Andreea Papuc & Andrea Tan
Temasek Holdings Pte said it will consider promoting an internal manager after abandoning plans to make Charles “Chip” Goodyear the first foreign chief executive officer of Singapore’s state-owned investment fund.
“Temasek has in place a CEO succession planning process,” Temasek said in an e-mailed response to questions. “Our board reviews external and internal candidates over various time horizons.”
Goodyear and Temasek said last week that differences over strategy would lead them to terminate their relationship before Oct. 1, when the U.S.-born former head of BHP Billiton Ltd. was due to replace Ho Ching as CEO and bring an outside perspective to the $88 billion fund. There are at least 13 internal candidates, including executive director and former Danone executive Simon Israel and ex-investment banker Charles Ong, the Straits Times newspaper reported yesterday, without identifying the source of its information.
“An internal person would not only know the business aspects, but also the political elements and be sensitive to Singapore and our surrounding neighboring countries when making a business decision,” said Lan Luh Luh, co-director of The Corporate Governance and Financial Reporting Centre at National University of Singapore Business School, and an associate professor at the business school and Faculty of Law.
Ho, wife of Singapore’s Prime Minister Lee Hsien Loong, will helm the investment company in the interim, Temasek said July 21 when it announced Goodyear’s departure.
Temasek has declined requests for interviews with Ho, Goodyear or other senior executives.
“If it’s about Temasek, I’ve got nothing to say beyond what’s in the press release,” Israel, 56, said July 24 after Singapore Telecommunications Ltd.’s shareholder meeting. Israel is a director of SingTel, Southeast Asia’s largest phone company, which is 54 percent-owned by Temasek.
The Singapore sovereign wealth fund has been hiring executives with experience at international companies as it expands in Asia with stakes in India’s ICICI Bank Ltd., China Construction Bank Corp. and lenders in Indonesia, South Korea and Pakistan. Investments in Singapore now make up a third of the portfolio from more than half five years ago.
The Straits Times also identified as potential CEO replacement Michael Dee, 53, senior managing director international, who was hired from Morgan Stanley last year. Dee was the chief executive officer for Southeast Asia at New York- based Morgan Stanley in Singapore from 2001 until 2004, when he left to head the bank’s Houston office.
It also mentioned Jimmy Phoon, a Temasek senior managing director, and a former executive director with the investment banking unit of London-based Standard Chartered Plc.
Senior managing director and chief strategist Ong was the head of corporate finance at Frankfurt-based Deutsche Bank AG in Southeast Asia before he joined Temasek in 2002.
“Hiring external executives has been a trend within SWFs for some time, and it is starting to intensify,” said Marko Maslakovic, senior economist at International Financial Services London and author of the group’s annual report on sovereign wealth funds. “There has been a gradual movement towards more transparency for sovereign funds, and hiring executives who’ve worked in Western institutions may help send the right message.”
Temasek, with a controlling stake in six of Singapore’s 10 biggest companies, including DBS Group Holdings Ltd., announced 51-year-old Goodyear’s appointment in February after discussions over more than 15 months with Ho and her team.
“Wealth of experience”
Ho drove an expansion outside the city-state and increased financial assets to 40 percent of Temasek’s portfolio, including stakes in Merrill Lynch & Co., Barclays Plc and Standard Chartered. The value of Temasek’s assets fell 31 percent to S$127 billion in the eight months to Nov. 30 as the credit crisis drove down the value of those stakes.
The investment firm, in the first quarter, sold its 3.8 percent stake in Bank of America Corp., which bought Merrill Lynch, at a loss that may have totaled $4.6 billion. It sold its stake in London-based Barclays at a loss in December and January, Reuters reported on June 3, citing people familiar with the matter.
“Chip brings a wealth of experience,” Ho, 56, said at the time Goodyear’s appointment was announced. “He brings in capabilities that I do not have. Just as the team in Temasek, many of them have the capabilities I do not have. As a team, I think it’s a very strong team. I like to think that whoever is the new CEO would like to have maximum space without having to say, ‘Is this somebody’s pet project?’”
Goodyear, who presided over record profits at BHP and an almost 350 percent surge in the share price from 2003 to 2007, was seen as shifting the state-run investment firm’s focus to commodities that are rallying this year after the first annual decline since at least 1957 last year. In June, the fund bought a stake in Singapore-based agricultural commodities supplier Olam International Ltd.
Temasek and Goodyear “have concluded and accepted that there are differences regarding certain strategic issues that could not be resolved,” the company said July 21.
Temasek was founded in 1974 to foster development of the island’s banks, airlines and ports.
The company will maintain “our exposure to rest of Asia at 40 percent, keeping Singapore at about 30 percent, reducing OECD exposure to 20 percent and adding exposure to other geographies such as Latin America, Russia and Africa of up to 10 percent,” Ho said in May.