January 12, 2010
Two days after The Temasek Review reported on the gigantic losses suffered by GIC in a New York city property project Stuyvesant Town, the Straits Times has little choice but to follow suit with a watered-down version on 11 January 2010. (read our article here)
When contacted by Straits Times, GIC finally confirmed that it incurred losses from an investment in the project after the American owners defaulted on a debt payment at the weekend. (read Straits Times article here)
News of its possible losses surfaced as early as September last year in an article on the Wall Street Journal, but GIC had declined to comment on the matter. Neither did the Singapore media report on it.
On 8 January 2010, Tishman Speyer and BlackRock Inc released an official statement saying that “they wouldn’t make a full scheduled debt payment to senior lenders on Stuyvesant Town and Peter Cooper Village.” (read report here)
CWCapital, the special servicer acting on behalf of the lenders is expected to issue a notice of default over the payment which amounts to $16 million dollars.
According to Straits Times, ”GIC has written off the losses, which reports have estimated to be around US$575 million in debt and US$100 million to US$200 million in equity” which translates to a loss of between SGD$945 million and SGD$1.085 billion dollars, a mindboggling figure. (USD$1 = SGD$1.4)
Ten years ago, the Straits Times will not bother to report on the losses and most Singaporeans will still be kept in the dark save for a few in the finance industry.
Now with the new media providing an alternative source of news to the mainstream media, it can no longer afford censor such bad news from the general public.
If it chooses to ignore the news, its credibility will take a beating as readers continue to flock to alternative news sites like ours for news not published by the state media.
However, by publishing the news, the Straits Times is publicizing the matter to a wider audience. The state media is hence stuck in a Catch-22 situation.
Either way, we will be the ultimate beneficiaries as the state media continues to prove itself to be impotent, unreliable and untrustworthy in its coverage of local news, especially those pertaining to politics.
Hear Mr Alex Tan’s newcast on the above here
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That is why now scheming to acquire HDB flats from HDB owners to make up for loss?
Someone posted this news liao....DOUBLE POSTING!!!
January 12, 2010
Singapore’s largest sovereign wealth fund Government Investment Corporation (GIC) may have lost more than SGD$30 billion dollars of the country’s reserves in risky overseas investments last year.
GIC was established in 1981 as a “private” company to manage the reserves of Singapore which is accumulated from years of budget surpluses due to Singapore’s high national saving rates, especially in the 1970s.
The Government of Singapore Investment Corporation does not own the funds it manages but manages them on behalf of their clients: the Government of Singapore, and the Monetary Authority of Singapore.
According to the Sovereign Wealth Fund Institute, GIC has an estimated reserve of USD$247.5 billion dollars or SGD$346.5 billion dollars. (taking USD$1 = SGD$1.40)
Due to the global financial crisis in 2008, GIC’s portfolio slumped more than 20 per cent in Singapore-dollar terms for that financial year.
The gigantic losses suffered by GIC and another Singapore sovereign wealth fund Temasek Holdings has caused some disquiet among Singaporeans, especially netizens who have been speculating on the real extent of their losses.
GIC is headed by Singapore’s geriatrician leader Lee Kuan Yew since its inception in 1981. Temasek Holdings is led by his daughter-in-law Ho Ching since 2002.
The latest investment loss suffered by GIC in a New York property project has cast the spotlight once again on its track record.
Though the exact figures were not revealed, GIC is said to have invested a total of US$675 million (S$925 million) in Manhattan’s Stuyvesant Town and Peter Cooper Village.
News of its possible losses surfaced as early as September last year in an article on the Wall Street Journal, but GIC had declined to comment on the matter. Neither did the Singapore media report on it.
On 8 January 2010, Tishman Speyer and BlackRock Inc released an official statement saying that “they wouldn’t make a full scheduled debt payment to senior lenders on Stuyvesant Town and Peter Cooper Village.” (read report here)
The Temasek Review was the first internet news site to report on the news, well before any of the newspapers owned by SPH and Mediacorp (read our article here)
The matter would have been kept under wraps if not for the wild speculations and rumors circulating in cyberspace after we published the news which finally forced Straits Times and Channel News Asia to report on it two days later.
According to Straits Times, ”GIC has written off the losses, which reports have estimated to be around US$575 million in debt and US$100 million to US$200 million in equity” which translates to a loss of between SGD$945 million and SGD$1.085 billion dollars, a mindboggling figure. (USD$1 = SGD$1.4)
Still, the potential $1 billion loss pales in comparison to the losses it suffered in the fiscal year ended March 2009, – estimated at around $59 billion Singapore dollars by Wall Street Journal. (read article here)
GIC said last September that it has since recovered “more than half of those losses”.
As no figures were provided, we can only warrant a guess that this means it has lost between 7 to 9 per cent of its reserves of SGD$346.5 billion dollars which translates to a loss of between SGD$24.255 and SGD$31.185 billion dollars, more than the entire Gross National Product of some Third World countries.
If the amount of money is given to the 3 million or so Singaporean citizens instead, each of us will expect to receive between SGD$8,085 and SGD$10,395.
Despite the catastrophic losses, nobody has stepped forward to accept responsibility for the mistakes. Both Lee and Ho remains in charge of GIC and Temasek Holdings respectively.
Lee’s ruling party has governed Singapore continuously for 50 years since coming to power in 1959. There is no opposition in parliament to hold the ruling party accountable to the people.
All institutions of the state are controlled by the ruling party including grassroots organizations. Lee himself admitted lately that “all CCs, CCCs and RCs are part of the PAP”.
Singapore’s Law Minister K Shanmugam wrote a lengthy commentary in the PAP magazine Petir recently that “Singapore, more than most states, needs an excellent, strong leadership, and its political structures and systems must allow for effective and speedy decision-making.”
The GIC fiasco has shown once again why the PAP needs a political system which allow for “effective and speedy decision-making.”
In other democracies, a Commission of Inquiry will be called to investigate the losses and the entire board of directors replaced leading to a messy transition period. Mass protests will break out in the streets with the people calling for the government to step down and fresh elections be held.
In Singapore, life continues as per normal without much of a hassle. Singapore’s “unique” one-party system allows the PAP to make the ultimate ”speedy” decision that the best course of action will be to do nothing since doing anything will not be in the “strategic” interest of the country (PAP).