Oops! We goofed! That's what the Singapore sovereign wealth fund Temasek Holdings said in more diplomatic language yesterday when it announced the Singapore Prime Minister's wife Ho Ching would stay on as CEO instead of handing over to her heir-designate, Charles "Chip" Goodyear, who is quitting after less than six months with the company.
Temasek says he is stepping down because of "differences regarding certain strategic issues that could not be resolved". In other words, it picked the wrong man just as it blundered in some of its investments, losing $39 billion, or 31 percent of its holdings, in eight months up to November last year when its assets dropped to $88 billion. (Temasek now reports a portfolio of more than $134 billion.)
Some foreign observers are beginning to question the company's performance. The New York Times reports:
"This is not good news for Temasek,” said Carl Linaburg, co-founder of the Sovereign Wealth Fund Institute in Roseville, California., which tracks data on the investment funds. “Prior to Chip’s arrival, Ho Ching had been widely criticized for Temasek’s major losses in financials. Chip’s departure makes people wonder why Temasek can’t seem to make firm decisions with sound judgment, which is essential for managing the assets of a country."
Reuters columnist Jeffrey Cane goes further:
There may have been a real clash over strategy, to be sure. Or given the wave of deal-making in mining, one might wonder whether Goodyear has been tempted by the prospect of a return to the CEO suite in his former business.
Yet Goodyear's departure gives the appearance of local politics trumping business considerations. That could be costly if Temasek ever decides to pursue high-profile deals in markets like the United States, where SWFs have become ensnared in controversies in the past. Suspicions will cling to these funds until they can demonstrate that they are truly independent investment managers.
The Wall Street Journal also comments on the sudden turn of events:
‘We hired the best,” Singapore founder Lee Kuan Yew said last month, referring to the incoming head of state-owned investment firm Temasek, Chip Goodyear. Yesterday, Temasek released a statement saying Mr. Goodyear wouldn’t be taking the job after all. Given that Temasek manages about $84 billion in taxpayer monies, Singaporeans deserve to know what happened.
Mr. Goodyear’s appointment was a step toward more transparency and professionalism. He was the first non-Singaporean to be named as CEO and had experience running companies in Australia and U.S. Current CEO Ho Ching, the wife of the prime minister, spent her professional career in Singapore and has presided over a huge fall in the company’s portfolio value amid the recent financial crisis.
The Journal is unfair to Ms Ho. She is not the only CEO to have presided over huge losses in the economic downturn. May she have better luck next time in stock picks and staff appointments.
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