A few days ago Temasek announced that it was very sorry for screwing up with the FTX investment and losing your money. It admitted losses of US$275 million ($374 million) but without transparency we can’t be sure that that is the full story as earlier funding rounds in which Temasek participated do not appear to be accounted for.

In a fake display of contrition, Temasek management issued the following statement:

“The investment team and senior management, who are ultimately responsible for the investment decisions made, took collective accountability and had their compensation reduced.” It went on to say it was “disappointed with the outcome of our investment, and the negative impact on our reputation”.

What reputation? It’s just further confirmation that the highly (or astronomically we just don’t know as Ho Ching’s and the other top management’s compensation remains a state secret) paid managers don’t know what they’re doing. I’ve written countless articles on this subject over the past decade and also pointed out that much of Temasek’s claimed investment out performance since 1974 is due to IPO’ing* state assets like Singapore Airlines and SingTel that were injected into Temasek Holdings at ludicrously low valuations. For those who are interested I provide a list of links below. (*Initial Public Offering)

It is not deemed necessary to tell us what the PM’s wife earned as CEO of Temasek (and now as Chair of Temasek Trust) as well as her other senior management colleagues, so how do we know if the pay cuts are meaningful or merely symbolic. After all, if Ho Ching was earning $100 million a year as CEO (and has several billion dollars in the pension fund) then a pay cut of $1 million is “peanuts”, as Mrs Goh Chok Tong said of sub-million dollar salaries back in the early 2000s.

It doesn’t matter how flawed the investment process or how skimpy the due diligence. Temasek can be run like a casino or a gigantic slush fund for rewarding friends and cronies of the PM and the PAP. It doesn’t matter. Or like the criminal decision to rescue the Olam shareholders at a premium when their company would likely have gone bankrupt without it. Whatever decisions are made or could be made, Singaporeans have never seen any benefit from the reserves and never will as long as the PAP Government remain in office.

The Government wants you to be fooled into thinking that the Net Investment Returns Contribution (NIRC), represents resources from the reserves which are spent on Singaporeans. But this is, like most PAP propaganda, lies and disinformation that I’ve likened to a smoke and mirrors exercise or a shell game of hiding the money.

Firstly the Finance Minister, now seatwarmer-in-waiting, Lawrence Wong, puts much of the NIRC directly into long term funds and endowments where it is not included in current spending. In 2023 the NIRC amounted to $23 billion but a huge $17 billion went into top-ups to funds and endowments. Some years the amount going into endowments and top-ups has been 100% of the NIRC. Spending out from those long term funds is only a fraction of the money being put into them. The budget shows that typically about $4-5 billion goes out and this is amount is then not accountable to Parliament. Many of the accounts of these funds are not available for inspection and do not seem to be audited. Once money is allocated to these funds it is by law excluded from the amount used to calculate the NIRC. Why does this matter. Most of the money squirreled away in long term funds and endowments is money that is never going to see the light of day and be spent in a manner that would alleviate the cost of living squeeze for Singaporeans.

Secondly I have highlighted the mystery of the healthcare budget where spending by MOH is highlighted in the budget but there is no disclosure of revenue collected by MOH Holdings, a private corporation like Temasek whose accounts the Government has hidden behind a paywall. I asked to see the accounts but MOH refused to provide them. I suspect that the surplus here, which could be several billion, is transferred directly to GIC and Temasek.

Thirdly, there is the charade of making Singaporeans pay the full “market” value for the land that HDB buys from SLA to build new housing. In the Budget there is a sum set aside, out of tax and other revenues, used to give subsidies in the form of grants to Singaporeans to enable them to afford HDB land at the very high prices, called market rates. This is again is just a way of transferring money out of the Budget and into the reserves to avoid spending it on Singaporeans. These fake “subsidies” amount to several billions of dollars a year. Instead of providing money to you they are giving you a “subsidy ‘ which allows them to keep the prices of HDB artificially high but your individual spending power does not increase.

As I have pointed out in my blogs on Ridoutgate, the Government fiercely resists any suggestion that land used to build homes for ordinary Singaporeans should be priced lower than “market”, with both Indranee Rajah and Desmond Lee saying in parliament that this would be a drain on the reserves. Yet huge tracts of land can go underutilised and subsequently occupied long term by Government Ministers (Shanmugam and Balakrishnan are the only cases we know about so far but there could be more). The rents are currently undisclosed but will inevitably be revealed to be so far below private rents and the economic value of the land as to constitute an easy opportunity to arbitrage risk free between the rental they can get on their private residences and the ones they pay for state property. So it’s clearly OK for this government to mismanage our land reserves to benefit an elite group of Singaporeans over the ordinary people.

In fact, far from money coming out of the reserves, the true figures show that the Government has run a cash surplus since 2004 of about $400 billion and a deficit in only one year (2020). This excludes the surpluses of GIC, Temasek, MAS, Changi Airport Group, MOH Holdings and any other corporations the Government owns which are not paid as dividends to the Government. I have calculated, and Lawrence Wong has implicitly confirmed that my calculation is bang on, that the total value of the Government’s financial assets is at least $3 trillion. When the value of state land is added on, the value of the Government’s total assets should be at least $10 trillion or about $3 million per Singaporean citizen.

Yet despite what should be overflowing coffers the Government pretends that the reserves are about to run out and that to invest any more than a meagre amount in our citizens’ welfare would be unfair to future generations. Singaporeans are always being told by LHL and LW that growing social needs mean taxes must be go up, particularly of the indirect variety that hit ordinary Singaporeans the hardest. The parallels with the NKF scandal and TT Durai are instructive. As I wrote here:

In the trial the true amount of the reserves accumulated by NKF came out. NKF had said that reserves were not excessive and would run out in 3 years. They used this fear to get more donations from the public. Davinder Singh forced Durai to admit this was a deliberate deception.

Similarly PAP argue, without telling us how much the reserves are or who they will be used for, that we need to keep accumulating reserves and squeezing the ordinary Singaporean otherwise it will be unfair to future generations. I have consistently shown that the reserves must be several trillion dollars and are likely in excess of $3 trillion in financial assets alone. In fact we probably have nearly $1 million reserves for every Singaporean. When you factor in the value of land owned by the Government, the reserves are easily in excess of $10 trillion or $3 million for every Singaporean. Yet LHL and the PAP keep trying to scare Singaporeans that taxes need to go up, belts need to tighten and tough choices must be made by the ordinary Singaporean in her 3 room HDB or Singapore will collapse.

Tough choices that apparently do not have to be made by PAP Ministers who are able to take advantage of their control over state assets to utilize them for their own benefit, ignoring blatant conflicts of interest. In the same way the PM’s wife was appointed head of Temasek, ignoring a similarly blatant conflict of interest and her compensation kept secret without any public interest justification.

Until you have MPs who are prepared to ask tough questions but also the expertise to ask the right questions and to persist in that line of questioning you will never know the truth about the reserves. In fact you will probably need to change the government and throw the PAP out of office to get the whole truth.

Ridoutgate would never have come to light if I hadn’t dared to publish articles about it, even though oblique references had already been made by opposition in the parliament before I published.

What is happening to our reserves? There are two possibilities. The more likely one is that the coffers are overflowing and there is no excuse for the Government’s claims that the reserves will run out. Singaporeans should receive vastly improved dividends from the reserves and can aspire at last to Goh Chok Tong’s long promised Swiss standard of living. The second possibility is that something is seriously wrong, the reserves are a gigantic Ponzi scheme and those in charge have some serious explaining to do.

Links

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