Morgan Stanley’s Xie quits after critical email on Singapore

October 6, 2006
Singapore Democrats

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Netty Ismail
Bloomberg
6 Oct 06

Andy Xie’s resignation as Morgan Stanley’s chief economist in Asia last week followed an e-mail in which he characterized Singapore as an economic failure dependent on illicit money from Indonesia and China.

Xie, who worked at Morgan Stanley for nine years, sent the e-mail to his colleagues after attending the International Monetary Fund and World Bank annual meetings last month in the Southeast Asian island state. The 46-year-old Shanghai-born economist questioned why Singapore was chosen to host the conference and said delegates “were competing with each other to praise Singapore as the success story of globalization.”

“Actually, Singapore’s success came mostly from being the money laundering center for corrupt Indonesian businessmen and government officials,” Xie, who was based in Hong Kong before leaving Morgan Stanley on Sept. 29, wrote in the e-mail.

“Indonesia has no money. So Singapore isn’t doing well.” Singapore’s $118 billion economy is recovering from three recessions since the 1997 Asian financial crisis, and is expecting growth of as much as 7.5 percent this year. The city-state is grappling with growing competition from China and India, two of the world’s most populous nations, where labor costs are less than a quarter of those in Singapore.

Mountain Summit

Officials from the public relations departments of the Monetary Authority of Singapore and the government’s information service declined to comment on the contents of the e-mail. They also declined to be identified.

Xie, 46, declined to comment on his departure when contacted on his mobile phone on Oct. 2 and said he hasn’t decided on what he will do next.

“I’m not at liberty to comment on anything,” Xie said. “I’m in Guangzhou and I’m taking a break on top of a mountain. It’s quite nice here.”

Prime Minister Lee Hsien Loong said in September that Singapore’s economy may sustain annual growth of 3 percent to 5 percent for the next 10 years to 15 years as the country expands industries ranging from information technology to tourism.

“To sustain its economy, Singapore is building casinos to attract corruption money from China,” Xie said.

Singapore is ending a four-decade ban on casinos. The government plans to triple tourism revenue to $19 billion and double visitors to 17 million by 2015.

Morgan Stanley confirmed the contents of the e-mail and said the New York-based firm doesn’t elaborate on the reasons behind employee departures.

‘Strong Supporter’

“This is an internal e-mail based on personal suppositions and aimed at stimulating internal debate amongst a small group of intended recipients,” said Cheung Po-ling, a Hong Kong-based spokeswoman for the world’s largest securities firm by market value, in a written statement. “The e-mail expresses the views of one individual and does not in any way represent the views of the firm.

“Morgan Stanley has been a very strong supporter of Singapore and has a great deal of respect for Singapore’s achievements,” Cheung said.

In the U.S., Wall Street analysts have lost their jobs for recommending shares of companies that they privately disparaged. Citigroup Inc., Merrill Lynch & Co. and eight rival securities firms agreed in 2003 to pay $1.4 billion to settle charges that analysts published misleading stock research in a bid to win investment-banking business.

Dinner Party

Morgan Stanley ranks sixth among merger advisers in Singapore this year, handling $1.5 billion of deals, according to data compiled by Bloomberg. It advised Temasek Holdings Pte., the Singapore government’s investment company, in the purchase of a 9.9 percent stake in Mumbai-based Tata Teleservices Ltd.

Morgan Stanley, the No. 3 arranger of stock sales in Asia outside Japan, hasn’t underwritten a Singapore deal this year, Bloomberg data show.

“I tried to find out why Singapore was chosen to host the conference,” Xie wrote in the e-mail. “Nobody knew. Some said that probably no one else wanted it. Some guessed that Singapore did a good selling job. I thought it was a strange choice because Singapore was so far from any action or the hot topic of China and India. Mumbai or Shanghai would be a lot more appropriate.”

At a dinner party hosted by Singapore Prime Minister Lee Hsien Loong, “people fawned him like a prince,” Xie wrote.

“These Western people didn’t know what they were talking about,” he wrote, describing the praise for Singapore as “nauseating pleasantries.”

Xie, who said in September that the U.S. economy may fall into a recession in 2008, worked at the corporate finance division at Macquarie Bank in Singapore before joining Morgan Stanley in 1997. He earlier spent five years as an economist with the World Bank, overseeing the bank’s programs in Indonesia and other countries in the Asia-Pacific region, according to the New York-based firm’s Web site.

Xie holds a doctorate in economics and a master’s degree in civil engineering from the Massachusetts Institute of Technology in Cambridge, Massachusetts.