Singapore Govt’s continued refusal to disclose remuneration of top executives at Statutory Boards and SWFs

   2022-11-24 08:11

Mdm Ho Ching, former Temasek Holdings’ CEO, Dilhan Pillay Sandrasegara, current TH CEO, Lim Chow Kiat, GIC CEO



The Singapore Government continues to resist calls to disclose the remuneration of Chief Executive Officers and directors of Statutory Boards and Sovereign Wealth Funds (SWFs). 

In September this year, Singapore Exchange Regulation (SGX RegCo) stated that it intends to introduce changes relating to board renewal and remuneration matters, with the aim of raising corporate governance standards of companies listed on the Singapore Exchange (SGX).

At the same time, the Corporate Governance Advisory Committee (CGAC) recommends that SGX consider making the remuneration disclosures of each individual director and the CEO mandatory under the Listing Rules. It noted that such disclosures are required under the law or the listing rules in other jurisdictions such as the United Kingdom, Australia, Hong Kong and Malaysia.

CGAC in its statement, said, “Shareholders are increasingly demanding more transparency and accountability regarding remuneration.”

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Based on these recommendations, Mr Louis Chua, Member of Parliament for Seng Kang GRC filed a parliamentary question on 3 October this year, asking if the Prime Minister would, in consideration of what was said by SGX RegCo and CGAC, mandate remuneration disclosures for Statutory Boards and Government companies such as entities listed in the Fifth Schedule of the Constitution.

Mr Chan Chun Sing, Minister of Education who was replying on behalf of Mr Lee Hsien Loong, wrote that the recommendation by SGX RegCo and CGAC was made as members of the public who are shareholders in these companies will have an interest in knowing the remuneration of the CEO and Board Director to assess if the pay is commensurate with business performance.

He noted that Statutory Boards are set up by the Government and are governed by the Public Sector (Governance) Act.

“The remuneration of Statutory Board CEO and officers are subject to the oversight of the supervising Ministry as well as the Public Service Division. Board Directors who serve on Statutory Boards receive an annual allowance commensurate with the size and complexity of the organisation. The allowance quanta are centrally determined by the Public Service Division.” wrote Mr Chan.

As for the Fifth Schedule entities which are not statutory boards, namely, GIC and Temasek, Mr Chan noted that the Government, as shareholder, holds their boards accountable for instilling good corporate governance practices, including remuneration.

He said that GIC and Temasek currently disclose information on their compensation approaches in their annual reports.

“Both GIC and Temasek adopt remuneration frameworks that are based on performance and industry benchmarks to ensure that they can attract and retain talent.” wrote Mr Chan and added that these frameworks tie a portion of remuneration to long-term performance, including for senior management, which reinforces prudent risk taking.

Mr Chan’s statement about the frameworks is highly debatable, especially in light of the Temasek’s write-down of its US$275 million investment into cryptocurrency exchange FTX.

Would the executives have their remuneration affected in any way due to their questionable “due diligence” exercised in this particular investment?

Let us also not forget the developing story of GIC’s investment in Digital Currency Group (DCG).

PAP government refuses to acknowledge if they know the pay of top executives of SWFs

We know from the response from Mr Chan that the salaries of the top executives of the Statutory Boards are known to the individual ministries and their ministers. But what about GIC and Temasek?

In May 2019, Mr Png Eng Huat, former MP for Hougang SMC asked for the range of total annual remuneration, including salary, annual and performance bonuses, paid to the top three higher paid executives in GIC and Temasek respectively.

In response, Deputy Prime Minister and Finance Minister, Lawrence Wong who was then the second Minister of Finance said, “GIC and Temasek are commercially-run companies. The remunerations of their staff are therefore decided independently by their respective boards. The Government maintains an arms-length relationship with the companies and does not interfere in their operational decisions such as remuneration. Instead, we hold the boards accountable for their respective performances.”

One might think that Mr Wong is saying that the Government does not know the salaries since it keeps an arms-length relationship with the companies.

But Mr Png in his supplementary question goes on to ask, “Usually, the shareholders would know the remuneration packages for the company that they own. Does the Government or anyone in the Finance Ministry know the remuneration packages for the top brass in terms of the value of GIC and Temasek?”

Instead of a clear no, Mr Wong went on to babble about the system that the Singapore government has in place.

In particular, Mr Wong said, “MOF reviews that assessment of the investment environment. The expected long-term returns for both GIC and Temasek that figure is proposed to the President and the President makes an independent assessment of that long-term expected return, together with the Council of Presidential Advisers.”

Now, it can be said to be pointless for Mr Wong to bring in the President and her council as a form of assurance that checks and balances are in place when the same Government tells Parliament that it has the power to decide on matters as the President has to listen to the cabinet’s advice — even without her inputs.

Former Finance Minister issues POFMA correction directions on Temasek CEO’s salary

In April 2020, Mr Heng Swee Keat, then-Minister of Finance instructed the POFMA Office to issue four correction directions under the Protection from Online Falsehoods and Manipulation Act (POFMA) relating to posts made about the salary of Temasek Holding’s CEO Ho Ching, who is also the wife of Prime Minister Lee Hsien Loong.

TOC was one of the recipients of the correction directions.

The correction order noted that is the opinion of the Finance Minister that it is in the public interest to issue these directions.

The POFMA website noted, “The Authors made various claims that the annual salary of Temasek CEO Ms Ho Ching is ‘NT$ 2.1 billion’, ‘about 100 million SGD’ or ‘S$99 million a year’.”

It asserted that these claims are “false” or False Statement of Fact (FSOF), referring to a statement published on the Temasek Holdings website as well.

The SWF denied claims that its CEO Ho Ching earns an annual salary of S$99 million.

Though it rarely ever addressed the matter of remuneration of its top management, this time Temasek addressed the claims of Ho Ching’s salary directly, merely saying that the claim is “false”. Temasek also noted that Ho Ching’s annual compensation is not the highest within the firm nor is she among the top five highest-paid executives.

TOC contested the correction direction via an appeal to the High Court.

As a result of the appeal, Mr Heng had to file an affidavit to the court.

Mr Heng in his affidavit wrote, “it was necessary and expedient for the FSOF to be corrected in order to prevent a diminution of public confidence in the performance of the Government of Singapore’s function in relation to the management of the national services of Singapore”

But nowhere in his affidavit, did Mr Heng state that he has knowledge of how much Mdm Ho earns.

TOC later applied to the court to have Mr Heng cross-examined as a witness and was going to have the application heard on 10 July 2020.

It had argued that the Government implicitly said in Parliament that it has no knowledge of the executives’ remuneration in May 2019. And Mr Heng has no basis to issue a POFMA correction direction on something he does not know as a fact.

However, as the polling day for the General Election in 2020 was held on the same day, the hearing was postponed after the election.

Following the decision of the Court of Appeal (COA) on the appeals filed by the Singapore Democratic Party and TOC, TOC decided against proceeding with the appeal.

This is because the ruling by the COA imposes a requirement upon TOC to produce some form of evidence to suggest Ho Ching’s salary is S$100 million before the burden of proof is passed upon the government.

Given that the figure of S$100 million was provided by a Taiwanese news company in its programme — which was not POFAMed by Mr Heng, by the way, TOC cannot use the third-party account as a basis for evidence.

As a result, Mr Heng was therefore spared a round of cross-examination at the witness stand for his correction direction.

Blank cheque

Of course, the People’s Action Party (PAP) government would say that since they were given the mandate by the Singapore population in the General Election, they could act as the checks and balances to audit the SWFs.

However, PAP should reconsider whether that mandate should be taken as a blank cheque or a blanket endorsement for all its decisions and actions.

The salaries of the top executives at the Statutory Boards and SWFs especially that of Mdm Ho, are definitely of great interest to the general public, especially since the entities operate using tax-payers monies and/or with the use of Past Reserves and GIC invests monies from the Central Provident Funds.

Even putting aside public interest, as what SGX RegCo and CGAC pointed out, it is just good governance that the remuneration of companies’ top executives is revealed.

In CGAC’s statement, it wrote, “The CGAC is of the view that companies need to make both qualitative and quantitative disclosures. Shareholders require insight into how Companies determine director and executive remuneration to understand the link between compensation and performance and to assess the appropriateness of remuneration practices.”

In the context of what CGAC wrote, shouldn’t citizens who are stakeholders of the country and its assets be considered shareholders? And in that connection, shouldn’t they be given insight as to whether the executives are appropriately compensated based on the performance of the companies?

At this point, the recent news about FTX and DCG comes to mind.

It is somewhat of a joke when we know how much a CEO of a foreign SWF, namely Norway hedge fund CEO, Nicolai Tangen earns in exact dollars — US$672,400 a year — but the remuneration of our own SWFs’ executives remains a secret which the PAP politicians fiercely guard.

One would wonder if the secret is something that the country needs or that would be so politically damaging to the PAP which is why its politicians are absolutely tight-lipped about the figures.

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