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Singapore’s Temasek said Charles (Chip) Goodyear has decided not to become the chief executive of the state investment firm due to differences over strategy, less than six months after accepting the post.
Ho Ching, the wife of Singapore’s prime minister and the current CEO, will continue to remain executive director and chief executive, Temasek said in a statement on Tuesday.
“In Singapore, all these successions at this level are planned quite carefully and for this to happen now is quite unusual,” said Song Seng Wun, senior regional economist at CIMB.
Sources familiar with Temasek said the announcement came out of the blue, with senior managers called into a meeting about half an hour before the news was made public.
Goodyear, the former CEO of BHP Billiton, was ready to take over from Ho on Oct 1 as the sovereign wealth fund’s first foreign CEO.
With 40 percent of its holdings in financials, the market meltdown last year saw Temasek’s portfolio lose nearly a third in the eight months to November, sparking unprecedented criticism in Singapore about its strategy. The size of its portfolio shrank to $84 billion as of Nov. 30.
“Four months into the leadership transition, the Temasek Board and Mr Goodyear have concluded and accepted that there are differences regarding certain strategic issues that could not be resolved,” the statement said.
The decision came after analysts said Goodyear could overhaul the firm’s investment strategy after Temasek lost more than $4 billion this year after dumping stakes in Bank of America (BAC.N: Quote, Profile, Research) and Barclays.
“I’m sorry that we are unable to continue with the leadership transition. Temasek has a fantastic platform and I wish the Board, Ho Ching and the team all the best,” Goodyear was quoted as saying in the Temasek statement.
Goodyear was also widely expected to trim Temasek’s financial holdings and move aggressively into commodities and energy and into emerging market infrastructure and consumer retail sectors, analysts and bankers have said.
“Chip’s experience in the resources sector would have come in very handy in the next cycle of growth. They will have to look for someone of similar calibre if they need to invest in that sector,” CIMB’s Song said.
Goodyear descends from a U.S. lumber baron and hails from the halls of Ivy League universities and Wall Street, but is best known for his reign at the Australian mining giant BHP.
Goodyear joined then debt-ridden BHP in 1999 as chief financial officer, and was instrumental in growing the company into the world’s top miner, via a merger with South Africa’s Billiton, with a market value bigger than the GDP of some countries it operated in.
The decision Ho puts back in the hot seat, extending a five-year run as head of Singapore’s smaller of two sovereign wealth funds, behind Government of Singapore Investment Corp.
Ho has guided the fund through a number of controversial investments including stakes in Thai and Indonesian telecoms firm earlier this decade.
Temasek says Goodyear will not be chief
The Financial Times
Temasek Holdings said on Tuesday that Charles “Chip” Goodyear would not take over as chief executive of the Singapore state investment company as planned, following strategic “differences.”
Mr Goodyear, the former chief executive of BHP Billiton, was scheduled to succeed Ho Ching, the wife of the Singapore prime minister, on October 1 after joining the group in February as part of a transition process. Temasek said that Ms Ho would continue in her role as chief executive.
The sudden termination of Mr Goodyear’s appointment is a blow to Temasek’s stated aim of bringing in new leadership for the group – at least for the time being.
”The Temasek board and Mr Goodyear have concluded and accepted that there are differences regarding certain strategic issues that could not be resolved. In light of the differences, both parties decided that it is in their mutual interests to terminate the leadership transition process and hence the executive relationship with effect from 15 August 2009,” Temasek said in a statement.
Mr Goodyear, who would have been the first foreigner to lead Temasek since its founding in 1974, had been expected to make significant changes in the group’s strategy, including a shift in focus towards natural resources rather than financials after Temasek suffered losses with investments in Merrill Lynch and Barclays.
However, there has been considerable speculation in Singapore about how much independence Mr Goodyear would be given in pursuing his goals, largely because its strategic importance. Temasek owns most of the city-state’s leading companies.
”I think it was inevitable that Chip would have made management changes that would have upset the Singapore corporate establishment,” said a Singapore-based analyst.
Ms Ho said in a statement on Tuesday: ”I am sorry he is unable to continue with the leadership transition, and hope to complete the initiatives that he has started.”
S. Dhanabalan, the Temasek chairman, said in February of Ms Ho’s departure that the group had decided ”it would be as good a time as any to involve a new leader” in a review of long-term strategy.
Ms Ho’s resignation had coincided with a 31 per cent fall in the value of Temasek’s portfolio to S$127bn ($88bn) between April 1 and November 30 last year due to the global financial crisis.
But Mr Dhanabalan said that Ms Ho’s decision to step down was not linked to performance. Temasek is believed to have recovered much of the losses as global markets have rebounded in the last few months.
Ms Ho is credited with turning Temasek from a Singapore-focused group to one that aggressively expanded overseas since she became its head in May 2002 by buying assets mainly in the financial and telecoms sectors.
Mr Goodyear joined then debt-ridden BHP in 1999 as chief financial officer, and was instrumental in transforming the company into the world’s top miner, merging it with South Africa’s Billiton.