The FTX debacle

Parliamentarians finally had a chance to ask questions on the FTX debacle on 30 November, the final day of the last Parliamentary sitting for 2022. I noticed that the questions in relation to the FTX saga were placed towards the end of the Order Paper on 28 November. For an issue that is of great concern to many Singaporeans, I was concerned that MPs would have to settle for a written answer instead of being able to question the Government orally – hence my raising a “point of order” at the start of the Parliamentary sitting on 28 November. (Refer to video below)

Many Singaporeans will be disappointed that the 45 minutes of Question Time for FTX was insufficient to address issues that they would like answered. Question Time is meant for asking questions, and not a forum for debate. Parliamentarians are also “restricted” to asking two supplementary questions, and usually do not get a chance to ask further follow-up questions. If we wanted a full debate, the issue must be raised in another motion, possibly after Temasek has completed and released its internal review.

The admission by DPM Lawrence Wong that Temasek had suffered reputational damage in addition to financial damage from having to write down 𝐔𝐒$𝟐𝟕𝟓 𝐦𝐢𝐥𝐥𝐢𝐨𝐧, barely a year after investment raised many questions about the investment process. We hope that the report on Temasek’s internal review will tell us how Temasek intends to avoid such future lapses to allay the concerns of Singaporeans.

To have a meaningful public discourse on the issue, I would like to share that the investment team for FTX at Temasek might have erred on two major areas in evaluating venture investments – “key man risk” and “balance sheet risk”.

Temasek admitted to wrong judgement in the key man risk, in its statement released on 17 November, “It is apparent from this investment that perhaps our belief in the actions, judgement and leadership of Sam Bankman-Fried, formed from our interactions with him and views expressed in our discussions with others, would appear to have been misplaced.”

In that same statement, Temasek was less explicit in admitting to the oversight of the balance sheet risk. However, if “the thesis for our (Temasek’s) investment in FTX was to invest in a leading digital asset exchange providing us with protocol agnostic and market neutral exposure to crypto markets with a fee income model and no trading or balance sheet risk”, it may have committed a professional lapse in evaluating potential balance sheet risks by missing out on the relationship between FTX and Alameda Research.

Having said that, making correct investment decisions is a fine art and mistakes happen often. We should not be overly hard on our sovereign fund managers. Instead, we should challenge them to learn from their mistakes and do an even better job for us in the future.

Nevertheless, Chairman Lim Boon Heng and CEO Dilhan Pillay Sandrasegara of Temasek should note that Singaporeans are increasingly asking for more transparency and accountability in the management of our trillion-dollar reserves, of which Temasek’s portfolio is a part of. Singaporeans’ awareness of the reserves has heightened in recent months, following the discourse on the reserves and the accounting of land sales.

We hope that Temasek will continue to be transparent in this matter and publicly release its internal review report once it is completed, especially the recommendations and specific lessons learnt from this failed investment.

Singaporeans deserve better.

For Country For People.

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