Singapore's Ideal: A Singaporean CEO for Temasek

By P.R. VENKAT

SINGAPORE -- Singapore's finance minister said state-owned investment company Temasek Holdings Pte. Ltd.'s chief executive would ideally be Singaporean, but the government won't interfere in nor restrict Temasek's decision in the selection process.

"The question of whether the CEO of Temasek should be a Singaporean is not a trivial one; it is one which cabinet considered very carefully and debated on before arriving at a decision," Tharman Shanmugaratnam told lawmakers in Parliament.

"Ideally, we should have a Singaporean as the CEO; that's the ideal and everything else being equal and you look at two candidates who are equally suitable for the job, I think we should prefer to have a Singaporean," he said. "The ideal is not always possible. What is critical is that the board remains in the control of Singaporeans."

Mr. Tharman stressed that the investment company is independent from government interference and that the government prefers not to put restrictions on Temasek in its CEO search.

"The government does not directly manage the process of chief executive succession. To do so would make the appointment of the chief executive a political decision, which it must never be," Mr. Tharman said.

In July, Temasek said it and former CEO-designate Charles "Chip" Goodyear, a U.S.-born executive who was formerly chief of mining giant BHP Billiton Ltd., mutually agreed to part ways, citing differences on "certain strategic issues."

A person familiar with the situation said at the time that Mr. Goodyear's proposals for the firm's new strategic direction were considered too risky by some, and that he also planned some changes to the senior management that weren't well-received by Temasek's board.

Temasek CEO Ho Ching said in July that Mr. Goodyear's departure was "mutual and amicable."

The finance minister said Temasek's leadership remains strong, at both the CEO and board level. "They have enabled Temasek to sustain its generally superior overall investment performance over the years," he said.

Temasek suffered losses on its investments due to the global slowdown and financial crisis. Ms. Ho said late last month that Temasek's portfolio fell more than S$40 billion (US$27.54 billion) at the end of March from a year earlier. The company manages a portfolio valued at S$127 billion.

Mr. Tharman said Temasek had done "rather well" compared with other companies and that there was no "push factor" for the current CEO to step down. "As shareholder of Temasek, the government has a clear interest in Temasek continuing to have strong leadership," he said.

Write to P.R. Venkat at venkat.pr@dowjones.com

Temasek's Portfolio Hit: $27.75 Billion

By P.R. VENKAT and SE YOUNG LEE

SINGAPORE -- The value of state-owned investment company Temasek Holdings Pte. Ltd.'s portfolio fell more than 40 billion Singapore dollars (US$27.75 billion) at the end of March from a year earlier, Chief Executive Ho Ching said.

Ho Ching

"We are certainly not happy with the negative wealth added in March last year as well as March this year," Ms. Ho said.

The figure suggests Temasek has recouped some of the losses made at the height of the financial crisis, as global markets begin to rally on hopes that the worst of the downturn has passed. Ms. Ho didn't disclose the percentage decline or the overall value of its assets.

The Singapore government previously said that the value of Temasek's portfolio had fallen S$58 billion to S$127 billion from the end of March 2008 to November, suggesting a 31% decline. Based on those figures, it suggests the portfolio lost about 22% over 12 months,

Earlier

• Goodyear Won't Be Temasek CEO
  07/22/2009
• Opinion: Temasek and Transparency -- II
  07/22/2009
• Randomly Noted: Singapore's Temasek Troubles
  07/22/2009
• Temasek Loses Big on Stake in Barclays
  06/04/2009
• Deal Journal: A Lesson in Bad Timing
  06/04/2009
• Temasek Portfolio Lost $39.91 Billion
  05/29/2009
• Opinion: Temasek and Transparency
  02/12/2009
• Taking Hits, Temasek's Assets Slide 31%
  02/11/2009
• Deal Journal: The Now Slightly Less Singaporean Singapore SWF
  02/09/2009
• Temasek Shakes Up Its Top Ranks
  02/07/09

Ms. Ho, speaking at the Institute of Policy Studies in Singapore, also said Temasek was exploring the possibility of creating "one more group of stakeholders." Ms. Ho said Temasek could allow outsiders to co-invest with the investment fund, a plan that may be firmed up in the next six to 12 months.

Temasek wants to invite "sophisticated" investors to put money into deals alongside Temasek and could eventually allow retail investors to co-invest in eight to 10 years if the test succeeds, she said.

She also said the bulk of incentives to Temasek's senior management has been deferred by three to 12 years.

Separately, Ms. Ho said Temasek's succession planning continues given the impending departure of Chief Executive-Designate Charles "Chip" Goodyear.

Last week, Temasek said it and Mr. Goodyear mutually agreed to part ways -- just a little more than two months before the former BHP Billiton Ltd. chief was to succeed Ms. Ho.

Temasek said last week that the decision was due to "differences regarding certain strategic issues." Mr. Goodyear will leave the company Aug. 15. Ms. Ho said in her speech that his departure was "unfortunate."

Chip Goodyear

"This does not mean, however, that we should stop this discipline of succession review," she said. "I just want to reaffirm that the decision was both mutual and amicable. We continue to hold Chip in very high regard for his professionalism and his integrity."

Temasek surprised many in February when it named U.S.-born Mr. Goodyear as successor to Ms. Ho, who is married to Singapore Prime Minister Lee Hsien Loong and is daughter-in-law of the founder of modern Singapore, Lee Kuan Yew.

A person familiar with the situation said last week that Mr. Goodyear's proposals for the company's new strategic direction were considered too risky by some, without elaborating. He also said Mr. Goodyear planned changes in senior management that weren't well received by Temasek's board.

Ms. Ho said Temasek will keep its portfolio exposure to Asia at 70% or more, its current exposure to members of the Organization for Economic Cooperation and Development at around 20%, and its exposure to new regions like Latin America, Africa and others at up to 10%.

"We continue to anticipate opportunities, not just within Asia, but also in Latin America and elsewhere, too," she said.

Write to P.R. Venkat at venkat.pr@dowjones.com and Se Young Lee at vincent.lee@dowjones.com