Singapore's Sordid Accounts

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Former Australian Securities Exchange (ASX) chairman Maurice Newman argued this week that Australia’s decision to block the Singapore takeover of the ASX was based on "emotional and xenophobic-type issues". But there is much more to the story than that.

In the mid 1990s, I lived in the city state and caught glimpses of Singapore Incorporated at work — and while it always looked odourless, colourless and rather benign, hidden away behind the Bougainvillea one really had to hold one’s nose. There are good reasons why the Gillard Government would not want to hand the keys of the city to the Singapore.

In 1996, I did a story for SBS’s Dateline program on Singapore’s plan to go regional and foster trade and business with the neighbours. Singapore put a lot of effort into Burma. Singapore Government arms manufacturer, Chartered Industries, sold the Burmese junta weapons from its city state factory; small arms and ammunition no doubt used against the troublesome Karen, Shan or the democracy activists brave enough to rise up in recent years.

Singapore invested in hotels, airlines and all sorts of infrastructure in the lead up to "Visit Myanmar Year". In 1995, Singapore had even helped the generals in their public relations plan to "free", Aung San Suu Kyi who had been under house arrest since her thumping election win, as head of the National League for Democracy, in 1990. Singapore advised a "Clayton’s release" — the freedom you’re having when you’re not really free. As spin, it took some of the pressure off the Burmese junta, diluted calls for international sanctions and allowed everybody to get down to the business of business.

I was particularly interested in one investment vehicle, the Myanmar Fund. While it was quintessentially Singapore Inc it had a curious lineage. It was registered in Jersey, listed on the Dublin Exchange and its largest shareholder, at least initially, was the Government of Singapore Investment Corporation (GIC), with a 17.2 per cent share. The Myanmar Fund’s documents at the time confirmed that, "Eddie Taw Cheng Kong will represent the GIC … as core shareholder on the Investment Committee (of the Myanmar Fund). The Committee will determine whether investment proposals are viable and whether they should be approved for investment by the Fund".

So the Myanmar Fund then invested in multiple joint ventures with companies owned and run by Lo Hsing Han and his family. Mr Lo was none other than the largest drug trafficker in Burma, which at that time produced the bulk of the world’s heroin. Not only that, Singapore allowed the Lo family to set up business in Singapore through Lo Hsing Han’s son, Steven Law, even though he was banned from getting a US visa on suspicion of involvement in the drugs trade. Steven Law’s wife, Cecelia Ng, is Singaporean and they both had companies registered in the city state.

In 2008, the US Treasury Department’s Office of Foreign Assets Control blacklisted multiple conglomerates owned by Steven Law and 10 Singapore-based companies controlled by his wife for being part of a drug empire and having links Burma’s junta leaders. The move, in response to the bloody crackdown on 2008’s pro-democracy uprising by students and monks, bans US citizens from doing business with the family and freezes any assets they may have in America.

Not only was the Lo family close to Singapore, it was almost fused to the Burmese generals. A document I obtained from the Thai Office of Narcotics Control Board in the mid-90s demonstrated that in black and white. General Khin Nyunt, then the second most powerful man in Burma, gave privileges to Lo Hsing Han to transport drugs through Burma’s Shan state to the Thai border, "without interception".

In those years too, Singapore welcomed the Burmese military leader Than Shwe on official visits to the city state.

If one considered that the GIC was a little out of control in its investment decisions, think again. Father of the nation and former prime minister, Lee Kwan Yew, was Chairman of the GIC Board, his son Lee Hsien Loong — then deputy PM and now Prime Minister — was on the board along with then finance minister, Dr Richard Hu, and the then deputy PM, Dr Tony Tan. As I reported at the time, it was Singapore Inc incarnate. (Lee Kwan Yew remains Chairman and his son Lee Hsien Loong and Dr Tony Tan continue as Deputy Chairmen.)

Interestingly enough, the GIC at the time was not required to publish annual returns nor report to parliament. While it’s not as secretive as it once was, I would like to know if any Lo family companies are listed on the SGX. The family still has business there with SH Ng Trading Pte Ltd and Golden Aaron Pte Ltd registered in Singapore, despite being blacklisted by the US. Both companies were mentioned in a 2010 Maldivian Government investigation into the diversion of crude oil and diesel from the Maldives to Myanmar involving Vice Senior General Maung Aye, second in charge of the Burmese junta.

What I didn’t find out until after my original report went to air was that the same cabal, those behind the Myanmar Fund, were about to list a joint venture on the Singapore Exchange (SGX) itself. The unwelcome publicity meant the IPO had to be scrapped, with the prospectus pulped. As you can guess, I wasn’t popular and I was left in no doubt that I wasn’t welcome back in the foreseeable future. In 1997, the Myanmar Fund was wound up but Singapore continues to host the Lo Family’s burgeoning empire.

So in that context it was right for the Gillard Government not to allow Singapore’s takeover of the ASX. The SGX isn’t owned by the GIC but its sister sovereign wealth fund, Temasek, has a 23.5 per cent stake through SEL Holdings.

Temasek proudly proclaimed its lack of influence over SGX in a "letter to the Australian media" on 23 March this year. While that release was to mollify those concerned about Singapore Inc’s potential control over the ASX, it also served to highlight Temasek’s notorious opacity, "While we are an exempt private company that is not required to publish our financials, we have been publishing our annual review of our performance and various key portfolio and financial highlights".

So it’s up to Temasek to choose what it tells investors. Who knows what else it has stakes in? This question could probably be answered in the home of Prime Minister Lee Hsien Loong, whose wife Ho Ching is the CEO and Executive Director of Temasek.

The SGX is a crucial part of Singapore Incorporated, the directors are all from the same stable and Singapore Inc has allowed drug barons to set up there. The ASX and the SGX both have regulatory roles and that governance was bound to have been compromised by the weight of Singapore Incorporated.

So let the investors who want to buy a few shares in a drug dealer’s company do so in Rangoon or perhaps Singapore — not in Sydney.

 

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