Temasek’s FTX write-off will not affect contribution to Singapore’s reserves: Lawrence Wong

   2022-11-30 03:11

SINGAPORE – Temasek’s US$275 million (S$377 million) investment loss in bankrupt cryptocurrency exchange FTX will not affect the stream of income from the reserves available for the Government’s Budget, or the Net Investment Returns Contribution (NIRC).

This is because the NIRC is tied to the overall expected long-term returns of Singapore’s investment entities and not to individual investments, said Deputy Prime Minister Lawrence Wong, who was replying to questions in Parliament on Wednesday.



He also said spillovers from the collapse of FTX to Singapore’s broader financial system and economy “will be very limited”.

“It is disappointing when there is a loss, as in the case of Temasek’s investment in FTX. Even more so because the loss arose from what turned out to be a very badly managed company and from possible fraud and mishandling of customer funds,” said Mr Wong, who is also Finance Minister.

“The fact that other leading global institutional investors like BlackRock and Sequoia Capital also invested in FTX does not mitigate this.”

The nature of investing is having to take risks, and no amount of due diligence and monitoring can completely eliminate such risks, he noted, adding that losses do not imply that the governance system is not working.

“What is important is that our investment entities take lessons from each failure and success, and continue to take well-judged risks in order to achieve good overall returns in the long term.

“In this way, we can continue to add to our national reserves, and provide a stable income stream to fund government programmes for a long time to come,” Mr Wong said.

After writing off the FTX investment, Temasek’s early-stage portfolio as at March has generated an internal rate of return in the mid-teens over the last decade, which is better than industry averages, he said.

Still, what happened with FTX has not only caused a financial loss to Singapore’s investment company, but also reputational damage, Mr Wong said.

He added that Temasek has started an internal review by an independent team that is “separate from the investment team” and will report findings to the board.

When asked about this by Leader of the Opposition Pritam Singh (Aljunied GRC), DPM Wong said the internal review is a step up from the usual review procedure, and it will study and improve Temasek’s processes, as well as to draw lessons for the future.

The Government will not rule out getting an external auditor to look into the matter, but it will be for “something that we feel has gone wrong within the organisation, possibly, there might be negligence, there might be fraud, there might be misconduct”, said Mr Wong.

Temasek and sovereign wealth fund GIC have some investments in the digital asset space, but Mr Wong said they do not have direct exposure to cryptocurrencies.


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