With the election is supposedly just around the corner and the new Protection from Online Falsehood and Manipulation Act (POFMA) just having become law, the Prime Minister must have been itching to try out his new weapon on a relatively tame target just to test its effectiveness and see whether he needs to calibrate it by tightening the screws of repression further. Brad Bowyer may be a fairly soft target but like many in Singapore he has finally picked up on many of the themes that I have been writing about since at least 2010. LHL must now be hoping that it will have had a huge deterrent effect on all those who dare to criticise him, his wife and his Government.

Just to demonstrate that I am not deterred, I decided to go through the so-called “facts” that the Government sets out and refute them.

Falsehoods

I. Singapore Government’s Involvement in Investment Decisions by Temasek and GIC

How can it be correct to say that the Government has no involvement in investment decisions? The PM is the head of the Government which has the power to sack the Board of Directors and appoint a new Board at any time. As Chairman of GIC Lee Hsien Loong controls the Board which appoints and can at any time dismiss the CEO and Senior Management who report to the Board regularly, presumably monthly. At Temasek again the Government appoints the Board which appoints the Senior Management including the PM’s wife, whose salary should be a matter of public interest but which the Government refuses to tell us, claiming disingenuously that Temasek and GIC are private companies.

As I have said in many of my previous blog posts on this subject dating back six or seven years the Boards of both companies are made up of ex PAP Ministers, ex and serving MPs, civil servants and billionaire property developers and international business heads who benefit from the Government’s policies. Robert Ng, together with his brother Philip, the richest billionaires in Singapore, also sits on the Chinese Communist Party’s National People’s Congress. The Chairman of Temasek is Lim Boon Heng, the former minister, head of NTUC and chairman of PAP. Ho Ching, apart from being the PM’s wife, frequently posts in support of her husband and the Government despite being ostensibly a public servant, so must be considered part of the Government.

II Amarvati Project

Both Sembcorp and CapitaLand (the parent company of Ascendas-Singbridge since its acquisition from Temasek) are majority owned by Temasek. The Government claims that the abortive costs are only a few million dollars and we will have to accept that in the absence of independent information and verification of the accounts. Costs can be hidden as shown by the bribery scandal at Sembcorp and Temasek subsidiary Keppel Corp (where Temasek has also increased its stake to majority ownership). As majority owner Temasek will more control over accounting policies at both companies.

It is odd that the Government is rushing to claim that costs were minimal since in I. it argues that it does not direct the investment policies of Temasek Group or GIC. Also the decision to invest in Amaravati clearly does not seem to have been a commercial one but one rather that was driven by political considerations.

Additional Clarifications

Temasek, GIC and Public Funds

As Temasek is not publicly listed and only publishes limited accounts there is no way of knowing whether its assets and liabilities are correctly valued. Since over 40% of its portfolio is in unlisted assets there should be considerable concern particularly since the evaporation in value of over $100 billion in some of the most prominent tech unicorns such as Uber and WeWork over the year. There is much less information about GIC but since it also has a large segment of its portfolio in private equity (and real estate) there must be concern here also that assets are not correctly valued. In contrast the Norwegian Pension Fund, which has over US$1 trillion in assets, is completely transparent.

Leaving aside the question of current asset valuations, the claimed return of 7% p.a. since inception is fraudulent since the starting assets were injected into Temasek in 1974 at book value or even below book value. When key assets like SingTel and Singapore Airlines were subsequently listed there was a huge valuation gain which misleadingly flatters performance. I have written many articles on this subject starting in 2012 and I have provided the links below to some of them.

Temasek’s AAA credit rating owes as much to the fact that it is !00% Government-owned as to its fundamentals.

The claim that Temasek and GIC are big contributors to Government revenues is also highly misleading. As I have written frequently, most of the Net Investment Returns Contribution (NIRC) is not spent that year but transferred into a long-term fund whose accountability and transparency remain opaque. In several blog posts I have characterised this as a smoke-and-mirrors exercise, or a sophisticated version of the shell game, in which money appears to move between different accounts but nothing is actually spent (see links below). In just one example the Finance Minister, Tharman, transferred $8 billion in 2014, almost the whole of the NIRC that year, to a specially created Pioneer Generation Fund. Actual annual spending from that fund has been about 5% of the capital amount and as of 2019 most of the fund still remained unspent. The Government is always using the Budget to transfer sums from one pocket to another with little real spending taking place. It has been very effective in bamboozling both the Workers Party and the wider public since no one has really questioned it or probed for answers.

Keppel

Apart from the fact that Keppel (and Sembcorp Marine’s) deep involvement in bribing Brazilian politicians saw them indicted under the US Foreign Corrupt Practices Act and served as a shocking indictment of the lack of corporate governance and oversight at all levels in Temasek, It also indicates that the business was only viable because of bribery. Keppel’s Offshore and Marine unit has incurred heavy losses over the last three years and the overall results were only bailed out by Keppel’s Property and Infrastructure Divisions. Given likely low oil prices and the pressure to reduce greenhouse gas emissions it is hard to see any future growth prospects in the Offshore and Marine Division. Temasek is seeking to take majority control of Keppel without paying the cost of a full offer so that it can restructure the offshore division. That suggests that the problems at Keppel go much deeper and are more urgent than the published accounts suggest and the partial and misleading statement from the Government. Again the fact that the Government is commenting on Keppel, a supposedly private company (though headed by an ex-PAP Minister and ex-MPs) is odd given its insistence that it does not direct investment decisions.

Conclusion

In claiming to refute falsehoods using its special powers under the repressive and ridiculous POFMA, the Government is publishing its own fake facts, replete with falsehoods, equivocations and misleading statements. Unfortunately POFMA is completely one-sided and does not allow citizens to apply to the courts for a Correction or Disabling Direction against Government propaganda. Hopefully this post will serve as a privatized Correction Notice!

Links

Has Temasek Found A Cure for Balding?

Why Temasek? As a Vehicle to Allow the Lees to Secretly Extract Money?

Questions for the Prime Minister’s Wife on Temasek’s Olam Acquisition

Smoke and Mirrors in the Government’s Accounts

Budget 2016: Stuck in a Car in the Fog. Who to Ask for Directions?

Budget 2018: Same Old Cliches As Heng Makes Your Money Vanish in the Uniquely Singaporean Version of the Shell Game

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