Temasek expects portfolio firms to be on the straight and narrow: Indranee
TODAY file photo
SINGAPORE — State investment firm Temasek Holdings “does not condone improper conduct and malfeasance”, and expects its portfolio companies to abide by sound corporate governance and robust codes of conduct and ethics.
These firms are also expected to comply with all laws and regulations of jurisdictions in which they have investments or operations, said Senior Minister of State for Law and Finance Indranee Rajah on Tuesday (Mar 6).
Ms Indranee was responding to queries from Workers’ Party (WP) Members of Parliament (MPs) Sylvia Lim and Leon Perera on the role played by Temasek and the Republic’s sovereign wealth fund GIC in relation to the companies which they invest in.
Last December, Keppel Offshore & Marine (KOM) — a subsidiary of Keppel Corp, which Temasek holds stakes in — said in a press statement that it has agreed to pay US$422 million (S$570 million) in fines as part of global resolution with authorities in Singapore, Brazil and the United States. The US Justice Department said that from 2001 to 2014, KOM had engaged in a scheme to pay US$55 million in bribes to win contracts.
The incident was given an airing in Parliament in January, with several MPs from both the WP and the ruling People’s Action Party raising questions about the scandal.
The topic was raised again on Tuesday, with Ms Indranee reiterated that as a shareholder, the Government expects from Temasek the highest standards of integrity and governance, and not “anything illegal” .
She noted that the Ministry of Finance does not get involved with Temasek’s commercial decisions but its expectation is that Temasek “must uphold the highest standard of integrity, the highest standards of governance (and) do not get involved in anything illegal”. She added: “(Temasek) are a professional team and we expect them to live up to that… and they in turn expect that from their investee companies.”
On its part, Temasek “plays the role of an advocate for good corporate practices”, she said.
Ms Indranee noted that under company law, shareholders have the power to appoint and remove boards, and have a “statutory right” to the audited financial statements of the company.
However, they do not interfere with the business decisions or operations, and these are the responsibilities of companies’ boards and management. These include ensuring that the companies abide by the applicable laws and regulations of the jurisdictions in which they invest or operate in, as well as having in place the appropriate corporate governance and stakeholder engagement practices.
Nevertheless, as shareholders, Temasek and GIC “hold the boards of their investee companies responsible for conducting their affairs properly and delivering sustainable returns over the long term”, Ms Indranee said. Although Temasek and GIC do not get involved with the day-to-day management, they engage the companies in their portfolios.
For example, GIC’s investment teams engage the management teams of the portfolio companies to encourage policies and business practices that support sustainable long-term financial performance.
As for Temasek, it is fostering an ethos of integrity, good governance and sustainability among its portfolio firms.
Ms Indranee noted that last week at an annual Chinese New Year lunch, Temasek chairman Lim Boon Heng had reiterated “his expectation of governance” to the chairmen of the major companies in its portfolio companies.
Ms Indranee quoted Mr Lim as saying: “In markets where practices are questionable and compromising integrity is required to win business or contracts, we have to be very clear – there is a bright red line our companies should not cross…. We are also entrusted with the responsibility of being the owners and guardians of the company’s reputation, and we must always live up to that trust.”
Ms Lim asked if the Government has information on whether Temasek questions the goings-on in its portfolio companies. In response, Ms Indranee said she does not have the information but she “would certainly expect” Temasek, as a shareholder, to raise questions if it sees anything in the accounts that look suspicious. “Does the Ministry of Finance expect Temasek when they see something suspicious in the audited accounts to raise it at shareholder’s meetings? The answer is yes,” she said.
Ms Indranee had said at the January parliamentary sitting that the Government was “extremely disappointed” with the conduct of Keppel Corp, and stressed that it does not condone improper conduct overseas by Singapore companies. Adding that the Government has zero tolerance for corruption, she also warned firms not to “import” corrupt practices into Singapore.
