we are unable to assess Temasek’s performance in terms of it’s investment decisions – that is shares and derivatives that it bought and sold. I suspect that if it was assessed on this alone, we will find it’s performance to be dismal.

I can’t back my statements with any data, because Temasek won’t release it. However, I suspect that it is not too far from the truth.
62) Oxford Dude on August 27th, 2009 8.31 pm Hi Joseph Teo #46,

I agree with you. This was actually hinted in the Temasek Charter 2002 Backgrounder which revealed that Temasek divides its portfolio companies in Groups A and B.

Group A are firms that are essential to the Singapore economy and our national security. As such, the Government will continue to hold high ownership stake in these firms. Firms that fall into category would include Singapore Petroleum Company, Singapore Press Holdings, DBS Group and the ST Group. Group B are firms with regional potential and they are less tied to our national interest. Capitaland, Singapore International Airlines, UBS, Standard Chartered would fall under this category.

However, the distinction between Groups A and B can be quite blurred. For example, Singtel has overseas subsidiaries in Indonesia, Malaysia, Australia. Yet at the same time, the earnings from Singtel overseas subsidiaries are beginning to exceed the earnings in Singapore. In terms of commercial operation, it begs to question whether the commercial managers will shift local resources abroad to better capture overseas opportunities at the expense of the “home” market.
66) T on August 27th, 2009 11.12 pm /// 46) Joseph Teo on August 27th, 2009 10.27 am
An insight into Temasek’s returns. ///

Joe – actually the data have been published before. I remember seeing a chart of the value creation. The BIGGEST single contributor is SingTel. On its listing, it created billions in asset value overnight. If you strip out SingTel, the return will be miserable. A lot of the values are from private companies injected into TH.

 

[Papsmearer]

If Temasek does not like the article, sue for defamation than. That's what they all do in S'pore. If they don't dare to start legal action, than the article must be true.

 

[chinkangkor]

As the finance minister told parliament, while it is ideal to have a Singaporean, this is not always possible, as the field of candidates with experience in running international operations is narrow.

If candidates with experience running international operations is so important, how did Ho Ching get the job in the first place? Based on this criteria, Ho Ching shouldn't be selected for the job at all as it is obviously a mismatch.

 

[methink]

If candidates with experience running international operations is so important, how did Ho Ching get the job in the first place? Based on this criteria, Ho Ching shouldn't be selected for the job at all as it is obviously a mismatch.

She is the exception. One rule for sinkies, another for the elitist.

Very exceptional familee.

 

[Hope]

annualized returns of 15% can lose freaking 260 billions?

this guy is withholding some information...

"annualized returns of 15% (in U.S. dollar terms and excluding capital injections) from the start of the market cycle in 2003 until the trough in November 2008"

Is this guy out of his mind?really?

Does he know what is compound interest.

$100 becomes $231 with compund interest of 15% for seven years(2003-2008)

So if TMS started with US$200 billion,it should already earn US$262.00 by now.

Why are the 154th prostitutes keeping their peace and not going to town telling all and sundries.

The minister of finance shoud be sacked immediately for withholding such vital info for so long,and thus causing tremendous pain and agony to Lee family in general and Madam Ho in particular.

 

[Hope]

Ministry of Finance replies to WSJ article
Wednesday, 26 August 2009, 6:45 am | 2,555 views
From The Wall Street Journal:

Your editorial “Temasek and Transparency III” (Review & Outlook, Aug. 20) makes unfounded claims on disclosure regarding Temasek.

The government takes a principled approach in what it discloses on Temasek, not merely “what it deems acceptable.” It discloses all relevant information that Singaporeans need to judge Temasek’s performance as a long-term investor, favorable or otherwise. But it does not believe that either government or parliament should become engaged in Temasek’s investment strategies or internal governance. This would politicize Temasek’s operations and prevent it from managing its portfolio professionally and sustaining good, long-term performance.

Temasek itself discloses well beyond what it is required to under the law. It publishes annually its total shareholder returns over various time horizons from one to 30 years and since its inception in 1974, as well as the value of its portfolio for each year since inception. It also publishes the group’s financial summary including profit and loss statements and balance sheets. Temasek’s accounts are audited by reputable international auditors.

You cited Temasek’s losses since March last year as warranting greater scrutiny by parliament but omitted other facts disclosed by the government in parliament—that while Temasek’s portfolio value had fallen in line with the recent market decline, its annualized returns of 15% (in U.S. dollar terms and excluding capital injections) from the start of the market cycle in 2003 until the trough in November 2008 exceeded relevant market indices, as well as many comparable investment entities internationally.

On Charles Goodyear, what Temasek stated about the mutual agreement not to proceed with the planned CEO succession is no different from typical disclosure by large companies which make senior management changes.

Your editorial also gave the misimpression that the government did not favor a non-Singaporean as CEO of Temasek. As the finance minister told parliament, while it is ideal to have a Singaporean, this is not always possible, as the field of candidates with experience in running international operations is narrow. This is why the government wants Temasek to get the best person for the job and accepted the Temasek board’s decision to appoint Mr. Goodyear, a non-Singaporean, as CEO-designate.

Chin Sau Ho

Press Secretary to Minister for Finance

Ministry of Finance

Singapore

Chin Sau Ho is obviously talking big cock here.