The husband and wife team at FMSS

The husband and wife who run the country

Over the last few days PAP Ministers and MPs have lined up in Parliament to attack the WP for its lack of transparency and accountability in running AHPETC. As I said on my Facebook page, it’s about $6.6 million of Aljunied residents’ money versus $800+ billion of Singaporeans assets in GIC, Temasek, MAS and who knows how many other entities. That’s less than 0.001%.

Where does the bigger problem lie with accountability and transparency?

I will remind you of what  Khaw Boon Wan (KBW)  said during Wednesday’s debate:

“The Town Council also did not “adequately manage the conflicts of interests of related parties arising from ownership interests of its key officers,” said Mr Khaw. “It was very convenient. Husband issued payment voucher, wife issued payment.”

Yes, Khaw really did bring up husbands and wives in a debate on conflicts of interest. The phrase: The pot calling the kettle black, does not even begin to cover this.

I wonder whether the PAP appreciates the hypocrisy in attacking the WP over transparency and accountability.  While not wishing to minimise the conflicts of interest of AHPETC, the consequences are fairly small compared to the glaring conflict of interest in which the PM’s wife (Ho Ching) runs one SWF (Temasek) while Lee Hsien Loong is the Chairman of the other (GIC).  Lee Hsien Loong as the head of the Cabinet and the PM had ultimate authority to approve the appointment of his wife. As a result the PM and his wife control over $800 billion of assets.

We are not told how much Ho Ching earns as CEO of Temasek, though the fact that her husband is in a position to influence the terms of her employment and remuneration must be a serious conflict of interest that should be covered by the same disclosure requirements as related party transactions. Certainly she probably earns considerably more per annum than the $6.4 million that WP are accused of overpaying to FMSS. We also do not know whether Lee Hsien Loong is paid anything for serving as Chairman of GIC or Tharman is paid for being the Chairman of MAS.

Shanmugam weighed in to say that the MA fees had been inflated to benefit FMSS by some $6.6 million over the past four years:

“The rhetoric from the Workers’ Party is always about helping the poor man. The reality is that the Workers’ Party took money from the man in the street to give to their friends in FMSS,”
Again the mind boggles at the lack of capacity of the PAP for self-reflection on the irony of what they are saying. We all know that Temasek has sustained serious losses before now. How much have the returns of Temasek and GIC been inflated over the years by ripping off CPF account holders and paying them a below-market rate of interest? How much has Temasek gained by gifts from the Treasury of assets below their fair market value on which the managers were able to make enormous revaluation gains when they were listed or sold? SingTel and Singapore Airlines spring to mind. This still goes on. Changi Airport Group was transferred to Temasek at a valuation of $3 billion a few years back when its true valuation is probably closer to $20 billion now. Read the TOC article on Ho Ching’s losses here: http://www.theonlinecitizen.com/2009/07/breaking-news-40-billion-losses-by-temasek-holdings/

Hari Kumar  was not slow to add his criticism:

Mr Nair said that it’s not that the AGO did not note any criminal activity, but that the AGO does not know if there was because of the state of AHPETC’s records.

Hri Kumar making sure I can’t look him in the eye and demand transparency.

We have not seen any evidence of outright corruption in Temasek and GIC but we would not know anyway because of the complete lack of transparency. Parliament does not even question the fake Budget presentation which is used to hide the Government’s obscene surpluses, running at about $30 billion a year, and fend off any pressure for higher spending on social programmes.

On Friday KBW outdid his previous performance with the words:

“Where the water is murky, it’s easier to fish. Opacity creates opportunity for crooks to make money.”

Talking about murky water is especially ironic given that Muddy Waters, an American short-seller that specialises in ferreting out companies committing fraud or hiding their true financial position, said that Olam was likely to go bust because of its heavy debt load and lack of positive cash flow.  Inexplicably and inexcusably, Ho Ching chose to buy out the major shareholders of Olam by making an offer above the market price rather than wait for the company to fail and buy it out of bankruptcy with an offer to debt holders. I blogged about it in March 2014
http://sonofadud.com/2014/03/16/questions-for-the-prime-ministers-wife-on-temaseks-olam-acquisition/

And here is one of the many stories on it covering Muddy Water’s analysis.  http://www.cnbc.com/id/100272657#.

The PAP manage our reserves in a totally opaque way. Yet the PAP wants us to believe that they are immune from what history has shown to be true time and again.  Opacity and lack of accountability breed mismanagement and at worst, corruption.

These are the real conflicts of interest that pass almost unnoticed and yet are of far greater consequence to Singaporeans than a mere few million dollars in overpayments:

1. The conflict between paying you a fair rate of return on your CPF savings and exploiting you as a cheap source of funding for GIC so it can make higher returns.
2. The moral hazard which encourages Temasek and GIC to take higher risks because they know that the Singapore taxpayer and CPF holder will bail them out. Also if Ho Ching can never lose her job, she is incentivized to take maximum risks as she will then get a higher bonus with no downside if she loses money.
3. The conflict between the Government’s role as owner of most of the land and desire to make a profit and its role in providing low-cost social housing
4. The conflict between the Government’s monopoly control of many domestic industries and ensuring a competitive environment so that you get lower prices
5. The conflict between the Government’s desire to grow the economy and revenues through the import of cheap labour and driving down wages and improving the real earnings of mid- to low-income Singaporeans.
6. The conflict between the role of an Opposition MP as a check on the Government and a proposer of alternative policies and the job of running the TC. MPs should not be estate managers, which requires people with specialized training. One of the reforms I want to see is elected TCs and MPs free to concentrate on their proper role.

   

We should not lose focus on what this attack is really about. We must resist the PAP’s attempt to turn MPs into mere town council managers. By putting the WP on the defensive over their failings in corporate governance the real aim of the PAP is to deter the Opposition from carrying out their proper function, which is to force the Government to be transparent and accountable and govern in accordance with the people’s wishes.

We must keep out focus on what really counts and that is transparency. It is transparency that comes first and every other improvement we want to see in our society, whether freedom, justice, compassion or a more equitable share in our Nation’s wealth, flows from that. We must keep up the pressure to demand that our government supplies transparency. On the other hand, should they continue to give us only muddy waters, then we will have to make use of secrecy, the secrecy of the ballot in the coming GE.

Published by kjeyaretnam

I'm a Singaporean economist who became an opposition activist. I blog to provide an alternative to the porkies that the Pinkies tell. It just so happens that my alternative is the truth. That's why I've never been sued in any civil or criminal court no matter how hard hitting my criticism. I'm quoted and interviewed and asked to speak across the world but largely censored in Singapore in an effort to silence my political opinions. The left hate me because they think I split their vote and because I eschew their outmoded economic models. Models that don't work. The Right and the Conservatives hate me because I'm a liberal. I'm not sure what the middle think of me. I don't think there are more than a handful of people in the middle, here in Singapore. I'm a Singaporean born and bred, dual heritage, my parents Singaporean established here before the State of Singapore was created. I'm not Eurasian. I read economics at Cambridge and could be broadly described as from the Keynesian school but I believe in interventions. I was formerly a successful hedge fund manager. After economics and politics my greatest interests are history, film and Makan. I run but I run so I can eat like a Singaporean. View all posts by kjeyaretnam