SINGAPORE — In July this year, Temasek Holdings held a Temasek Review 2022 media conference. At the conference, someone asked about Temasek Holdings’ view on the impact on the valuation of crypto companies like FTX during the present downturn.
Martin Fichtner, who is a Managing Director and Deputy Head of Technology & Consumer at Temasek told the media:
“What we focus on is this: are the businesses healthy and are they growing, and do we think the prospects are strong? There is no mark to market on a daily, quarterly, et cetera basis, and we feel strongly about the companies in our portfolio performing well over time and we’ll see cycles in terms of multiples go up and down as the cycles occur.”
Fichtner only joined Temasek in 2019. Although he didn’t specifically mention FTX in his reply above, the fact that he said Temasek feels strongly about the companies in its portfolio performing well over time shows that Temasek felt the same for FTX too.
Fichtner’s statement came just 4 months before the FTX debacle exploded spectacularly in public resulting in the company filing for bankruptcy last month.
The Chief Investment Officer of Temasek is Rohit Sipahimalani. According to his LinkedIn profile, Sipahimalani graduated with B.A. in Economics at St. Stephen’s College based in Delhi. He later obtained an MBA from the Indian Institute of Management in Ahmedabad of India.
Temasek reportedly took eight months, from February to October 2021, to do its thorough due diligence before investing in FTX.
When FTX went bankrupt last month, Temasek quickly issued a statement blaming FTX CEO Sam Bankman-Fried, “It is apparent from this investment that perhaps our 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.”
In a filing to Delaware bankruptcy court, John J. Ray III, the new FTX CEO who replaced Bankman-Fried, issued a scathing assessment of “unprecedented” poor management practices by his predecessor and listed a series of questionable financial activities in a filing to Delaware bankruptcy court.
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” said Ray. He further revealed that there had been poor record-keeping and a lack of experience among senior managers.
“From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented,” Ray concluded.
He also pointed out that FTX “did not keep appropriate books and records or security controls” for its digital assets, used unsecured shared email accounts to access private keys, and could not provide a list of those working for the company. He further criticized the use of software to conceal the “misuse of corporate funds,” a failure to reconcile blockchain positions daily, and the absence of independent governance between Alameda and the cluster of companies that includes FTX.com
Ray only took one week to discover the various problems in FTX when Temasek’s team could not in eight months.
It’s not known if Fichtner or Sipahimalani was involved in the due diligence process of Temasek before investing in FTX and thus, losing US$275 million of Singaporeans’ monies spectacularly.