John Burton
Financial Times
5 Nov 06
http://news.yahoo.com/s/ft/20061106/bs_ft/fto110520062039273451
Lee Kuan Yew, Singapore’s elder statesman, has defended the secrecy of the government’s powerful investment agencies in spite of demands that they become more accountable in the wake of Temasek Holdings’ troubled takeover of Shin Corp, the Thai telecoms group.
“To the outside world, curious to know the inner workings of Temasek, of the Government Investment Corporation of Singapore, it’s unnecessary secrecy. But we have reasons for that. Some we’re prepared to disclose, some we’re not,” he said.
Temasek and GIC are estimated to control more than $200bn (EU157bn, £105bn) in assets and they have emerged among the biggest investors in Asia.
Temasek owns most of Singapore’s leading companies and has bought stakes in regional banks and telecom companies, while GIC invests the city-state’s foreign reserves in overseas equities, bonds and property.
The agencies have encountered resistance in some markets because of their state affiliation, underscored by the recent controversy over the Shin Corp deal.
Thai authorities are investigating whether Temasek breached foreign shareholding limits in the takeover, which has caused Shin Corp’s share price to fall and resulted in a $1.3bn paper loss for Temasek.
“This system exists on the basis of integrity. Starting from the top right through, there are checks and balances – not from the media, but as part of the system,” said Mr Lee, who, together with his son, Lee Hsien Loong, prime minister, heads the GIC board. Ho Ching, Temasek chief executive, is the prime minister’s wife.
Critics allege that Temasek failed to conduct proper due diligence of the Shin Corp deal and raise questions about the accountability of Temasek and GIC to Singapore taxpayers.
Mr Lee said the Temasek deal was “completely above board” and the purchase was conducted in accordance with Temasek’s strict internal rules.
“Yes, the press, the media, Moody’s etc are curious to know. We disclose what we think they need to know. This is our money, we are trustees, we know what we have to do and we’re going to do this,” he said.
“We took this country from zero to here, and we’re not out to bring it back to zero. So I say, please put your mind at ease – Singaporeans do not worry, you need not worry for them.”
The International Monetary Fund last year suggested that Singapore should reveal the financial performance of GIC. In July Mr Lee revealed for the first time that GIC had reported an annual real return of 5.3 per cent since it was created in 1981.
The disclosure, however, fell short of the IMF’s recommendation that the government should consider “publishing, without disclosing strategic and sensitive details, GIC’s aggregate assets, broad elements of its portfolio, and its overall returns” because it “could further enhance investor confidence”.
The IMF noted that Singapore authorities “did not see any benefit of disclosing the market value of GIC’s assets”. Mr Lee described GIC’s assets as “well over” $100bn. Temasek reported assets of S$129bn last year.