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Singapore
government cannot make up its mind about transparency
Singapore
Democrats
28 Jan 08
Singapore
sovereign wealth fund promises greater transparency
Peter
Thal Larsen & Martin Dickson
Financial Times
28 Jan
08
http://www.ft.com/cms/s/0/ebeb8f52-cd40-11dc-9b2b-000077b07658.html
Singapore's
Government Investment Corporation has promised greater disclosure
about its activities, amid mounting concerns about the secretive
fund's influence after high-profile investments in UBS and
Citigroup.
Tony Tan, deputy chairman of GIC and a former
Singapore deputy prime minister, said the fund planned to become
more transparent as part of a broader effort by sovereign wealth
funds to agree a set of common standards.
"We have
already decided that the circumstances have changed. The right
thing to do is to move to a path of more disclosure," Mr Tan
said in a rare interview. "The greatest danger if this is
not addressed directly is that then some form of financial
protectionism will arise and barriers will be raised to hinder
the flow of funds."
However, Mr Tan would not be
drawn on what areas of disclosure GIC would improve, arguing that
this was a decision for the Singaporean government.
GIC,
which says it manages more than $100bn but is estimated by
analysts to oversee three times that amount, has come under
intense scrutiny after injecting $16bn in UBS and Citigroup. The
investments, a departure from GIC's low-key approach, have
prompted politicians to question the fund's influence, while some
UBS shareholders have complained the investment dilutes existing
investors.
Mr Tan insisted GIC was interested only in a
financial return, and revealed the fund had recently rejected an
offer from UBS to nominate a board director. "I think we
want to be seen to be quite clear that we are not seeking
control," he said. Along with funds from Abu Dhabi and
Norway, GIC is helping co-ordinate an effort by the International
Monetary Fund to agree common standards for sovereign wealth
funds.
Mr Tan said concerns in Europe and the United
States were "understandable" and should be addressed.
However, he said guidelines should be flexible, voluntary, and
recognise that not all funds were the same.
GIC's
investments in UBS and Citigroup have prompted some observers to
suggest it is becoming more aggressive. But Mr Tan said the fund
had been able to invest such sums because it cashed in a
significant chunk of its equity investments in 2007, before the
market turmoil struck. He said the investments in UBS and
Citigroup were unusual and did not reflect GIC's "preferred
mode of investment".
Singapore PM
"transparency isn't everything"
Mark
Kleinman
Telegraph
27 Jan
08
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/01/27/ccsingapore127.x
The
PM of Singapore is a staunch defender of its wealth funds - but
does not want a free press. He talked to Mark Kleinman in Davos
Is
Lee Hsien Loong the most powerful man on Wall Street? The prime
minister of Singapore might dismiss the idea, but the recent
humbling of the world's most powerful financial institutions
suggests it may not be as absurd as it sounds.
Injections
of $9.31bn, $6.88bn and $5bn into UBS, Citigroup and Merrill
respectively have helped cement Singapore's place on the global
financial map and triggered a new wave of recriminations over the
power and transparency of government-backed investment funds. Yet
even as economists hail the migration of financial clout from
West to East, the most powerful man in Singapore is more
circumspect.
"I don't feel anything like that [kind
of power]," Lee told The Sunday Telegraph at the World
Economic Forum at Davos. "We don't take control of the
companies we invest in, we don't want control and we are not
looking for seats on boards. It is not our business to tell
foreign banks how to run their companies."
The
injections of capital into Wall Street banks by sovereign
investors from the Middle East and Asia have nevertheless been
the financial phenomenon of the past six months.
So far,
more than $60bn has been ploughed in to investment banks' balance
sheets in an effort to draw a line under their exposure to the
imploding sub-prime mortgage industry.
To that extent,
some economists argue, the governments of Abu Dhabi, China and
Singapore have done more to secure the stability of the global
financial system than the central banks of Europe and the
US.
Lee is, however, no apologist for the fast-growing
breed of often secretive funds that analysts at Morgan Stanley
have predicted will account for $27?trillion in assets by
2022.
"There has been a proliferation of things which
like to call themselves sovereign wealth funds, but they are very
different animals. Often they are not even of the same
sub-species," said Lee. "Our funds are accountable to
the government. I would not believe that transparency is
everything."
Singapore's twin investment funds -
Temasek Holdings and Government Investment Corporation - manage
about $400bn between them, a large chunk of which has been
deployed in Britain. Between them, their UK portfolio includes an
18 per cent stake in Standard Chartered, 2.1 per cent of Barclays
and 3 per cent of British Land.
Where foreign takeovers
have attracted close scrutiny and sometimes outright opposition
in the US - the abortive takeover of Unocal by the Chinese
state-owned oil company Cnooc, for example - the same has not
been true in the UK.
"Britain has proved to be a very
open place to invest, and there is no reason that should not
continue. Examples like Unocal and Dubai Ports World [which was
prevented from buying the US operations of P&O] sour the mood
and set a bad example.
Even when US unemployment is below
5 per cent, there is always an undertone of protectionism,
whether it is from the steel industry or sugar-cane growers,"
said Lee, who sits at the centre of one of Asia's most powerful
families.
His father, Lee Kuan Yew, is the city-state's
Minister Mentor or elder statesman, and his wife, Ho Ching, is
the chief executive of Temasek.
The family will have had
much to discuss. Singapore has experienced its own difficulties
with overseas investments. Its takeover of Shin Corporation, a
Thai telecoms company, sparked outrage from its south-east Asian
neighbour and was one of the triggers of the coup that overturned
the former Thai prime minister, Thaksin Shinawatra.
The
Singaporean government owns majority stakes in many of the
country's commercial crown jewels, including Singapore Airlines
and SingTel, but Lee insisted that reciprocal investment was
welcome. "From an economic policy point of view, I would not
look at an investor and say: 'Is this a sovereign wealth fund?' I
would be concerned if there were national security or defence
issues, but otherwise we are open. If an investor wanted to come
in with sugar daddy money and pay a lot of money like Japan did
in the US in the 1980s, I would be happy."
Despite
the marital connection, Lee was keen to emphasise that he did not
spend all his time contemplating the deployment of Singaporean
capital.
Two years on from the Shin Corp takeover, Lee is
attempting to forge closer ties with his fellow governments in
the region. An Association of South-East Asian Neighbours (Asean)
plenary in Davos was designed to "institutionalise closer
integration" between Singapore and neighbours such as
Indonesia and Thailand.
"As the prosperity of China
and India grows, we are anxious that we do not get lost among the
Asian superpowers," he said.
Lee's vision for the
Singaporean economy is based on the core pillar of a booming
financial services industry, which he said was well-placed to
compete with Hong Kong, its regional rival, despite the latter's
proximity and ties to mainland China. "Hong Kong is
preoccupied with China, while we are more omni-directional in our
approach."
Singapore has proved an attractive
environment for alternative asset managers such as hedge funds
and private equity firms to base themselves there, and Lee is
attempting to extend that magnetism to industries such as medical
tourism.
"We attract many people from the Middle
East. In the West, their money is welcome but they can feel like
they are being looked at askance."
One thing Lee's
government does not welcome is a critical fourth estate.
Singapore's media laws prevent criticism of the government, and
Lee makes no apology for that.
"The press is free to
report views that are different to the government but it is not
their job to hold the government to account. Your job [as foreign
media] is to report facts, not to get involved in Singaporean
politics."
He is less definitive about the global
economic outlook.
"We do not yet know how tough a
time the Americans will have. I am not sure about it being Asia's
century. The region is doing reasonably well now. I hope that
will continue."
More than ever, in these uncertain
times, the rest of the world may share his view.
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