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Singapore

'Misperception' that government 'blessed' Income-Allianz deal before reversing decision: Shanmugam

The Law and Home Affairs Minister also said his role and influence in the government's decision to block the deal has been "overestimated".

'Misperception' that government 'blessed' Income-Allianz deal before reversing decision: Shanmugam

German insurer Allianz announced in July it was planning to buy a majority stake in Singapore's Income Insurance. (File photos: NTUC, Reuters/Gonzalo Fuentes)

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SINGAPORE: The government had no prior knowledge of a proposed deal between Income Insurance and German insurer Allianz, said Minister for Law K Shanmugam on Wednesday (Nov 6).

Mr Shanmugam, who is also Minister for Home Affairs, said this in response to what he termed "misperceptions" that the government had at first "blessed" the deal, but reversed its decision following public feedback. 

His comments on Facebook were also made in reply to former NTUC Income CEO Tan Suee Chieh, who a day earlier had credited the minister as having a "pivotal role" in the government’s blocking of the transaction, which would have seen Allianz acquiring a majority stake in Income. 

Mr Tan "has perhaps overestimated my role and influence", Mr Shanmugam wrote. 

The minister went on to say that the Ministry of Culture, Community and Youth (MCCY) and most of the government did not know about the deal, until it was publicly announced in mid-July.

He added that since NTUC Enterprise (NE) - the parent company of NTUC Income - is a private company and that Allianz is a listed company, deals of such commercial sensitivities cannot be disclosed to third parties, except to regulatory bodies, as doing so would be illegal.

“In this case, both NE and Allianz respected and followed the law,” he said.

The deal, announced on Jul 17, triggered a public outcry, with concerns over how Allianz, a large multinational company, would not be fully aligned with the original mission of NTUC Income, which is to serve the needs of low-income workers. 

Lawmakers discussed the deal in parliament in August, before Culture, Community and Youth Minister Edwin Tong announced in October’s sitting that the government was stopping the deal.

“At the time (in August), it was made clear, that the deal was still under consideration and subject to regulatory approval. That was repeated at the subsequent October sitting - that the deal has not been approved,” said Mr Shanmugam.

“There was no 'reversal' of any decision - no decision had been made in the first place,” he said.

Mr Shanmugam added that while relevant agencies had initially taken a positive view, it was before full facts were made known to them.

“When the facts were clear and had been shared, as part of the decision-making process, the decision was that the deal cannot go through,” he said.

“So, the assumption and comments that the government as a whole must have known and blessed the deal, before reversing its decision - these are all conjectures, based on a misunderstanding of what the law is and how a proper system functions, with confidentiality; and ignores the facts that have been set out in Parliament.”

CONFIDENTIAL TERMS

Mr Shanmugam on Wednesday also took issue with another misperception - that there was a perceived lack of "coordination" within the government over the deal.

He said that the terms of the deal were disclosed to the Monetary Authority of Singapore (MAS), as it was subject to the regulatory body’s approval.

“MAS cannot go around disclosing the terms willy-nilly to other parts of the government. The terms are confidential and market sensitive.”

Regulatory bodies like MAS are required to maintain the strictest confidentiality, though there can be situations where the information needs to be disclosed to other agencies.

“And that is what happened in this case... Up to the August parliament sitting, the MAS team reviewing the deal was not aware of MCCY’s considerations in giving Income the exemption under section 88 of the Co-operative Societies Act. The details of the exemption were not made public,” said Mr Shanmugam.

The exemption would have allowed it to carry over approximately S$2 billion in surplus to the new corporate entity, rather than the Cooperative Societies Liquidation Account, which would benefit the co-op sector here.

Over the course of assessing the deal, the MAS team realised that this capital reduction plan might be relevant to MCCY and informed the MAS board, which in turn shared the details with MCCY.

“Once MCCY came to know about the details of the deal, (this was after the August parliamentary sitting), it conveyed its views,” said Mr Shanmugam.

The minister dismissed the position that MAS should have broadcasted the details to all government agencies, calling it "extreme and untenable".

“It would result in breaches of MAS’s duty of confidentiality, undermine trust in government, and damage Singapore’s reputation, as an international commercial hub,” he said.

“In this case, the deal has been stopped, with full regard for the law and due process. The deal was made public in July. In August, the government gave its interim views in Parliament - and continued to study the matter thereafter. MAS and MCCY worked together closely.

“With the full facts, the government moved decisively to amend the Insurance Act, on an urgent basis, to stop the deal.”

“OVERESTIMATED” ROLE AND INFLUENCE

Mr Tan, the former NTUC Income CEO who had opposed the deal, said he had approached Mr Shanmugam after his attempts to reach MAS and NTUC failed to produce a response.

“Throughout our exchanges, Mr Shanmugam took my feedback seriously, and I sensed he played a pivotal role in the internal deliberations that ultimately led to halting the deal," said Mr Tan in a Facebook post on Tuesday.

“On 14 October, just an hour before parliament convened, he reached out to me again, providing detailed explanations on why legislative changes were needed to prevent the Allianz-Income sale. Until then, few believed the deal would be halted.”

Mr Tan had also previously credited public outcry over the deal as a factor which influenced the government’s decision to block it. In an Oct 21 Facebook post, he hailed the decision as “a new chapter in the government’s approach to encouraging a plurality of views”.

But Mr Shanmugam on Wednesday played down his role. 

“(Suee Chieh) has said some kind things about me. He has perhaps overestimated my role and influence,” said Mr Shanmugam.

“The deal, and (Suee Chieh's) views on the deal, do not fall within my purview. I was a conduit, sending his views on, to the relevant ministers.

“The ultimate decision, to amend the Insurance Act, was decided by (the Prime Minister) himself, together with the Cabinet.”

Source: CNA/ec(mp)

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