Published February 7, 2009

Temasek's change of guard

Ho Ching to hand over reins to American Chip Goodyear on Oct 1

By SIOW LI SEN

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IN an announcement that took many by surprise, Temasek Holdings revealed yesterday that Ho Ching will step down as its chief executive on Oct 1. The woman who was ranked as the most powerful in Asia last year by Forbes magazine will be succeeded by Charles (Chip) Goodyear, the former chief executive of Australia's BHP Billiton, the world's biggest mining company.

PASSING THE BATON Ms Ho and Mr Goodyear at the media conference yesterday. Mr Goodyear joined the Temasek board on Feb 1

Mr Goodyear, first identified as a potential successor to Ms Ho some 15 months ago, joined the Temasek board on Feb 1, said chairman S Dhanabalan at a media conference.

Ms Ho, the wife of Prime Minister Lee Hsien Loong, joined Temasek in 2002. She said that she would step down from the Temasek board as well as her post. 'I'd like to think that whoever is the CEO would like to have maximum space without having to ask if this is somebody's pet project; it is a wise thing for a departing CEO not to hang around on the board.'

Mr Dhanabalan added that it is Temasek's policy that 'the outgoing CEO shouldn't hang around on the board'.

He said that the board, including Ms Ho, began addressing succession planning in early 2005 on an annual basis and first identified Mr Goodyear in 2007. The board looked at 'external and internal candidates, as well as Singaporeans and non-Singaporeans, over various time horizons', Mr Dhanabalan revealed. He added that while Temasek is Singapore-owned and based, 'our area of operation is the globe'.

He also dealt with speculation that Ms Ho's decision to step down is tied to Temasek's performance of the past few years. Since December 2007, Temasek had pumped US$5-6 billion into Merrill Lynch which suffered massive losses from the US sub-prime mortgages and was acquired by Bank of America in January this year. It now holds Bank of America shares.

Another of Temasek's soured investments was Australian ABC Learning Centres, once the world's biggest childcare company which collapsed last November. Then, there was Temasek's US$1.9 billion purchase of 49 per cent of Shin Corp, an investment that was caught up in a political upheaval that culminated in the ouster of Thai prime minister Thaksin Shinawatra.

'It's got nothing to do with performance,' he said. 'I would ask you to be a little cautious in coming to a conclusion that these investments are losses because we have a long-term view of our investments. And it is too early to say,' he said.

He also said that Ms Ho's relationship with the prime minister is not a factor in her stepping down, an issue he has dealt with from the first day since she was made CEO.

'I was very instrumental in bringing in Ho Ching and it was based purely on merit and has nothing to do with her relationship to anyone,' said Mr Dhanabalan. 'This is a not a burden I'm getting rid of, certainly not,' he said.

Asked if she has any regrets, Ms Ho said: 'Is there a regret? I think if you want to run life with regrets, you may end up doing very little.'

Mr Dhanabalan also revealed that Temasek has begun a review of its long-term plans and taken a different stance since mid-2007.

'The team has already embarked on a different stance since mid-2007, and has begun to review its long-term plans under various scenarios prompted by the economic downturn. The board is of the view that, if we are to bring in new leadership, it would be as good a time as any to involve a new leader in this review.' .

As to what he would bring to Temasek, Mr Goodyear said that he understands capital and the application of capital. He mentioned his background as an investment banker and experience in mergers and acquisitions. Later, when he joined industry, he went first into the financial role. 'In the resources business, our payoff times are decades,' said Mr Goodyear who was with BHP Billiton for nine years and where he presided over record profits.

Observers such as Target Asset Management chief executive Teng Ngiek Lian says that Ms Ho transformed Temasek. As for the Shin Corp deal, he said: 'The problems are political, not investment issues. It's risks one encounters when investing in emerging markets, where politics is so volatile.' Chua Sock Koong, chief executive of Singapore Telecommunications, 55 per cent owned by Temasek said: 'Under Ho Ching's leadership, Temasek has transformed into an active international investor.'

As at March 31 2008, Temasek holds a portfolio of $185 billion, concentrated principally in Singapore, Asia and the developed OECD countries.