Wednesday, September 28, 2011

When Will They Ever Learn

According to this Bloomberg report, Government of Singapore Investment Corp (GIC) faces a potential loss of 6.7 billion Swiss franc (US$7.4 billion) by virtue of being the biggest investor in UBS, making it one of the most unprofitable banking investment since 2007.  In 2Q 2009, the Bank of America "divestment" by Temasek Holdings lost US$1 billion in just one deal (188.8 million BOA shares valued at US$13.7 each sold at an average US$8.67 per share). When  these guys make a boo boo, they make sure it generates more publicity than the F1 night race.

UBS chief executive Oswald Gruebel was earlier reported to be under pressure to step down after a rogue trader trashed US$2.3 billion (S$3 billion), less than half of what GIC stands to lose. When Gruebel finally quit on Saturday, 10 days after the trading scandal was exposed, he stressed it was a personal decision and that he was personally accountable for the loss. “I am convinced that it is in the best interests of UBS to approach the future with a new leader at the top.”

Nobody at GIC seems to feel personally accountable for their losses. As a matter of fact, the former chairman has just been rewarded with a $4 payola.

When Nick Leeson broke the Barings Bank, the international community was aghast that it happened under the supposedly strict supervision of the Monetary Authority of Singapore. Like the former derivatives broker whose fraudulent, unauthorized speculative trading caused the collapse of the United Kingdom's oldest investment bank, Kweku Adoboli also engaged in unauthorised trades in his role as part of UBS's so-called Delta One trading team, which deals in Exchange Traded Funds. Both Leeson and Adoboli placed big bets on future movements in stock-market indices. Leeson used one of Barings' error accounts to cover up bad trades, Adoboli hid the size of his bets by the manufacture of fictitious offsetting investments. The similarities are uncanny.

The Financial Services Authority, the equivalent of our MAS, is investigating why UBS failed to identify the unauthorised transactions that the bank says will generate the humongous US$2.3 billion loss. GIC, which has a 6.41 per cent stake in UBS, had repeatedly expressed its support for outgoing chief executive Oswald Gruebel, according to a Reuters report. The worrying aspect of this sorry saga is that while Leeson left only a black-eye on MAS, the UBS debacle is hurting us where it counts - our hard earned sovereign funds.  And the guy in charge of protecting our reserves won't be telling us much about other potential disasters because he claims to be bound by the Official Secrets Act. "GIC believed he had good plans," said one source, a remark that is hardly assuring, since Thaksin was also considered be a good bet by the same people playing with the nation's savings.


  1. The reported losses are just tip of the ice berg. Wait till you see the unreported ones. GIC and Temasek Holdings are raiding our hard earned reserves. Say bye bye to our CPF.

  2. Between now and some 28 years down the road, both Temasek and GIC could have many opportunities for making big money. Remember the Most Talented Man In Sin said the Investments are for the LONG TERM.
    Better believe him as he is some sort of ADVISER to Citibank leh.

    As for CPF, it is there, at least on paper and claims made by the Authority. It is CPF Members who have difficulties; with changing conditions in withdrawing their own monies from it that's worrying.

    Sin President Tony Tan will have his chance(s) to show Singaporeans that any loss in investment could be recouped in FUTURE. UNLESS GIC or TEMASEK is no more in existence for whatever reason. BUT, it will be most unfortunate IF THE DECISION MAKER(S) DIES WHILST LOSS(IN INVESTMENT) IS SUBSTANTIAL. HE/SHE WILL LEAVE A NAME OF INFAMY FOR ETERNITY.

    Well, life is a gamble and for some it is fun to gamble big with schemes that reward and protect them. So, why not?


  3. Conscience, where are you ? I wonder if THEY have them ? No ?! Blatant lying everyday on our MSM.


  4. Is that the best our Prime Minister can offer to Singaporeans : his wife & his father ?

    The uppermost question now is why are these 2 financial idiots still in charge of these funds in spite of the funds losing our money like nobody's business ?

  5. Because any transparency and revelation may cause a political tsunami, the kind that sees peasants storm the Bastille.

  6. There ain't going to be any Tsunami in Singapore.

    Singaporeans are the luckiest people on Earth.

    What's 7/8 billions ?

    Peanuts !