Spore's GIC: Inching toward transparency - Nepotism In Spore Govt/ GLCs
- Following the latest debacle concerning Severe Accounting Irregularities' Found
in GLC, and passing of the Constitution of the Republic of Singapore
(Amendment) bill which allows the government or statutory boards to transfer
the national reserves to statutory boards or government companies, we append an
old article which has continued relevance today.
Singapore's GIC secrets: Inching toward transparency
August 13, 2001
By Eric Ellis
'If you've got as good a record as they claim, why not shout it from
STEP aside, Sage of Omaha. You've got big-time competition in
Singapore. Not even the legendary Warren Buffett has made the calls
claimed by Singapore's Government Investment Corp. Indeed, the state-
owned fund seems to have anticipated every major event of the past 20
years, including the 1987 stock market crash, the Gulf War oil shock
of 1990, and the Asian financial crisis of 1997-98. The fund's
managers even claim to have gotten in early on Cisco Systems' amazing
That's quite a record. Problem is, unlike shareholders in Buffett's
Berkshire Hathaway, Singaporeans can't verify the GIC's boasts. Its
portfolio, said to be worth more than $100 billion, is a state
secret. The fund doesn't have to file annual reports, justify profit-
and-loss statements, or even report to Parliament. And its managing
director of markets, Ng Kok Song, decries transparency as
a "fashionable subject" that has little place in his offices. In top-
down Singapore, when government officials say the fund has been a
huge success, Singaporeans are expected to believe them.
The GIC is so secretive that many Singaporeans are suspicious about
its source of funds; some believe the money comes from a compulsory
state savings plan. (The GIC denies this and says its funds come from
government reserves and surpluses.) But as Asia's economies slither
into another recession, criticism has gotten louder. "The GIC says it
is no different from other fund managers like Fidelity," says
Singaporean-born professor Linda Y.C. Lim of the University of
Michigan's business school. "So if you've got as good a record as
they claim, why not shout it from the rooftops?"
Finally, the government seems to be listening. Sort of. With an
election looming and "corporate governance" the business watchwords
of the day, a kind of glasnost seems to be arriving at the GIC.
Singapore Senior Minister Lee Kuan Yew, who chairs the GIC, recently
revealed who sits on the fund's board: many of the same safe hands
who run the other government-owned companies that make up as much as
60 percent of Singapore's economy. And he approved publication of a
book commemorating the fund's 20th anniversary that reveals some
superb calls--and some eyebrow-raising duds. There's the $220 million
the GIC blew when China's state-owned Guangdong International Trust &
Investment Corp. went belly-up in 1998-99. And the $100 million it
pumped into Astra, the struggling Indonesian carmaker, a move that
seemed designed to prop up the presidency of Abdurrahman Wahid. (The
GIC also had a stake in the controversial Myanmar Fund, which
invested in Burma.)
But you don't build up a $100 billion portfolio without some winners.
In a rare interview, Ng, 53, who's been with the fund almost since
its inception, told Fortune that being invested in the US stock
market since 1981 has "generated excellent returns." The GIC rode
Pfizer's wild Viagra trip and has done well with Microsoft, both big
investors in Singapore. Perhaps most impressive, the fund staked $25
million in data-services provider Equant in the early 1990s and
cashed out for $368 million before last year's tech wreck. (That
Cisco bet was less successful: The GIC sold its $8 million stake in
the mid-'90s, only to see its value blossom to more than $1 billion
Is the GIC's secrecy coming to an end? Lee continues to argue that
full disclosure of its holdings could imperil Singapore's currency in
these volatile times. But many economists argue that the fund's
purportedly stellar record couldn't possibly harm the currency and
say the government's stonewalling is getting harder to defend. Be
that as it may, Ng did tell Fortune that GIC funds are more likely to
be directed across Asia in the coming years, "bottom-fishing" for
investments as economies bounce out of recession. Of course, he
wouldn't identify specific countries. After all, at the GIC that
would be equivalent to giving away state secrets.
"Current or former PAP MPs have often been appointed as executives or
directors of GLCs, while GLCs have also served as recruitment grounds
for the PAP."
"Senior government officials and military commanders have also
secured posts in the GLCs after retirement."
Singapore issues rules to prevent 'crony capitalism'
By John Burton in Singapore
Published: May 1 2004 5:00
Singapore has issued new rules that increase oversight on government
lawmakers serving as company directors, in an effort to prevent the
emergence of "crony capitalism" in the city-state which prides itself
on its integrity.
Goh Chok Tong, the prime minister, said members of parliament with
the long-ruling People's Action party must submit annually a list of
their directorships and the total fees and stock options they receive.
PAP MPs have found company directorships a lucrative sideline, with
some sitting on as many as 11 boards and receiving fees of up to
S$70,000 ($41,000, 34,000, £23,000) from each company.
There are suggestions that private companies have sought the MPs as
board members to gain influence with the PAP, which has ruled
Singapore since 1959 and holds all but two seats in parliament.
Mr Goh warned that "some companies may do so, hoping that this will
facilitate their business inter-actions with the government or lend
respectability to their operations".
But some analysts believe private companies have little choice in
currying favour with government MPs to gain a foothold in an economy
dominated by state-owned companies.
The PAP's political dominance and the high salaries offered for
government posts to discourage corruption has drawn Singapore's
brightest to the public sector and ruling party, depriving private
business of the best talent.
Mr Goh said the new guidelines on MPs' involvement in business would
help improve transparency and draw a clear line between political
duties and private interests.
"The MP should also consider the possible impact that the
directorship may have on his political life," the guidelines stated.
There are suggestions that the PAP should place limits on the number
of directorships an MP can hold.
A survey by the Singapore Straits Times newspaper found that a large
number of PAP MPs had been approached for board directorships and
demand was rising due to an increased number of initial public
The guidelines said MPs should not solicit for directorships as they
may appear to be using their political position for personal gain.
But the guidelines appeared to fail to address the close involvement
of government MPs and other officials in state-owned companies, or
government-linked companies (GLCs) as they are known in Singapore.
Current or former PAP MPs have often been appointed as executives or
directors of GLCs, while GLCs have also served as recruitment grounds
for the PAP.
Senior government officials and military commanders have also secured
posts in the GLCs after retirement.
Mr Goh, for example, was managing director of Neptune Orient Lines,
the state-owned shipping line, before he entered politics, while
David Lim, a former government minister, was recently named as NOL
This has led critics to suggest that the government is reluctant to
privatise GLCs because it could hurt the employment and ownership
interests of people closely connected to it.
From: "apsonlim" <apsonlim@y...>
Date: Wed Aug 13, 2003 6:15 am
Subject: Why it is difficult for govt to withdraw from business
Please click on this link for a comprehensive data of who's who in
Why it might be difficult for the government to withdraw from
BY Tan Boon Seng
February 10, 2002
Singapore Window obtained this documentation. As far as we know, the
information is correct.
IF readers know of any inaccuracies please contact the webmaster.
GOVERNMENT-LINKED companies (GLCs) appear to be playing a bigger
role in the Singapore economy than ever before. With Singapore
experiencing possibly its worst economic downturn since
independence, the government is re-examining its economic policies.
The government's deepening and broadening involvement in private
enterprise is among the policies being scrutinized by the
government's Economic Review Committee. Some officials hint at a
reversal of this practice but others appear to disagree.
A closer look at the issue suggests that reversing this policy is
difficult. The government's withdrawal from business could hurt the
employment, income and ownership interests of people closely
connected to it
1)relatives of senior government leaders,
2)former senior government officials,
3)former senior military commanders,
4)current senior government officials, and
5)current and former ruling party politicians. The outcome may also
hurt the government's efforts to co-opt its politicians from the
The Policy Debate
]Minister of State for Trade and Industry Raymond Lim in November
said that the government might in future do less of "leading from
the front". He also suggested the possibility of introducing
competition law to address the dominance of GLCs. Mr Tharman
Shanmugaratnam, Senior Minister of State for Trade and Industry, in
December said that: "What really matters for East Asia is a shift
towards open, competitive markets, and away from the state-driven
industrial policies and the collusive domestic networks that have
led to low returns on investment."
However, Deputy Prime Minister Brigadier-General Lee Hsien Loong,
who is heading the Economic Review Committee, has clarified the
extent to which the government will withdraw from business. He said
GLCs would continue to be "one of the thrusts forward" for the
Singapore economy. His wife, Mdm Ho Ching, who is Director of
Temasek Holdings and Deputy Chairman of Singapore Technologies, has
shared her dream for Singapore Technologies to become a "global
champion", "to make the seemingly impossible, a reality". Mr S
Dhanabalan, Chairman of Temasek Holdings, has also made it clear
that the government will not withdraw from businesses it deems it to
have a "strategic" interest in. Mr Dhanabalan said the government
also intends to be involved in businesses of a high-risk nature.
These remarks were made even before the committee's work had begun.
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