http://business.smh.com.au/business/lumbered-with-the-bosss-wife-20090729-e1oc.html?page=-1
The Sydney Morning Herald, 30 Jul 2009, Eric Ellis
Lumbered with the boss's wife
SINGAPOREANS aren’t usually given to open criticism of the Lee
family that has ruled them for half a century. Rightly or wrongly, some
presume that in their tightly controlled island state, walls have ears,
and one never knows who is listening.
But this time it’s different. Singaporeans are deeply displeased with their Prime Minister’s wife, Ho Ching. She has run Temasek Holdings, the state-owned fund, since 2002, and has
presided over a spectacular series of misjudgments that have lost
Singaporeans billions.
There was the murky $3 billion deal she made in
Bangkok in 2006, to buy then Thai PM Thaksin Shinawatra out of his
telco. Ho’s massive plunges into European and American banks ended in
tears last year when Temasek lost a third of its $100 billion
portfolio. In Australia, Ho lost Temasek’s entire $400 million stake
she’d plunged into Eddie Groves’ ABC Learning Centres, among other
missteps.
So much for her much-lauded ‘‘Superwoman’’ smarts
and vision when the state appointed her, even though her pre-Temasek
record at Temasek-owned arms supplier Singapore Technologies was hardly
Sorosesque. Today,
Singaporeans are sick of Ho and have been for some time. They want her
out of Temasek, lest she create any more financial havoc for them.
Except she’s not going. In a February ‘‘transition’’ — not a sacking,
as Temasek spun furiously — Ho was supposed to hand over Temasek to
Chip Goodyear, the 51-year-old American (and North Melbourne supporter)
who pointed BHP-Billiton at China for four years and made billions.
The big idea was that Goodyear would fix the mess Ho made in banking
and tilt Singapore into the booming China and India growth stories,
which meant placing Temasek at the middle of big regional resources
plays. But that, too, has ended in tears, when Temasek last week cited
‘‘strategic differences,’’ announcing it was "mutually agreed" Goodyear
would not become CEO.
It seems clear that after five
months hanging around the Temasek office, Goodyear has been paid
millions for his life-long silence.
But only a few days earlier, Goodyear was doing the rounds of Temasek
satellites mapping out his vision. One CEO I spoke to expressed shock,
saying he had been on the ‘‘same page’’ as Goodyear and was looking
forward to working with him. The implication was clear: Goodyear was a
genuine businessperson whereas Ho was not.
That was mid-July. A week later, Chip was chopped. Temasek’s board met
the weekend before last, then announced Goodyear was gone. So what
happened?
The Government-controlled Straits Times said Goodyear’s proposals to shake up Temasek were viewed as "too risky" by the board. Too risky? Ho’s bad bets in banks lost Temasek around $30 billion. What could be riskier than that?
More likely is the take doing the rounds of Singapore’s banking and
business communities. Local insiders, under few illusions that little
happens at Temasek without Government say-so, say the Government has been spooked by the arrest in China of Rio-Tinto executive Stern Hu.
Temasek hired Goodyear because they wanted him to do for it what he had
done at BHP, expertly play China, which is far more politically
important for an Asian nation such as tiny Chinese-dominated Singapore
than it is for a global mining giant. But after
the Chinese Government arrested Hu and sent a message it was taking
back control of its resources management, it wouldn’t do now, they say,
for a foreigner who knows so much about Chinese resources to front
mostly Singapore Inc’s ambitions in China.
The handling of Goodyear has deeply embarrassed Singapore and seems to
give lie to the fiction that Temasek operates transparently and
separately from Government policy. And knowing how deep runs the anger
among its readers that Ho has squandered a big chunk of their nest egg,
even the normally lap-dog Straits Times was moved to ask how ‘‘private
sector’’ can Temasek really be, commenting: ‘‘Like it or not, Temasek
cannot get away from the fact that it is inextricably linked to the
Singapore Government’’.
It’s shaken up the arcane world of sovereign wealth funds too, where
Temasek liked to portray itself as the model for emerging wealthy
states. Delegations from around the world made pilgrimages to Singapore
to see how it was done, how their state’s strategic jewels can be
packaged and managed into an investment vehicle that maintained the
illusion it was somehow separated from the Government. Journalists
describing Temasek as "Government-controlled" invited a welter of
complaints to their editors from Temasek’s spinners who demanded it be
benignly referenced as an "Asian investment company" with no references
to the Government whatsoever, and certainly not to describe the family
connections of Ho’s. Failure to comply would mean an outlet would be
blackballed by Temasek, which in Singapore ultimately suggests a libel
suit no media company has ever won there.
East Timor decided the Temasek model wasn’t for them, and chose a
Norwegian-inspired transparent route for its now $6 billion petroleum
royalties pile. In many respects, it’s actually a model for Temasek.
Certainly, the East Timorese fund made more money than Temasek has
recently — it invested in boring US treasury bonds while Ho was
plunging billions into Merrill Lynch.
Unsurprisingly, Temasek’s model
appeals more to the more authoritarian and less democratic of states,
such as Kazakhstan which, like Singapore, is run along family lines.
Now Singapore Inc is in a pickle. It said it wants to internationalise
Temasek, and appointing the much-respected Goodyear was a huge – and
widely welcomed – statement. Now it’s stuck with the bumbling Ho, for
at least another year, which simply deepens the market’s conviction
that dealing with Temasek is akin to de facto dealing with the
Government.
Temasek says it is continuing its
international search for a new boss. But after Goodyear’s bad year at
Temasek, why would anyone want to go there?
.
The handling of Goodyear has deeply embarrassed Singapore and seems to give lie to the fiction that Temasek operates transparently and separately from Government policy. And knowing how deep runs the anger among its readers that Ho has squandered a big chunk of their nest egg, even the normally lap-dog Straits Times was moved to ask how ‘‘private sector’’ can Temasek really be, commenting: ‘‘Like it or not, Temasek cannot get away from the fact that it is inextricably linked to the Singapore Government’’.
...