An estimated S$3,610,000,000 was set aside by Temasek for executive bonus for y/e 31 Mar 2018. To have a grasp of the perspective, the total amount of bonuses paid out by US companies in 2013 was US$38b.
Temasek salaries are benchmarked to industry, I'm guessing the fund management industry, which is one of the highest paying ones, if not the highest. Further incentive bonuses are required to motivate employees who are not already motivated by good salaries. There is a fine line between putting aside a certain amount to reward employees for a good year, and over-reaching into the dark side of incentive plans to outright plunder. S$3.61b is testing Singaporeans' credulity. It should make Ali Baba and his 40 thieves turn dark green with envy. This is Temasek's compensation package :
Basic salary
MAD (Make A Difference) rewards
Short term incentive - Annual Cash bonus
Medium term incentive - WA (Wealth-Added) Bonus
Long term incentive - Co-ownership grants
We don't know if is there is also a 13th month pay (afterall, they work for the government) and wonder if there is an incentive just for turning up to work. The basic salary is competitive and benched-marked to industry. One wonders which industry. Are they compared to other sovereign wealth funds, or to other investment companies or to the fund managers. Temasek website says they are not a fund management company. And that is right. They simply invest the money the owners (Ministry of Finance) hand to them. So they are something in the nature of the investing arm of an insurance company. Fund managers need to raise funds from investors and manage other people's money. Is Temasek bench-marking themselves to the likes of Berkshire Hathaway, Soros Fund Management, Bridgewater Associates, etc and all those maverick fund managers that earn in billions?
"MAD Programme rewards employees for achieving non-financial goals targeted at strengthening the institution, contributing to our community, and taking care of our families and ourselves.'' No idea what these goals are nor the quantum of rewards. The "our" sounds like "me", "me", "me".
Annual cash bonus is based on team and individual performance and capped by budget. It appears there are several targets, but hardly any details.
WA bonus is the incentive to die for. The S$3.61b that has been set aside for y/e 31 Mar 2018 is for this bonus. Temasek uses a risk-adjusted hurdle rate to assess performance. Earnings above this hurdle rate is the Wealth Added. Based on some data provided in Temasek Review 2018, I estimate the WA bonus as follows:
Info provided:-
Shareholder equity - S$273b.
Total Wealth Added - S$14b.
Risk-adjusted hurdle rate - 7%.
Profit before tax - S$29.5b.
Profit before tax before WA bonus = S$273b x 7% + S$14b = S$33.11b.
WA bonus = S$33.11b - S$29.5b = S$3.61b
In the year when there is a positive WA, the WA bonus is computed and the sum goes into a slush fund. Only a portion of this WA bonus is paid out in respect of that year. The balance is retained to meet clawbacks in future years when there is a negative WA.
Temasek total employee strength is about 750 but only top executives are in the key team that enjoys WA bonus. Ali Baba obviously has a way to distribute the S$3.61b to each of the key team members. Each member is credited their share into individual ledger accounts called, would you believe it, WA Bank accounts. How much they get paid in 2018 depends on 3 levels of seniority. Out of their individual WA Bank accounts, the most senior get 1/3 out, mid level ones get 1/2 out and the lower level get 2/3 out. On average, probably 50% of the S$3.61b has been paid out.
Co-ownership grants is a bit scant in details. It seems to be like sort of unit trusts. Part of the funding comes from the WA slush funds and balance presumably from the company. How much is Ho Ching paid? What is the remuneration package of Ho Ching, the CEO of Singapore sovereign wealth fund Temasek, who happens to be the wife of the Prime Minister? This has been the best kept secret in Singapore for more than a decade.
GAAP (generally accepted accounting practices) requires all companies to show executive remuneration in their financial statements of companies. Temasek is a private exempt company, the shareholder is the Ministry of Finance. As an exempt company, it does not need to publish its annual financial statements. It hides behind this legality to shield from the public, information regarding executive remuneration. The only reason for this is it posses a great embarassment for the government to disclose a huge payout for the wife of the Prime Minister. It has become a hot potato politically as the country has seen a big segment of the older population slipping below poverty line in a wealthy country that is unwilling to allocate more to social welfare spending.
Ho Ching's salary has it's Barbara Striesand effect. The more they try to shield it, the more the unintended effect of people wanting to know and asking all over the internet. Social media pundits guess it could be in the upper level of CEOs in Singapore, or what was possibly offered to Charles Goodyear. In 2009 Goodyear was hired to replace Ho Ching but eventually she was retained. (It was businessman Ong Beng Seng who influenced Lee Kuan Yew that Ho Ching was doing a great job at Temasek and ought to be retained). Goodyear was already drawing S$54m at BHP Billiton at the time. Perhap that was simply a faux placement exercise to gauge a salary level for Ho Ching.
Those who believe her salary was about $54m certainly has a reasonable basis. More interesting is what is her bonus? Most disconcerting is, what will be her severance pay? Since husband Lee is stepping down from the premiership soon, her retirement is imminent.
Singaporeans ought to be concerned with top executive salaries. Greed has crept into big corporations all over the world, especially in financial institutions. Compensation has gotten to estronomical levels. It is a blatant transfer of wealth from shareholders to executives, even at times when corporations are not doing well. Temasek can hide behind the cloak of private exempt status, but all Singaporeans know it is a public institution and we have the right to know.
The pristine impeccable hallmark of integrity and competency in governance that Singaporeans sacrificed for and hold dear is gone. In one generational change of leadership, a culture of non-accountability has slipped in. In Singapore Inc hierarchical structure, there is always a boss, but the buck does not stop there anymore. The Finance Minister, and Prime Minister-in-waiting, Heng Swee Kiat, has said our sovereign wealth funds are not the responsibility under his ministry. If the affairs of looking after the country's reserves is not his concern, is he swatting mosquitoes in office? Of course a supervisory entity is not going to be concerned with transactional routines of operating units under them, but it ought to be involved in terms of policies and other significant developments as well as general oversight which encompasses monitoring performances and compliance.
Singapore Inc is managed by tightly knit PAP insiders, particularly the Kwa, Lee and Lim families. With marriages, this group has expanded considerably whose members have gone forth and populated various government agencies and the web of government-linked companies. Conflict of interest is the albatross the administration refuses to take off their necks.
The core worry of Temasek is CEO Ho Ching happens to be the wife of the Prime Minister. The moral hazard of a million dollar salary ensures no Finance Minister, no cabinet members, and no PAP members of parliament, will raise any issue of concern. There is not a squeak in parliament as Temasek suffered one huge loss after another from investments in Shin Corporation to UBS. Absolutely no claim is being made here that Ho Ching has been less than upright. The case being made here is that management of massive wealth places immense power in the hands of a few. It would be naive to live on trust alone.
Massive funds and massive power coupled with opaqueness in dealings, despotism and ruling family or small inner circle management, is a recipe for financial disaster. This powder keg ignites easily given human frailties. Track records of sovereign wealth funds have shown this naivete to base on trust is deadly. The sovereign wealth funds of Angola, Libya, Brunei, Kuwait, Malaysia etc have suffered scandals and losses running into billions. They all say they comply with Santiago Principles, which is some accepted principles adopted by International Forum of Sovereign Wealth Funds. It's not what they say, but what they do or don't do that matters. Santiago Principles GAPP 7 states : "The owner should set the objectives of the SWF, appoint the members of its governing body(ies) in accordance with clearly defined procedures, and exercise oversight over the SWF’s operations."
Is Heng acquainted with GAPP 7, and how does MOF exercise oversight? MOF as the sole shareholder of Temasek, has no monitoring function over Temasek. No MOF representatives sit on the Board of Temasek.
Is the government really not concerned with the investment decisions of Temasek? It is seriously a political leadership that is blind to the geopolitical impact that a sovereign wealth fund can create with consequences to foreign relations. This was brought home when Temasek acquired Thai Prime Minister Shinawarta's 49% stake in Shin Corporation in 2006. The Thais were incensed with Shinawarta's tax evasion scheme in the deal and riots ensued with lots of Singapore flags burnt. This deal added to the rising contempt of Shinawarta which led to his downfall.
When no one is held accountable for mistakes or poor management, the lapse of control like a cancer grows. From MRT (poor maintenance, massive delays, accidents) to Health Ministry (data losses) to Temasek associated company Keppel Offshore Marine.
The latest scandal of Keppel Offshore Marine bribing Petrobas officials in order to secure contracts is now given the expected treatment. Lee Boon Yang, a PAP insider and chairman of the Keppel Group, initially passed the buck. The board does not know of the bribery -- of course, because they don't interfere with the operations of the management. Standard fare. Eventually Keppel had to pay of a US$422m fine to US authorities to make the problem go away. Meanwhile, the government gave Keppel a "severe reprimand" but criminal investigations are still in progress to bring some lower level executives to court. Scapegoats aplenty, but where are those in charge?
Temasek holds a 20% stake in Keppel, but of course it does not concern itself with the running of their associated companies. It is left to the top honcho, Temasek Chairman Lim Boon Heng, ex-PAP cabinet member, to do a show of reigning in the pack by warning Temasek stable of companies about the 'bright red line' that they must not cross. Unlike Lee Kuan Yew, PAP now carries a big stick to be used only on political opponents, never on their own error members.
Santiago Principle GAPP 17 requires financial statements to be disclosed publicly. Temasek hides behind its corporate charter as a private exempt company not to publish such information. It publishes an annual review but no balance sheet and profit & loss statements.
The continuing loud cry from the public to disclose the remuneration of top executives falls on deaf years for decades. Now it is the Minister of National Development Mr Lawrence Wong who defended this stance in parliament that the government does not interfere in the salary decisions of the top brass in GIC and Temasek. What has National Development Ministry got to do with our national reserves money? Who is the god damn boss?
Recently Standchart's CEO, Tim Winters, did a sleight of hand and computed a high pension payout for himself. It infuriated many shareholders. Temasek, a major shareholder in the bank, maintained silence throughout the public outcry. When pursued for a response, it was an invisible spokes person who gave the standard reply -- Temasek does not involve itself with the executive remuneration of the companies it invests in. Where are the top Temasek executives, where's Ho Ching? Having vigorously defended the confidentiality of their own remuneration, they have lost the moral authority to comment. This awkward situation stands in the way of them of them doing what is right with Standchart. No matter how one looks at it, it is tantamount to derelection of duty.
Compare Temasek's stand on a wrong doing in a company they invested heavily to Norway's sovereign wealth fund that has sued Volkswagen for tempering with the emission test results of their vehicles. The reason is, nobody seems to be in charge in Singapore. Coming up : Temasek - shocking $3.61b* executive bonus
* Note: Post fact revision - initially thought was S$14b.
Power retailers fail not due to fierce competition, nor is it because the market is too small as many pointed out. The main reason is the deregulation structure is tipped in favour of the gentailers (retailers set up by power generation companies). This rationale is not bandied about because it points to a planning oversight.
In 2017, top 5 gentailers had about 72%, SP had 27.7% of the market share, with the small balance shared by a host of independent retailers. Gentailers have name recognition and they have been there since day 1. Those first in the game has captured a huge chunk of the market, leaving the majority Johnny-come-lately which are independent retailers, to scramble over the crumbs. More independent retailers failing will create consumer fear in the smaller outfits and strengthen gentailer preference. No doubt it's open market and retailers can compete when gentailers' customers review their contracts, but they are disadvantaged for two reasons. Firstly, customer inertia ensures gentailer has good consumer retention as long as their service level is good and their rate is competitive. Secondly, the incumbent gentailer has no selling cost in extending a contract to an existing customer thus it has a pricing advantage.
All these means that over time, the industry may consolidate with more independent retailers exiting the market due to inability to build a sustainable market share. The industry may probably end up somewhat similar to the petrol pump industry, a cartel of oil companies and their service stations. There will be just gencos and their gentailers. This is bad news for both consumers as well as for the system. Gencos with their own gentailers, have a natural hedge on their power generation, or at least a major portion of it. This situation will curtail the development of the electricity futures market. For consumers, a cartel-like market will be a disaster. Assuming the present over-capacity is not resolved. and the retail electricity market is left with only gentailers, then gencos will continue to bid low in the pool to ensure their plants get despatched, meanwhile cartel trickery allows their gentailers to price higher in order to recoup the losses on the power generation side.
What is deregulation all about when gencos can also be retailers (distributors). The independent retailer SMEs have very little chance of building a sizeable load to sustain the business. It is difficult to understand the planners giving one leg up to the gencos. When the retail market opened up in 2001 in stages, perhaps the planners had difficulty in enticing entrants to the new industry of retail electricity. Or more likely they wanted to play safe with people who are already in the business, ie, the gencos. It could also well be the old wealth of Singapore prefers the easy way out of making money - in real estates, why bother with a new industry that they don't understand. It's probably a combination of all factors that led to deregulation kicking of with gentailers, giving them a huge head start in the game. Is the size of the market too small to sustain too many retailers? The aggregate annual energy consumption of Singapore is about 54 tetrawatts per annum. If the number of retailers is say 20 and the load is equally spread out, the average is 2,700,000,000 kWh. I have no idea what the gross margins are like. But working on just 100 basis points, or $0.01/kWh (which is very conservative), the gross revenue is S$27,000,000 pa which by simple intuition, can easily generate a pretty generous ROI. The market can easily support much more than 20 retailers if the load share is well spread out. The more retailers the better for market competition as well as more participants and liquidity for the electricity futures market. The problem is the gentailers have gobbled up the market with little left for the others. Coming up next : Why the retail pricing model is not sustainable
Pliant means easily influenced, directed, biddable, managed, and a host of synonyms describing a weak disposition of character. When used to describe the courts, the Attorney General has defined it to mean ".. the Singapore Judiciary acts on the direction of the Singapore Government, is not independent, and has ruled and will continue to rule in favour of the Singapore Government in any proceedings, regardless of the merits of the case.” Criticisms of the courts have landed many in trouble with the law in Singapore. Calling the courts pliant in a private Facebook conversation has landed no less than a grandson of Lee Kuan Yew and a nephew of incumbent PM Lee Hsien Loong in trouble. Arms-folded, Singaporeans stand on two sides of the aisle. One seeing a great effort to demonstrate no one is above the law. The other sees a PM using state resources to persecute a proponent in a personal matter in light of the family feud in the background.
I apologise the title of this blog is a click trap. But can we not discuss pliant in a mature and educated manner?
"Let me say at once that we will never use this jurisdiction as a means to uphold our own dignity. That must not rest on sheer foundations, nor will we use it to suppress those who speak against us. We do not fear criticism, nor do we resent it. For there is something far more at stake it is no less than freedom of speech itself " Lord Denning
Calling the courts pliant scandalises the courts and can be charged for contempt of court. Contempt is an awsome power and needs to be exercised very judiciously. Many jurisdictions have come to view this as an archaic law and taken steps to minimise its use. Singapore has gone the other direction and passed the Administration of Justice (Protection) Act where definitions are so loose that it is better for one to shut up. The Singapore courts are beyond criticism.
The main purpose of the contempt power is not to protect the dignity of the court against insult and injury, but to protect and indicate the right of public so that the administration of justice is not prevented, prejudiced, obstructed or interfered with. The tangent view is that scandalising the courts diminishes the judiciary in the country and people's trust in the system. While the Executive has lots of weapons to fend for themselves, the Legislative has Parliament house, judges have no forum to define themselves and they have a need to avoid controversy. Thus contempt offers them protection. The question of whether a court is pliant arises when it is called upon to decide if an administrative action, or a legislation, is fair. There have been cases where the litigants have won against an administrative action, but the incidence of such judicial disagreement with the executive is low, especially in those with political undertones. This situation has led many to hold the view that the judiciary defers to the executive. Or one may say the judiciary is reluctant to do proportionality analysis.
The attitude of the courts towards judiciary review of administrative action and legislation is influenced by judicial ideological persuasion on the red light/ green light doctrines. Basically, red light judiciary believes rights over law and they tend to be confrontational with the Executive and Legislative. Green light judiciary takes a more constructive approach.
Green light believers take the view that judiciary helps to make good administration better. It is foundational that the executive body is the elected representatives of the people, entrusted to legislate appropriate laws for the good of the people. The judiciary can only review the facts and the correct application of the laws, It has no business nor expertise to review political or national implications. To this extent, it will consider proportional analysis only where the administrative action is 'irrational' as to have 'Wednesbury unreasonableness', or bias.
Singapore courts have publicly made their stand in favour of the green light approach, in the ex-curia speech by CJ Chan SK 2010. This approach was further endorsed in the Kenneth Jeyeratnam vs AG 2012 case. The message from the Singapore judiciary is loud and clear. Do not seek the courts to change bad laws - do that through the ballot. Put it another way, do not seek redress for bad government via the courts, do that through legal political process.
The question thus arises - why does the judiciary here take to the green light doctrine? In his 2014 paper "According to the Spirit and not to the Letter: Proportionality and the Singapore Constitution", Asst prof Jack Tsen-Ta Lee of the Singapore Management University suggested ".. The general reluctance of the courts to exercise constitutional judicial review probably has its roots in the political experience of Singapore." Singapore has been dominated by one single party since independence in 1965. Each election has seen the PAP garnering a huge segment of the popular vote. Parliament is predominantly comprised of PAP members. The strength and party discipline of the PAP, the members required to vote according to party line, has meant laws can be, and have been, passed with great ease. This over-powering and intoxicating dominance of the PAP impacts every aspect of our cultural, social, and economic life as well as all spheres of human activities be it in business, education, the judiciary, etc. That dominance is reinforced by the larger than life personality of Lee Kuan Yew himself. The government is elected by us with overwhelming majority, it does it's best, it knows best, and it's trusted. So even though we have constitutional sovereignty, in reality, we live under parliamentary sovereignty. In 1986 a Commission of Inquiry into 'Judicial Independence" was held following an application by opposition MP JB Jeyeratnam, who claimed government interference in the subordinate courts. In the parliamentary debates, Opposition MP Chiam See Tong made a remark that the PM Lee "dominates the universities, the civil service, statutory boards, I think, even Members of Parliament". In his akwardly style, the endearing Chiam made the same suggestion that the personality of LKY dominates everything, thus influencing decision making although not personally directed. In that same parliamentary debate, Lee Kuan Yew said: "THE Subordinate Court judges are controlled by the High Court judges who can only be removed by an impeachment here in this House, by a two-thirds majority. But in Singapore, we have an extra supervision on them. When they write their judgments, they know that it could go up to the Privy Council and judges, nothing to do with Singapore, will scrutinise whether their findings are in accordance with the law."
For those who are not aware, in the past, Singapore outsourced it's last avenue of judicial appeal to the British Privy Council. Being a person of highest integrity, Lee boasted this avenue of last recourse stamps the unquestionable independence of our legal system. (By the way, the 1986 Commission of Inquiry concluded there was no administration interference in the courts. The commission was presided by the CJ over JBJ's objection.)
In 1993, Singapore judicial sovereignty finally established itself with the abolition of appeals to the Privy Council and establishment of the Court of Appeals. What caused the change of heart of Lee? It had to do with JBJ yet again. In 1986, JBJ lost his MP seat as well as a disbarment after being found guilty of falsifying party accounts. He went all the way to the Privy Council and in 1988 he won and the case was overturned, he returned to the bar. Lee felt a lesson was learnt, that a court a few thousand miles away from Singapore, is unable to understand the context of a case before it.
At the core, an allegation, or slur, to the independence of the judiciary, questions the integrity of our legal system, which of course needs to be challenged. On the other hand, neither can the public allow a cloak of protection of the courts camouflage administrative or legislative attempts to diminish the rights of citizens, particularly when driven by political self interests. How well are we doing so far is a matter of personal opinion, and in the market of ideas, the Administration of Justice (Protection) Act are drowning the voices.
"(Mr Chiam) now says, because I have been here for 25 years, I have become so dominant, so dominating, such a big banyan tree with such widespreading roots, that they all do my bidding... It is not the way a government is run. If you run a government that way, you end up like the Philippines. Because at some stage, it will all come out. It will all come out, what President (Ferdinand) Marcos said to the judges and to the prosecutor, and so on and so forth." ... Lee Kuan Yew
Great words of advice for the current administration.
OK so I got a slap in the face for predicting 2 months back a higher regulated electricity tariff for Q2 which did'nt materialise, Instead it dropped from Q1 rate of $0.2385 to $0.2279 in Q2.
The strange thing was retail rates did not register any drop going into April. It has in fact been creeping up steadily in response to rising wholesale prices on the back of higher oil prices. This suggests to me a political element in suppressing the Q2 tariff pointing to a closer general election. If I am correct, then somewhere along the line, possibly after the election, an adjustment will have to be made to pick up the tap on the under-adjusted tariff of Q2.
Unknown to most people, they upped the use-of-system rate by another $0.0013/kWh to $0.0544 in Q2. This is the grid or transmission charge. It is a tiny figure, but with national consumption of about 54 tetrawatt, SP Power group will pull in another $70m per year in revenue.
In previous blogs I explained how the regulated tariff is computed. A quick brief recap here for convenience. Electricity generation cost (inclusive of genco's ROI) is forecasted for each quarter. This rate is used to apply to vesting contracts for certain quantity of load, ie SP hedges with gencos. The hedging cost (difference between vesting contract rate and actual wholesale rates) of one quarter is adjusted in the next quarter's forecasted generation cost and the net is the tariff for the next quarter.
Due to over-capacity. gencos tend to bid low. As a result, SP hedges tend to result in SP paying gencos for the hedge. SP hedges to cover 100% of non-contestable load (ie total load of consumers who have not switched to retailers) or the LNG vesting contract quantity whichever is higher. The hedging cost of the previous quarter is all borne by those consumers who have not switched to retailers (since they pay at the tariff rates.
As more consumers switch to retailers, there will be a point when the vested quantity exceeds the total quantity in respect consumers who have not yet switched. In which case, the hedging cost will be apportioned to SP consumers and contestable consumers (those who have switched). Well, that situation has arrived. So in Q2 onwards, retailers added on a new cost component called 'vesting charge' rate of $0.001 to be charged to their customers. We can expect this to increase further in Q3,
The grid charges of $0.0544 and vesting charge of $0.001 are all pass-through costs that retailers collect from their customers. Carbon tax are mostly absorbed by retailers (but of course, they have worked it into their prices).
So in reality, cost has risen in Q2 but hidden in an overall lower tariff.
Recently The Online Citizen carried a short article that "Singapore-based maritime container line Pacific International Lines (PIL) received “previously unreported loans” from the Republic’s sovereign wealth fund Temasek Holdings in the form of hedge funds last year." TOC was rehashing from a report by shipping news platform Splash 24/7 which in turn cited from world maritime news platform Alphaliner.
"Unreported loans" and "hedge funds" are technically incorrect as were a few other inaccuracies, TOC should do well to beef up the quality of the post as an online media. Nevertheless, credit to them for raising public awareness. Not much information is out in the public sphere. From TOC-Splash 24/7-Alphaliner we know the following:
- Temasek made a loan to PIL which was having financial difficulties in the past 2 years.
- Loan was collateralised by 20.56% of shares in Singamas
- Singamas offloaded 5 box manufacturing facilities to Cosco for US$565mm.
- PIL owner is SS Teo, ex nominated MP in Singapore.
- PIL financials -- as at 30 Jun 2018 -- net loss US$141mm (6 months), US$3.46b debt, of which US$1.08b due within 12 months.
As regards TOC's 'unreported loans'. This serves to feed the paranoid of the public in light of the many investment losses by Temasek in the recent past. In the ordinary course of their business, is there a need for Temasek to report on loans extended, and if so, to report to who? It's a ridiculous supposition by TOC, Unless TOC meant that this loan has never been reported by the state media Straits Times.
The loan was actually extended by Seatown International Pte Ltd which is fully owned by Seatown Holdings Pte Ltd which itself is wholly owned by Temasek. Seatown International (SI) is a fund mangement company managing a US$4b fund seeded by Temasek in 2013. It is not known whether SI has managed to raise additional funds from other investors or are they simply managing Temasek's funds. TOC's is wrong here as the loan is not extended by Temasek directly, and SI is not a hedge fund operation.
This Temasek indirect 'investment' however, deserves, some scrutiny.
Singamas Holdings is listed in the HK stock exchange. It has businesses in container manufacturing and others . The company has been in financial difficulties. This month Singamas sold off 5 China-based subsidairies that manufacture standard containers to Cosco for US$565mm, of which US$300mm was used to pay off debts. A reason provided for the asset sale was to exit the standard box business and focus on customised container sector which has higher margins. PIL has controlling interest in Singamas.
PIL is Singapore-based, a private company owned by Singaporean businessman Teo Siong Seng. It is under financial difficulties due to the global challenges in the shipping industry. It's core shipping business is'nt pulling in the cashflows to service a huge debt of US$3.46b, of which US$1.08b is due within 12 months. Recently, PIL took delivery of 28 new vessels with new technologies that the company says will improve cost competitiveness.
What is the quantum of the loan - we can only speculate. The collateral for the loan is 20.56% Singamas' shares. In 2018 the total numer of shares issued by Singamas was 2,417,000,000. Based on market price @ HKD1.20 and US$/HKD rate of 7.69, the loan could be in the region of US$75m.
The question arises as to whether the loan is a purely business transaction or is Teo (an ex-nominated member of parliament) a PAP insider that needs to be accommodated. The public, with a trust deficit to the non-transparent dealings of Temasek, may be inclined to believe in the latter. Let's take it that it's purely a business loan. There are questions of legality and whether the business part of it makes sense. As a fund management company, SI is not in the business of lending. The loan is thus ultra vires both the company and directors under its Memorandum and Articles of Association. This is a breach of directors' duty chargeable under the Companies Act. SI is a capital market services licencee under the Monetary Authority of Singapore and commercial lending is in breach of this licence.
It is indefensible for SI, should they resort to, to claim that it is not a commercial but a friendly loan. A friendly loan is acceptable provided a relationship exists between the borrower and lender, such as subsidiaries or related companies, or where certain benefits accrue to the lender. No such relationship exists between SI or Temasek with PIL.
From the business point of view, US$75m is a drip in the ocean for the requirements of PIL. It points to a hurried injection of cashflow to assist the debt servicing of PIL. Why take a collateral whose valuation is going to be significantly depreciated with the sale of 5 subsidiaries by Singamas? Why give band-aid to a financially strapped company, good money after bad money. A good guess is there is a bigger game in play. PIL is the 10th largest shipping company in the world and there has been market talk of it being a takeover target although Teo has said the company is not for sale.
If and when the bigger play emerges, the same question arises as to the business decision. Is it a rescue mission, and if so, why play the white knight with PIL and not Hyflux? If it is an investment decision, why enter the shipping sector again after disposing of Neptune Orient Lines with huge humbling losses? TOC article
Under the Prevention of Online Falsehoods and Manipulation Act, anyone charged and found guilty by a Minister, has a right of recourse to the courts. The process of appealing to the courts will be formalised in an ancillary legislation.
Law Minister Shanmugan recently explained in brief how the process for appeal will be like. In all fairness, he tries to make it as simple and speedy as possible, and magnanimously waves court fess for the first 3 days. Before we bow low in gratitude for his graciousness, the reality is that the right to appeal is our inalienable right under doctrines of natural justice. He needs to craft that into the POFMA legislation, whether he likes it or not. The fact that this process was not addressed in POFMA itself seems to suggest it was an afterthought. In other words, just an obligation and not accommodation out of brotherly love. It is but a veneer to protect people's right to appeal. The fact is, success in such an action by an applicant is almost impossible on economics and judicial grounds, which I shall explain.
The process for appeal as disclosed by Shanmugaran is by way of simple form filing. It seems that it's something the ordinary guy can attend to personally. This is, however, nothing like going to HDB to appeal against a traffic summon. The applicant that tries to save cost and do a self-representation will get his head chopped off for the High Court suffers no fools. If he thinks he can shop around for the cheapest lawyer in town, he might as well throw in the towel and save his money. The case is likely to deal with constitutional and administrative law issues which lawyers lacking specialty knowledge are'nt good choices, all due respects to these. Shanmugaran and the Minister of State for Law Mr Edwin Tong, both may recommend you try Allen Gledhill, the firm where they were partners before. This is one of the best law practice in town in these specialty fields, a government favourite, and stratospheric fees.
The case before the High Court will call for either a judiciary review or supervisory review under their appellate jurisdiction. There is a world of difference between the two. In a judiciary review the High Court looks into the constitutionality of laws enacted by parliament and administrative acts of the government. Singapore has constitutionality supremacy, which means any laws or public authority regulations must observe the provisions of the Constitution. Article 93 of the Constitution vests the powers in the judiciary to abrogate any laws or administrative acts which exceed the limits of the power conferred. This is a check and balance function to ensure the acts of the legislative and executive are reviewed by the judiciary. Appellate jurisdiction is basically a supervisory function where the High Court reviews the work of a lower court or other tribunals. This power is derived from statutory framework. So Shanmugaran is in the process of crafting the legislation for appeals under POFMA. Under this mandate, the High Court looks only at the facts of the case and whether the relevant laws have been applied correctly.
If you wish to apply for recourse to the courts, there are only 3 grounds for your claim:
- Illegality (errors of law or facts, abuse of powers) - Irrationality - Procedural impropriety
When it is a case of balancing between individual or constitutional rights versus public interests, the High Court is called upon to do what is called a proportionality analysis. Judiciaries the world over take either an adversarial or conservative constructive approach. The ideology preferred depends on whether one is a red or green light theorist.
What is the position of the High Court in Singapore when it is called upon to do this? A few precedent cases have established beyond a doubt that Singapore judiciary is conservative in their approach towards administrative law. In fact, Chief Justice Chan Sek Keong, in an ex-curial (out of court) speech in 2010 had specifically expressed a preference for the ‘green-light’ approach towards administrative law. This approach translates to a reluctance by the judiciary to do proportionality analysis. Case of Jeyaretnam Kenneth Andrew v Attorney-General 2012:
In 2012, 25 IMF member countries committed a total of US$340B contingent loan line to safeguard global economic and financial stability till 2020. Singapore's share is US$4B. Jeyaretnam applied for judicial review on the ground that Article 144 of the Constitution, properly interpreted, required the loan to be approved by Parliament and the President. There was no constitutional approval as it was merely a central bank commitment. The Court of Appeals dismissed the case on grounds the appellant had no locus standi - Latin term for 'no standing ground'. The CA basically endorsed CJ Chan's green light preference and explained "public administration is not principally about stopping bad administrative practices but encouraging good ones: in other words, seek good government through the political process and a liberal standing test would allow ‘too many unmeritorious cases to be fought, which could seriously curtail the efficiency of the Executive in practising good governance."
Green light theorists tend to see their concern is primarily with the legality, not the merits of a case. The first reason is the courts are in no position to decide on a fact when the power to do so has been assigned to the public body to whom Parliament has entrusted the decision-making power. In the case of POFMA, it's the Ministers. The second reason is that the courts may not have the necessary expertise to assess the factual situation. Eg if a Minister says reporting the Joo Koon MRT collision jeopardises state security, there is no way for the court to assess what is state security. For these reasons, recourse to the courts on grounds of illegality is not the first line of defence against administrative abuses of powers. It is a fallacy. Irrationality was expounded in the English case of Associated Provincial Picture Houses v. Wednesbury Corporation (1947) It established irrationality in 2 ways :
1. Where a public authority does things such as not directing itself properly in law by considering matters which it is not bound to consider and taking into consideration irrelevant matters.
2. When a public authority does something that is "so absurd that no sensible person could ever dream that it lay within the powers of the authority. This has came to be known as Wednesbury unreasonableness. Singapore courts have applied Wednesbury unreasonableness as the test for irrationality, One matter that comes to mind is the Public Order Act where one person alone can constitute an illegal assembly. To my mind, if this is not utter madness it is definitely Wednesbury unreasonableness.
However, the courts are very careful not to supplant their opinions over those of decision makers. In this, they will adopt two levels of intensity of scrutiny -- a light touch or an anxious scrutiny in favour of the public authority. So if someone is charged under POFMA for posting an article about a train collision at Joo Koon station on the grounds of causing a danger to public safety, the High Court may well may well conclude that the judicial process was unsuitable for reaching decisions made on such grounds, and that therefore it was "in no position to hold that it has been established that the Minister's exercise of discretion was irrational in the Wednesbury sense", That is light touch, in other words, the odds are stacked against you as appellant. There do not seem to have a precedent case where the anxious touch has been applied. Procedural impropriety arises under 2 situations :
(1) nemo judex in causa sua "no-one should be a judge in his own case" which I wrote about in a previous blog ownself judge ownself. (2) where there has been bias, - actual, imputed and apparent bias. If you were not given a chance to be heard, or if the hearing was not conducted in a fair manner, or there was undue delay, or insufficient notice, then you have a claim to appeal on grounds of bias. Other examples could be where the Minister has pecuniary interest in the matter, directly or indirectly. These are the 2 key pillars of natural justice which all individuals are entitled to.
A Solomonic view: What are the chances of success for an applicant to appeal a Minister's judgement under POFMA? Applicants' arguments will most likely be of 2 types -- (1) a challenge on facts -- that the glass is half-full, not half-empty; (2) a challenge to a Minister's definition of whatever the state interest that was brought up. To the extent that applicants' claims are predominantly these two types, the advice is best to walk away with tails down, for the odds are stacked so high the avenue of recourse to the courts is but a fallacy.
Natural justice demands that when making decisions which impinge on people's rights or interest, public officials have to act judicially. This entails sufficient notice of charge, a right to be heard, a fair hearing, a right to appeal, and a duty to give reasons.
Technically, the Prevention of Online Falsehoods and Manipulation Act has been crafted to satisfy these requirements. Except for the last, Singapore government officials are not duty bound to give reasons, and many in fact do not do so.
".. justice should not only be done, but should manifestly be seen to be done"... Lord Hewart, Chief Justice of England and Wales;
One of the two pillars of natural justice is the doctrine of nemo judex in causa sua, Latin for "no-one should be a judge in his own case." The reason of course, is to prevent actual bias. With Ministers as the arbiters of truth, it will be challenging for them to show how justice will be carried out. Let's take one example. In the 2017 MRT train collision, one train read-ended another at the Joo Koon Station resulting in injuries to 38 passengers. If someone were to post a comment of the serious accident and describes the collision, it may be a 'false statement' if it irks the Minister since the authority regarded it as a non-event having described it as one train "coming into contact" with another. The Minister of Transport may choose to persecute him. It will be indefensible for the Minister to show that he was'nt a judge in his own case.
POFMA is so fundamentally and blatantly flawed in this respect. It is incomprehensible why the Legislative authority choose not to see it that way. Perhaps it would be naive to underrate the ingenuity of the authorities to circumvent this bothersome doctrine in natural justice. Afterall, this is a government that can make one single person an illegal assembly, and rear-ended collisions into a mere coming into contact. Perhaps the various ministries will establish reciprocity arrangements to pofma false news purveyors. Falsehoods on MRT will be dealt with by the Education Minister, those regarding national service by the Health Minister, those on educational matters by the Minister of Defence, etc. Scratch each other's back - no more ownself judge ownself.
A great irony is not lost to many that the Prevention of Online Falsehood and Manipulation Act was preceded by Prime Minister Lee Hsien Loong proclaiming a falsehood in a Q & A during the 9th Singapore-Malaysia Leaders' Retreat 9 April 2019. LSL : "Singapore is not the only one who is legislating on this issue. The French... Germans .... Australians have just done something similar and very draconian. The British is thinking of doing things as well." (See TOC's country comparative of anti-fake news legislation HERE) POFMA Clause 2 (C) defines a false statement of fact as one that is false or misleading whether wholly or in part and whether on its own or in the context in which it appears. Whilst the other quoted countries seek specifically to manage industry and agenda players, POFMA has a dragnet that captures all small time social media participants, from a primary school kid who has learnt how to use computer and internet, to a 90 year old retiree who still remembers how to punch the keyboards. Clearly LSL has committed falsehood under clause 2 (C) since none of the quoted countries' legislation are comparable in specificity and objective. This serves to demonstrate how loosely POFMA has been framed on just one illustrative issue. Good thing this legislation is not retrospective, otherwise, we have to wonder which Minister, in the words of the Prime Minister's wife, "has the balls" to pofma him. This atrocious legislation has been perlustrated by many, including foreign industry players and academia, whose concerns have been totally ignored by government. Some even received contemptious rejection publicly. Many thoughtful and concerned Singaporeans who see through this piece of legislation as a poorly concealed mechanism to muzzle criticism going into a general election, have done their job in vain to persuade a stoic government on the shortcomings, and to educate the public on the dangers, of the draft legislation. Rather than addressing issues raised, the government chose to go to great lengths to ridicule various contributors and attack their credentials. On this very important piece of legislation, Singaporeans have been let down by the spectacular absence of voices from local business leaders, the Law Society of Singapore, the judiciary, students' unions, industry workers' unions, and members of parliament from the ruling party. Singapore business leaders, ensconced in their elitist world of cash machines, has no time for 'freedom of speech' issues even as they hypocritically propagate fanciful faux social responsibility statements. No local business leader will lend their views and wisdom to pressing social issues if it means opposing the objectives of the government. The purpose of the Law Society as stated in The LegaLProfession Act 38(f), is "to protect and assist the public in Singapore in all matters touching on, or ancillary or incidental to the law." In many other countries, the bar associations are great bastions of citizens' rights, but in Singapore, it is a little rabbit that never pop it's head out of their security hole. One would have expected some vociferous and in fact confrontational engagements from them with regards to POFMA, but the society was as mute as a fish. Law Society President Gregory Vijayendran arrongantly chest-beat away his inutility with a meek overlay that the society works in confidential consultation with the government. It relays their views to the government and do not publicise the process. It's public knowledge the society has itself been muzzled since the 1980s and has never retrieved it's manhood ever since. Taking a stand against the government landed two ex-presidents in great trouble in the past, one of whom had to go into self-exile. Their business is solely to make money from the public, simple as that. Has there been any views from our Supreme Court? Absolute zero. Here is a legislation that make Ministers the arbiters of truth. It effectively transfers judiciary powers to the executive, and the highest judiciary office in the island is SILENT. A fundamentally flawed legislation allows for the usurpation of judiciary powers by cabinet ministers, and the Supreme Court is OK with it. It is a repeat of the last presidential election fiasco. The Constitution 93 (A) (1) states the SC has jurisdiction to determine questions as to validity of Presidential election. Its non-action was acquiescence to the ridiculous notion that a Muslim Indian is a Malay. The script thus allowed PAP MP Mdm Halimah Ya'acob (then House Speaker) to step down and stand as a candidate in the previous special election of a Malay president. The voice of youth in Singapore is dead. University student unions are obsolete. Youthful idealism that champions peace, equality, freedom and social injustices, and the audacity to challenge the status quo, is the missing ingredient in Singapore's attempt to move towards an advanced society. The consequence is new generations of academically bright but robotic citizens. A paranoid Lee Kuan Yew government understood the power of student unions well and at the slightest sign of emerging industrial or political activism, it would be nipped in the bud. This happened in 1975 with the Tan Wah Piow case. Tan, as President of the Singapore Student's Union, championed some marine workers union in an industrial dispute. He was quickly disposed off in a rioting charge which Tan claimed was a frame up. He was nowhere near the vicinity of the rioting, and the chief prosecution witness Phey Yew Kok (an union chairman) who, decades later, was himself convicted of graft and instigator of union members to lie, attesting to Tan's claim of the proclivity of the witness to lying. Students had since then, learnt to toe government lines. Where have all industrial unionists gone? Gone to graveyards everyone. Who cannot remember the day Lee Kuan Yew thumbed the tables at the meeting with the SIA Pilots Union back in 1980. Unions here are non-confrontational, which is not necessarily bad. But none has the temerity to stand up and be counted on a social issue that is not in line with government thinking.
Singapore likes to pretend it is a successful Westminister style parliamentary system. It is a sham and a disgrace. Attendance was high during Lee Kuan Yew's time. With his passing, the attendance in parliament at times were visibly less than 5%, and those attending seemed they were there to catch a nap. It tests credulity that issues of great national importance can be discussed. Discussions, if ever there was any, was either a confrontational personality clash with opposition MPs, or ruling party PAP members in an echo chamber. On POFMA, not a single PAP member had any opposing or cautionary views, or anything to add. It was a total shameful sellout. Sleeping cells are agents placed in a target country or organization not to undertake any immediate mission but to act as a potential asset to be activated when required. Oppressive policies that capture institutions are somewhat similar in the sense that they are preparations for contingency moments. Agencies or institutions with the latent energy for mobilising social change or resistance to government initiatives, are kept in check. As a younger man, I watched the G1 leadership carry the cudgels as they imposed tough love and discipline on a new country. Draconian policies were required in a new country given statehood. Lee Kuan Yew and other founder fathers were a different brand of leaders. Their tough policies worked and accepted because the leadership was trusted and they were driven by national interests. Even as a young man then, I was poignantly aware that Lee Kuan Yew's benign dictatorial brand, even though it was advancing the country's development very successfully, was embedding policies that captured democratic institutions. This laid the foundation of our death trap when a rogue leadership takes over. All evidence point to the reality that we are living under a leadership tipping into roguery now. POFMA is testament that with captive institutions, we are screwed.
