20140807 PAP must disclose hundreds of millions paid to GIC/Temasek board of directors and external fund managers

GIC manages about US$ 320 billion of CPF monies and our reserves. Temasek’s portfolio is currently valued at S$ 223 billion.

Although these 2 SWFs manage a total of S$623,000,000,000 of public funds, none has been accountable to the public for more than 3 decades. The government has encouraged both investment companies not to disclose the remunerations/fees of directors/external fund managers. (Ministers who are directors of GIC do not receive fees)

The government says it wants to engage citizens but in reality, it doesn’t. On 10 July, I queried the PMO on the non-disclosure of the remuneration of Temasek Holdings directors. ( “Good corporate governance at Temasek Holdings?”) It has yet to reply after almost 1 month.

In my email, I highlighted Norway’s SWF (GPFG) with about S$1.087 TRILLION managed by NBIM. Its CEO earns about $1.4 million annually and the remunerations of ALL its directors are disclosed to the public. (below)

Why does our government continue to allow GIC and Temasek to operate without any accountability to the public? What is the government trying to prevent the public from knowing by withholding factual information?

Temasek Holdings

The directors of TH include CEO Ho Ching, wife of the prime minister, Lim Boon Heng, Bobby Chin, Teo Ming Kian and eight others. TH directors count the Chairman of NTUC, Vice Chairman of NTUC Enterprise, CEO of ComfortDelgro, Deputy Chairman of SBS Transit, Chairman of Mediacorp, etc.on its board. Are these directors, who do not have any related experience in the fund management industry, able to contribute to TH?

TH CEO’s remuneration should not be a secret

NBIM manages GPFG funds which are more than 4 times the size of TH’s. It has no issue with the disclosure of directors’ remunerations.
Even our government does not conceal the salaries of our million-dollar ministers and highest-paid civil service. All other government-linked corporations such as DBS bank, Singtel, SIA, etc also disclose the salaries and outsized bonuses of CEOs. There is no reason for the government not to encourage good corporate governance at TH.

I came across an interesting article on Yawning Bread which I believe is a very good estimate of the pay package of TH CEO. It was estimated that Ho Ching could be getting between $8 million and $24 million, depending on bonuses pay out. This was based on TH shortest serving CEO, Charles Goodyear’s base pay of GBP 3.7 million in his previous company BHP before joining TH. For a more detailed explanation, read Alex Au’s article on Yawning Bread.

But that was in 2010, 4 years ago, when TH was just recovering from losses after the financial crisis. TH’s portfolio was then S$186 billion. Fast forward 4 years and TH would of course justify an increase in ints CEO’s pay package due to a bigger portfolio valued at $223 billion and inflation. And not forgetting the 2 CEOs of local banks are already earning close to S$10 million. They have less responsibilities than TH CEO.

Good corporate governance demands TH discloses the remunerations of its directors to ALL Singaproeans who collectively own all TH assets. If an exact figure is not available, perhaps the pay package could be disclosed in bands, eg:

Check box of total pay package
NAME OF DIRECTOR	$1M TO $2M	$2M TO $5M	$5M TO $10M	$10M TO $15M	$15M TO $20M
HO CHING (CEO)
LIM BOON HENG (CHAIRMAN)
CHENG WAI KEUNG (DY CHAIRMAN)
BOBBY CHIN
GOH YEW LIN
MICHAEL LIEN
ROBERT NG
TEO MING KIAN
MARCUS WALLENBERG
LUCIEN WONG

etc.

GIC

Although GIC does not compensate the PM, 2 DPMs and 2 ministers, it must disclose the pay package of all other directors eg Ang Kkong Hua, Peter Seah, Chew Choon Seng, Raymond Lim (ex minister), etc If absolute figures are not to be disclosed, it could also do so in salary bands similar to TH.

External fund managers

External fund managers also manage about 20% of GIC’s S$400 billion or S$80 billion.  A 1% management fee translates into S$800 million annually! Perhaps this may have contributed to the low returns which CPF members have been getting for 2 decades?

GIC must also disclose the fees and names of the fund managers. Eg:

FUND NAME	< S$100 million	< S$200 million	< S$300 million	< S$400 million
108 FUND
CAN ONLY WIN FUND
WIN NOT LOSE FUND

On 3 Apr, The Straits Times reported that “GIC is reportedly seeding a start-up fund helmed by its former chief investment officer”. Ex-CIO Ng Kok Song had resigned from GIC after 27 years “but stayed on as an adviser as the chair of global investment”.

Questions:

– Is it in the best interest of CPF members when a GIC employee resigns, starts up a fund to compete with other funds with total support from GIC using our CPF and tax dollars?
– Why was such a convenient arrangement not an issue in parliament when tens of billions of public funds are at stake?

Conclusion

Temasek and GIC have paid tens of millions to their board of directors, possibly more. Hundreds of millions are also paid to external fund managers whose performance is really nothing to shout about.

The continued non disclosure of what should have been publicly-available information breeds distrust of the government. The government is managing hundreds of billions belonging to CPF members and citizens. GIC and Temasek cannot be managed like any mom and pop shop where decisions are made by only a handful of politicians instead of parliament.

The handful of politicians cannot simply decide on the framework to invest using OUR money, publish their intentions in the press and pretend stakeholders do not exist. This is clearly wrong and would not have occurred in any truly democratic country. Parliament has the responsibility to correct this error.