Anyone expecting Temasek Holdings to shed further light on the departure of
Mr Charles Goodyear will be disappointed. Don't hold your breath. Despite
calls for more transparency and openness in its dealings, the state
sovereign wealth fund (SWF) is notoriously secretive.
Singaporeans will be left to speculate on the reasons for the sudden and
unexpected exit of Mr Goodyear.
Having said that, lets take a look at the selection process adopted by
Temasek through which it appointed Mr Goodyear to take over Ms Ho Ching,
wife of Prime Minister Lee Hsien Loong, as Chief Executive from October 1st.
In the Parliamentary sitting of 4 March 2009, then-second Minister for
Finance, Mrs Lim Hwee Hua, stoutly defended Mr Goodyear's appointment. She
explained how Mr Goodyear came to be offered the position of CEO of Temasek:
Mr Charles Goodyear was identified and approached by the Temasek Board as
a potential CEO candidate in 2007. Once he agreed to be considered as a CEO
candidate, Mr Goodyear was interviewed by the Board members, individually
and as a group. The Board engaged with him for over a year before it
finalised its decision. Temasek picked Mr Goodyear as its next CEO because
its Board assessed that he was the best person for the job, based on merit..
The Board was also satisfied that he shares Temasek's values and is
committed to building long-term sustainable value.
As Temasek is a Fifth-Schedule Company under the Singapore Constitution,
Mr Goodyear's appointment both as a Board member and as a CEO successor was
subject to the concurrence of the President. Cabinet first discussed the
Temasek Board's nomination of Mr Goodyear. Cabinet decided that the
Government should have no objection to Temasek appointing a foreigner as CEO
if he was assessed by the Board to be suitable and the best candidate
available. Cabinet, therefore, endorsed Mr Goodyear's nomination, but also
reaffirmed the need for the Board of Temasek to remain in the effective
control of Singaporeans.
Temasek Board's recommendation was then put to the President for approval,
and the President met Mr Goodyear before giving his concurrence.
So, the president, the cabinet and Temasek's Board of Directors all had a
hand in assessing and approving the appointment of Mr Goodyear over an
extended period of time. He was identified as a potential CEO in 2007 - two
years before he was offered and took up the job in March 2009.
In its news release on 6 February 2009, where Temasek announced Mr Goodyear's
appointment, its chairman, Mr S Dhanabalan, said: "Ho Ching has been
instrumental in bringing Chip on board. We have been working on this
appointment for more than a year." (Temasek website)
Less than three months before he was to replace Ms Ho Ching as CEO, Temasek
announces Mr Goodyear will no longer be its CEO come October 1st - and that
Ms Ho Ching will continue as its chief. The problems seem to have started
immediately after Mr Goodyear was designated as the new Temasek CEO.
According to the Associated Press, "Goodyear. had been working alongside
outgoing chief executive Ho Ching since March." One would imagine that in
the four months since, the two may not have got along as well as what has
So, what happened?
The reason given by Temasek in its news release of 21 July 2009 said that
"there are differences regarding certain strategic issues that could not be
resolved." However, this runs counter to what Minister Lim had said, that
Goodyear "shares the values of Temasek and its position as a long-term
investor committed to delivering sustainable returns."
It therefore raises the question: Did not the president, the cabinet, Ms Ho
Ching and the BOA of Temasek ask Mr Goodyear about his strategy for Temasek
before appointing him as CEO? And what does Temasek mean by "strategic
issues? Did not Minister Lim say Goodyear "shares. the values" and its
More curiously, on 21 July, Ms Ho Ching said: "I am sorry he is unable to
continue with the leadership transition, and hope to complete the
initiatives that he has started."
If Temasek cannot reconcile Mr Goodyear's ideas on "strategic issues" with
its own, why is Ms Ho Ching going to "complete the initiatives" which
Goodyear started? What are these initiatives? And how sure is Temasek that
Ms Ho Ching is up to the tasks, given that she herself admitted, in
February, that "Chip brings capabilities that I don't have"? (Straits Times)
So, is there more to Mr Goodyear's departure than meets the eye?
The New York Times:
"This is not good news for Temasek," said Carl Linaburg, co-founder of the
Sovereign Wealth Fund Institute in Roseville, Calif., 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."
Some have suggested that it is a clash of culture - according to the
Financial Times (FT):
". there has been intense speculation since Mr Goodyear's appointment was
announced about how he would deal with Temasek's senior management, and the
close-knit community of Singapore business executives in charge of the
Temasek-owned companies that dominate the city-state's corporate landscape.
These include Singapore Airlines, Singapore Telecommunications and DBS Bank.
Many observers said that Mr Goodyear might encounter a culture clash if he
attempted to shake up the management of Temasek and its affiliated
The FT also reported that "Nomura Securities, in a recent research report,
suggested that Mr Goodyear might increase Temasek's borrowings to make new
acquisitions in an effort to rebalance its portfolio. Such a move would have
been a break with Temasek's conservative cash management."
We will probably never know the true reasons for Goodyear's departure. But
perhaps that is not the real or important question we should ask. What
should be of concern to Singaporeans is the process of selection adopted by
Temasek and the seemingly rubber-stamp approval which the president and
cabinet gives to Temasek's actions. This is especially important given that
Temasek guards and invests billions of dollars which belong to Singaporeans,
which have resulted in monstrous losses in the past year or so.
Another important point to note is the question raised by Workers' Party
chairman, Ms Sylvia Lim, in Parliament in March. She had asked why the
hiring practice of the Civil Service, which restricts access to state
secrets to Singaporeans, was not applied to Temasek Holdings. (Parliament)
In her reply, Minister Lim said, "Temasek is not part of the Civil Service
or the public sector. It is a commercial company that is wholly-owned by
Government." Turning to Mr Goodyear's appointment, Minister Lim said, "As
Temasek CEO, Mr Goodyear would be privy to information about the company's
operations." Her only defence regarding the question of keeping state
secrets to Singaporeans was that Mr Goodyear is bound by the Official
Secrets Act (OSA). But as the WP chairman said, what good is the OSA given
the fact that Mr Goodyear may leave and never return to Singapore? "Does the
OSA really help us?" asked Ms Lim.
Minister Mentor Lee Kuan Yew has always rejected calls for Singapore's two
sovereign wealth funds - Temasek and the Government of Singapore Investment
Corporation (GIC) - to reveal its investments. Indeed, in a letter to the
Wall Street Journal on 27 June 2007, the press secretary to the Prime
Minister said "it is not in Singapore's interest to publish the details or
reveal their size." (Wall Street journal)
Mr Goodyear, now no longer taking up the CEO position, has such confidential
information about Temasek's investment strategy, as Minister Lim Hwee Hua
admitted in her parliamentary reply.
How will the government ensure that this is not used to compromise Temasek's
investment strategy, besides relying on the OSA, which may be useless
'We hired the best," MM Lee said in June, referring to Mr Goodyear. (Source)
While Mr Goodyear's credentials may indeed be impeccable, perhaps the more
important question lies with the selection process itself. Clearly, despite
having been intensely interviewed by the president, the cabinet, the BOA of
Temasek and Ms Ho Ching herself, the exit of Mr Goodyear has shown that the
selection process has flaws.
And the flaw seem to be a fundamental one - the selection process failed to
determine Mr Goodyear's stand on "strategic issues" which Temasek now says
is the reason why he will no longer be chief.
As blogger Lucky Tan put it:
"Gee, nobody bothered to ask him about what his strategies were and his
views on key issues when he was interviewed for the job? Is that how we hire
people to manage billions of tax payers' money?"