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Avoiding the grip of Singapore Inc & The Lee Family

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  • Eric Ellis
    The whole world sees through the flimsy corporate veil and sham companies incorporated by the Lees as a front to the family business.
    Message 1 of 1 , Apr 10 10:12 PM
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      The whole world sees through the flimsy corporate veil and sham companies incorporated by the Lees as a front to the family business.

      http://www.smh.com.au/business/avoiding-the-grip-of-singapore-inc-20110406-1d4i8.html

      Avoiding the grip of Singapore Inc & The Lee Family
      Eric Ellis
      April 7, 2011

      Swan blocks ASX merger

      Treasurer Wayne Swan has effectively blocked the merger between the Australian and Singapore stock exchanges.

      It was ''a missed opportunity for both sides''. So claimed the Singapore government's quasi-official mouthpiece, The Straits Times, yesterday after the shock of Wayne Swan's knockback of Singapore Inc's $8 billion takeover of the Australian Stock Exchange filtered through this urgent little island.

      And, if The Straits Times is true to form, that's about as generous as it will get on its coverage of Australia in coming weeks. Singapore Inc is not a good loser and so absolute is its control that Singapore's grumpiness with Australia will become patently clear in coming weeks.

      After the many years of the Lee regime, Singaporeans know the elite never make mistakes. But this play by Singapore Inc to walk off with a crucial pillar of Australia's financial architecture is precisely that, a hubristic reach too far with the government-linked ownership structure that Magnus Bocker and his SGX brought to the table, no matter how they tried spinning it.

      Mistakes are always others to have made, as The Straits Times was quick to point out. ''Crucially, [the SGX bid] would also have helped both bourses stay relevant in an increasingly tough competitive landscape. In Australia, specifically, the move would have helped ASX tap into the massive growth potential in the capital markets of Asia.

      ''From a broader perspective,'' the newspaper sniffed, ''the merger might have also helped Sydney, which is losing its allure as a leading financial hub in this part of the world to rival centres like Hong Kong, Shanghai and Singapore.''

      But Singapore hardly compares to Hong Kong or Shanghai as the fulcrum of thrusting Asian commerce. True, the region's tycoons like to discreetly park their billions there but if you want a piece of Asia's real growth, to invest in our backyard's chunky markets - India, China, Japan and perhaps Indonesia - one goes direct. Or to Hong Kong, a far more attractive proposition given Australia's trade and foreign investment profile than tiny Singapore. For a city-state constantly fretting about its long-term viability, the Lees need Australian heft more than vice versa.

      Australia isn't the first country to discover and rule that an investment by Singapore Inc entities such as Temasek Holdings carries heavy state baggage - a de facto nationalisation by a foreign government, as it was once described in Bangkok by no less a figure as the Thai finance minister, railing against Temasek's $4 billion purchase of former the PM Thaksin Shinawatra's media empire.

      Singapore Inc treads warily across the Asian region, where economic nationalism is in far healthier bloom than it is in Australia, one of the world's more open investment regimes. Singaporean investment is welcome in Asia, but only to a point and rarely to control, lest it bump up against the same cosy politico-corporate networks as, well, Singapore, where an Australian proposal to buy the SGX or Singapore Airlines would never happen.

      It will be fashionable in coming weeks to condemn Australia's decision as narrow, nationalistic, parochial and local, as Australia is often portrayed in Asia. Indeed, as the curmudgeonly Straits Times said yesterday: ''Analysts have noted that the deal has fallen victim, not to rational arguments and economic sense, but to intense, often vitriolic, political opposition from some Australian politicians. It was the same nationalistic chest-thumping from Australian politicians that had tried to prevent Singapore Airlines from buying Air New Zealand back in 2001.'' It seems that spurned suitors have long memories.

      What the Singapore media won't write is that Australia's rejection of the SGX bid comes at an embarrassing time for the long-ruling Lee regime, unhindered by the trifles of democracy since 1959, a grip on absolute power challenged only by China, North Korea and Cuba. It's the early throes of election season in Singapore, and the Lees are keen to avoid any jasmine-like suggestion that might flower from elsewhere. But this mistake will be noticed.

      That's not Canberra's concern, but Swan's spurning of the SGX bid throws another harsh spotlight on a more pressing Singaporean problem. Its power elite's reluctance to devolve corporate and political power, to give up the perks, the fat salaries, the clubby ride, has allowed its government-owned corporations to become massive entities that have outgrown Singapore's relatively small economy. They must continue to do deals to grow, to deliver the returns the government must produce to justify to its increasingly sceptical people their continued grip on power. And yet, when they reach for control of flashy assets such as the ASX, they frequently bump against the very ''national interest'' argument that has denied this deal.

      Infamously litigious, official Singapore insists that Temasek and its sister government entities are not government at all, that they operate entirely independently and should be judged by the market as a Microsoft or a GE. Yet when commentators and the market note the 100 per cent state ownership, the common directors, the crossover links between state and mammon, the prickly government bites back - not the ''independent'' Temasek company but muddle-headed bureaucrats. Critiquing Microsoft doesn't hazard a reprimand from the White House.

      Singaporeans aren't about to crowd Orchard Road as Egyptians did Tahrir Square but there is palpable disquiet about these cosy networks, loss-making deals, bad bets, the relative lack of transparency, the spin. They don't much like that the PM's wife controls their nest eggs at Temasek, which is almost impossible to compete against. It doesn't take a particular vigorous trawl through Singapore's (anonymous) social media to see that they'd like change in the institutions they fund. Wayne Swan may have just done Singapore Inc a favour, if it cares to listen.

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