Ho Ching

Leaked cables on the failed leadership transition of Temasek Holdings

6 years ago, the intended leadership transition of the Temasek’s Chief Executive Officer between former BHP Billiton chief Charles ‘Chip’ Goodyear and Mdm Ho Ching came to an abrupt stop when the private investment company announced the departure of Goodyear due to differences between him and the board of directors regarding certain strategic issues that could not be resolved.

“Four months into the leadership transition, the Temasek Board and Mr Goodyear have concluded and accepted that there are differences regarding certain strategic issues that could not be resolved. In light of the differences, both parties decided that it is in their mutual interests to terminate the leadership transition process and hence the executive relationship with effect from 15 August 2009. Mr Goodyear will also step down from the Temasek Board effective the same date.” – Temasek Holdings, 21 July 2009

Temasek Chairman, Mr Dhanabalan earlier said, “Ho Ching has been instrumental in bringing Chip on board. We have been working on this appointment for more than a year.” This was when Goodyear was first announced to be taking over the role of CEO from Mdm Ho on 6 February 2009.

He also said that Mr Goodyear shares the vision and values that underpin Temasek as a key Singapore institution and an international investment company. “Chip presents a rare and unusual combination of investment and operational experience that can support the continued transformation of Temasek,”

Mr Dhanabalan, however, clarified that the change of leadership had nothing to do with the billions of dollars of paper losses from recent overseas investments nor the perceived conflict of interest in some quarters arising from Mdm Ho being the wife of Prime Minister Lee Hsien Loong.

Reasons behind the termination of leadership transition

So what happened during the period of less than half a year and what were the differences between Goodyear and the board of directors to have resulted in the departure of the would-be CEO?

Recently leaked cables from the U.S embassy in Singapore published in Wikileaks, gives us a deeper insight into the failed transition. (see here)

It is said, Local analysts confirmed that Goodyear’s proposed changes to the senior management did not do well with the board at Temasek Holdings and that Mdm Ho continued to micro-manage Temasek despite her planned departure.

“Local analysts confirmed to Embassy local press reports suggesting Goodyear left Temasek after his proposed changes to senior management did not go down well with the Board. Also, Goodyear’s reputedly hard questioning of existing investment decisions and plans earned him some rancor among the Temasek investment team, few of whom are reportedly sad to see him depart. Another local economist suggested to Emboff a slightly more sinister reason: that Madam Ho had continued to micro-manage Temasek despite her planned departure, interfering with Goodyear’s transition to the top spot.” – Telegram dated 22 July 2009

Carl Linaburg, co-founder of the Sovereign Wealth Fund Institute in Roseville, Calif said that Goodyear’s departure was bad news for the bad news for the sovereign wealth fund managing company, “Prior to Chip’s arrival, Ho Ching had been widely criticized for Temasek’s major losses in financials. Chip’s departure makes people wonder why Temasek can’t seem to make firm decisions with sound judgment, which is essential for managing the assets of a country.”

This was also mentioned in the leaked telegram that Ho’s resignation at the time was widely considered (despite Temasek denials) to be a result of the fund’s poor performance in 2008 and the need to further internationalize the fund by bringing in foreign talent.

Incident highlights the lack of transparency by Temasek

The leaked document further noteTemasek’s handling of Goodyear’s departure generated renewed attention to the fund’s lack of transparency. Local press reports have begun speculation on the nature of the alleged strategic differences, why they were not discovered earlier, and why they could not be resolved during the company’s long vetting process.

It mentioned that foreign press editorials, including the Wall Street Journal’s were more critical in tone, emphasizing the right of Singaporeans to know the whole story behind Goodyear’s resignation.

Of course, we all know we didn’t.

And when the news of Goodyear’s resignation was announced, Mr Dhanabalan only said, “It is with much regret that both Chip and the Board have accepted that it is best not to proceed with the leadership transition. We wish Chip all the best in his future endeavours, and are happy that Ho Ching has agreed to continue as Executive Director and CEO.”

In the video above, Mdm Ho too did not say much about the reason behind Goodyear’s departure.

The cable also added that local analysts viewed the cancellation of the transition as much a step away from transparency as the original hiring had been a step toward more transparency and accountability. Temasek’s expected search process for a new CEO will be given closer scrutiny as the decision-making ability of Temasek’s board is called into question.

Critical strategic holding sold?

It is interesting to note the telegram had highlighted that Temasek’s strategic holdings are those considered critical to Singapore’s long-term interests and security and will stay in the portfolio, including DBS Bank, Singapore Airlines (SIA), ST Engineering, and shipping company Neptune Orient Lines (NOL).

Recently the Wall Street Journal has reported that state investment company Temasek Holdings is selling Neptune Orient Lines Ltd (NOL), which was founded in 1968 as Singapore’s national shipping line.

Temasek owns 65% of the shares in NOL, with the remainder traded on the Singapore Stock Exchange.

The US$1.7 billion shipping company is not in a good shape: WSJ describes it as “heavily indebted” and “money losing”. Sources told the paper that the company had been shopped to prospective buyers in recent months.

The shadow of Temasek Holdings' Executive Director and CEO Ho Ching falls on backdrop as she arrives for the presentation of Temasek's annual review in Singapore

One of the most powerful women in the world

Being the wife of Singapore’s most powerful person, Prime Minister, Lee Hsien Loong, Mdm Ho is no lesser in her global standing.

Being named by magazines such as Time and Forbes as one of the world’s most powerful women, Ho stands proudly as the Chief Executive Officer of Temasek Holdings, Singapore’s sovereign wealth fund for over ten years.

Mdm Ho graduated in 1976 with a Bachelor of Engineering (Electrical, First Class Honours) and went on with her career as an engineer at the Ministry of Defence.

She subsequently became the Director of Defence Material Organisation, the defence procurement agency of the Ministry in 1983 after graduating with her Master of Science (Electrical Engineering) degree from Stanford University in 1982, and concurrently held the position of Deputy Director of Defence Science Organisation (DSO).

Mdm Ho’s husband, Lee Hsien Loong was elected as a Member of Parliament (MP) in 1984. Following his election, he was appointed as Minister of State at the Ministry of Trade and Industry and the Ministry of Defence by his father and met Mdm Ho. The two soon got married in the year of 1985.

Mdm Ho took on further various senior responsibilities in DSO before becoming its President and Chief Executive Officer in 1997.

Mdm Ho was also accredited for being the architect for the formation and listing of Singapore Technologies Engineering as the largest listed defence engineering company in Asia in 1997, and served as its first Chairman.

Mdm Ho eventually joined Temasek Holdings as a Director in January 2002 and became its Executive Director in May 2002. She then assumed the role of Chief Executive Officer of Temasek on 1 January 2004 and still holds on the position till this very day.