Temasek CEO “ideally’ Singaporean, government says

Netty Ismail & Joyce Koh

Temasek Holdings Pte’s chief executive officer should “ideally” be Singaporean, the city- state’s finance minister said after the departure last month of U.S.-born Charles “Chip” Goodyear.

Temasek’s board of directors must remain in the control of Singaporeans, Tharman Shanmugaratnam said in Parliament today, adding that the government “would prefer not to restrict” the investment company in its choice of CEO candidate. Goodyear, who would’ve been the first foreign-born CEO of the state-owned investor, quit five months after Temasek named him to take the helm from current chief Ho Ching.

“Singaporeans would probably prefer a local on the job, as the role may sometimes involve sensitive issues,” said Song Seng-Wun, an economist at CIMB-GK Securities Pte in Singapore. “It should be business as usual as long as the present management line-up is there.”

The aborted appointment came after losses on Merrill Lynch & Co. and other financial investments dragged down the firm’s performance last year. Ho said last month the value of Temasek’s assets slumped by more than S$40 billion ($27.6 billion) in the 12 months ended March.

The board should decide on the best candidate for CEO, Shanmugaratnam said. Restricting Temasek’s choices would send a signal to countries in which it invests in “that there is an element of political decision making in the way Temasek is run and we do not want to send that signal.”

“Dent in reputation”

It is “critical” that Temasek’s chairman, deputy chairman and majority of the board are Singaporeans, Shanmugaratnam said.

“Ideally we should have a Singaporean as a CEO,” he added.

Temasek, owned by the finance ministry, had no contractual obligation to compensate Goodyear after the “amicable separation,” the minister said, adding that the government had no part to play in his departure.

Goodyear’s exit was “a dent in the reputation, it’s a very visible dent in the fender” of Temasek, Shanmugaratnam said.

Goodyear, 51, became a member of Temasek’s board on Feb. 1 and CEO-designate on March 1. He was to succeed Ho, wife of Singapore’s Prime Minister Lee Hsien Loong, on Oct. 1. The government doesn’t directly manage the process of CEO succession and wasn’t involved in Goodyear’s departure, the minister said.

Temasek said in July that Goodyear left because of “differences regarding certain strategic issues that could not be resolved.”

“It is a matter of public interest but that is not sufficient reason to disclose information,” Shanmugaratnam said, declining to elaborate on Goodyear’s departure.

CEO search

Goodyear presided over record profits at BHP Billiton Ltd., the world’s largest mining company, and an almost 350 percent surge in the share price from 2003 to 2007.

The board “will make refinements where possible” on Temasek’s search criteria for a CEO, Shanmugaratnam said. The board is reflecting on the recent episode “to see whether there could have been improvements made,” he added.

“But on the face of it, this was not the situation of a faulty selection process,” he said. “This was a situation which both parties realized was one which wouldn’t work out well only after working together in this transition process, and sometimes quite frankly, this happens.”

How soon Temasek finds a new CEO will depend on “whether the right person is available,” he said.

Selling down

Ho, 56, drove an expansion outside the city-state and increased financial assets to 40 percent of Temasek’s portfolio, including stakes in Merrill Lynch, Barclays Plc and Standard Chartered Plc.

Temasek, 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. Temasek 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.

The state-owned investment company’s assets were valued at S$127 billion as of Nov. 30, compared with S$185 billion at the end of March last year, the Ministry of Finance said in February.

Ho said in February she had been contemplating her departure since 2005 because it is important for CEOs to have a succession plan for “good governance” of their organizations.

She joined Temasek as a director in 2002. Ho, who holds a Master of Science in electrical engineering from Stanford University, became executive director that year and CEO in January 2004.

Temasek was founded in 1974 to foster development of the island’s banks, airlines and ports. It owns shares of Singapore’s biggest bank and its largest telephone company.

Singapore says Temasek has no deadline to find CEO
Kevin Lim & Nopporn Wong-Anan

Singapore state investor Temasek Holdings [TEM.UL] has set no deadline to find a candidate to replace former CEO-designate Charles “Chip” Goodyear, Finance Minister Tharman Shanmugaratnam said on Tuesday.

Tharman told Parliament the board of Temasek would continue to look for the right candidate to replace Goodyear, and that the government would not interfere in that decision.

“Ideally we should have a Singaporean (as CEO),” he said in a reply to a question in Parliament but said the government would leave the decision to Temasek’s board.

Temasek announced last month Goodyear would not become its CEO due to differences over strategy.

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