SINGAPORE — Secretary-General of Progress Singapore Party (PSP), Francis Yuen said that Temasek Holdings as Singapore’s sovereign wealth fund must account to Singaporeans as it concerns the country’s reserves and regarded its internal review of its failed US$275 million investment in the bankrupted cryptocurrency exchange FTX as an “ownself check ownself” exercise.
This was said in a Facebook post on Saturday (3 Dec) by Mr Yuen in response to the revelation by Deputy Prime Minister and Finance Minister Lawrence Wong on Wednesday that Temasek will have an internal review on its decision to invest in FTX and is intended “to study and improve its processes, and to draw lessons for the future”.
Mr Wong also clarified in response to Workers’ Party’s Secretary General, Pritam Singh’s question that the internal review will be conducted by a team led by people separate from the investment team that made the decision.
Mr Yuen noted that the Government has acknowledged that Temasek suffered “reputational damage” as a result of the failed investment in bankrupted FTX which is also under investigation for fraud.
Temasek had earlier issued a statement on 17 November to announce that it will be writing down its US$275 million investment in FTX where it stated the cost of its investment in FTX was 0.09% of its net portfolio value of S$403 billion as of 31 March 2022.
“Whether the financial loss is a fraction of the total portfolio of Temasek Holdings is not the point,” said Mr Yuen.
“It is understandable if the loss is due to market volatility as there are always risks associated with any investment. But the issue in this instance involves a gross failure in due diligence.”
Mr Yuen pointed out that it only took the new CEO of FTX, John Ray days to identify serious issues like flawed oversight and poor corporate governance after taking over the company.
Despite the claim by Temasek that months of rigorous audit and review was carried out, many of these red flags were not identified nor alarm bells sounded, said Mr Yuen.
“It seems that much of the company’s assessment hinged on trust in the CEO of FTX, inferred from Temasek’s statement highlighting misplaced belief in the CEO.”
In its statement on 17 November, Temasek noted that its belief in the actions, judgment and leadership of Sam Bankman-Fried, “formed from our interactions with him and views expressed in our discussions with others”, would appear to have been misplaced.
It said, “We expect companies that we invest in to comply with their obligations under the laws and regulations of jurisdictions in which they have investments or operations; abide by sound corporate governance; and above all act ethically always.”
Mr Yuen said in his post that such failure is not attributed to business risk but management incompetence, resulting in the total loss of the investment and Temasek writing down US$275 million from its portfolio.
He asks why is Temasek conducting only an internal review when the matter is serious enough to cause damage to its reputation.
“To regain the trust of taxpayers and stakeholders, shouldn’t it be incumbent on the board to engage a competent external agency to do an independent review?”
Mr Yuen emphasised that there should be transparency and honesty in the findings, accountability and clarity on measures meted out to ensure better management of Singapore’s sovereign wealth fund moving forward.
“Notwithstanding Temasek being a separate entity with its own board of directors and management team, it must still account to our people as it concerns our country’s reserves.”
“An internal review is merely an “ownself check ownself” exercise which is neither assuring nor meaningful. It is time for greater transparency and accountability.” said Mr Yuen, adding that it is also time to review the strategic role of Temasek in the overall scheme of things vis-a-vis GIC.
