Published May 26, 2009

MPs seek clarity on Temasek's sale of BOA stake

They also seek more scrutiny of GIC, Temasek actions

By LEE U-WEN

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(SINGAPORE) The recent news that Temasek Holdings had sold its entire stake in Bank of America (BOA) - at an estimated loss of up to US$4.6 billion - caused much murmuring among Singaporeans from all walks of life.

Their main beef? A lack of information on the reasons behind the decision, as well as the sale price, MP Michael Palmer said yesterday. He was the first of more than 50 politicians slated to speak as the second session of the eleventh Parliament of Singapore opened.

On May 15, it was reported that Temasek had sold all its shares in the US bank in the first quarter of this year, resulting in an estimated loss of between US$2.3 billion and US$4.6 billion.

The investment agency stayed silent for a week before it released a statement saying its 'investment thesis' had changed after its holding in Merrill Lynch was converted in BOA shares following Merrill's takeover by the bank.

Mr Palmer, an MP for Pasir Ris-Punggol Group Representation Constituency (GRC), said yesterday that as Singaporeans become more outspoken, the government has to do its part by encouraging openness and transparency where possible.

The fact that Temasek took so long to give a response resulted in many newspaper articles 'trying to second-guess' the answers surrounding the sale, he said.

'Online chatrooms were abuzz, with many vociferous views on the losses. Ordinary Singaporeans were discussing the issue, analysts speculated on the sale, and the public wanted to know about the decision to sell something that was supposed to be for the long- term,' said Mr Palmer, who is also chairman of the Government Parliamentary Committee for Foreign Affairs and Defence.

While he is glad that Temasek 'finally' issued a statement explaining its rationale, many questions remain unanswered, 'such as those relating to the timing of the sale and the actual sale price', he said.

Also making a pitch for greater transparency - this time in terms of government spending - Zaqy Mohamad (Hong Kah GRC) suggested there should be 'greater scrutiny' of investments by Temasek and the Government of Singapore Investment Corp (GIC).

'Our reserves involve our savings for the future. While we trust commercial professionals to do their job, they are investing Singapore's money and we deserve greater clarity on how our money is spent,' he said.

He added that it is important to address how to match the commercial objectives of Temasek and GIC to the social objectives of the reserves they both invest in.

'Should greater transparency also be given to the public on the bonuses and performance of their staff, in return for the rate of return of investments over the years?' he said. 'We ask the same of our investment fund managers and commercial banks, why not those who manage our reserves too?'

Inderjit Singh (Ang Mo Kio GRC) called for a look at how Singapore's reserves should be managed and invested, given the fact that the investment strategies of both Temasek and GIC have changed since their inception.

GIC, he said, used to focus on long-term investments, taking a 'somewhat conservative' approach that delivered good returns. In its infancy, Temasek used to invest in Singapore or government- linked firms, grooming them to be MNCs.

'Temasek was not seen to be a fund investor like GIC. But over the years, both have converged on their investment philosophies and are starting to look almost alike,' Mr Singh said.

'Is it appropriate for them to continue investing the way they have done in recent years, making somewhat speculative investments in certain cases. Is this the right thing for our reserves?'

He went on to question if it is wise to put such a large chunk of the reserves in the hands of Temasek and GIC, as opposed to placing them in 'safer investments managed by people who understand that these are meant for long-term investments and as a shelter for Singapore'.