Temasek Holdings says it is “a responsible long term investor”.
However, Temasek’s $4.6 billion loss in its 3.8% stake in Bank of America Corp on a single investment of $5.9 billion, one of the biggest losses in the world, is anything but responsible. On a per capita basis, every Singaporean lost $1500 in 2009 on a single investment. The BA investment was pure speculation.
Let’s put the loss in perspective. If every US citizen were to lose a similar amount, it would mean an unacceptable loss of $450 billion (300 million population X $1500). Fortunately, in truly democratic countries, such a loss is prevented.
Back home, the PAP government only justifies epic mistakes with ridiculous excuses in Parliament and does want to learn from any painful lesson. Temasek is not the savvy investor made out to be in the press. Its foreign investments are nothing to shout about and Temasek-linked companies were mostly handed over on a silver platter by the PAP government.
In fact, its foreign investments have proven to be disastrous. Another example of pure share speculation would be Temasek’s investment in Barclays in 2007. According to a Reuters report, Temasek bought Barclays shares at 720 pence in July 2007. It could have possibly bought more shares at 282 pence but that wasn’t disclosed. Anyway, Temasek liquidated all its shares at between 47.3 pence and 190.6 pence when prices hit a 24-year low in December 2008/January 2009. Temasek long-term investment = losing $1.5 billion in 18 months
Temasek was also taking huge forex risks as evident by the 27% collapse of the British pound within 18 months.
What’s the point of telling the world due diligence was conducted when 80% of the capital was lost in 18 months? Was Temasek trying to compete with local punters?
A $1.5 billion loss on a single investment would have raised serious questions in Parliament. Whoever authorised the investment would have been held accountable and given the boot. But $1.5 billion appears to be loose change to the PAP government. How many more similar transactions are there? (Notice when it comes to helping Singaporeans, the PAP made it seem as if an additional few million$ will cause our country to collapse.
Recall the 2007 parliamentary exchange between MP Lily Neo and Minister Vivian to belatedly increase the Public Assistance scheme by about $5 million annually. Why do MPs have to KPKB for a miserable $5 million when Temasek is allowed to lose tens of billion$ without the PAP batting an eyelid? Something is very wrong with such a system.)
Before Temasek invested in Barclays, its Senior Managing Director, Frank Tang had said, “We are pleased to have this opportunity to invest in Barclays. We look forward to supporting them in their strategy to create opportunities for a higher level of sustainable growth. This investment fits well with our interest for long-term exposure to strong players in the financial services sector”.
Temasek seems to be extremely flexible with the definition of “long term” and we now know it could actually mean short term. Is MD Frank “pleased” to have lost $1.5 billion of OUR reserves?
Executive Director Simon Israel added: “Barclays is a very well-managed bank. We are very impressed with its board and management, specifically their strategy, track record and focus on value creation for shareholders”. Barclays’ history goes back 300 years and it is still around today.
So why did Temasek suddenly change its mind about a “very well-managed bank” with a very impressive board and management? The answer should be obvious – Temasek was merely speculating with OUR reserves.
Why does Temasek require capital injections when returns from its investments are only meant to supplement the budget? Are capital injections used to mask Temasek’s huge losses?
Our reserves in Temasek belong to every Singaporean but has been used by Temasek for speculation. If PAP MPs continue to be indifferent, Singaporeans must speak up or risk the loss of our reserves which will affect future generations.
Temasek’s investments in foreign companies with accompanying huge losses confirm a high degree of speculation. Unless it opens up its books to the public, one should not believe Temasek is a responsible long term investor.