GIC incurred losses on investments

Related: GIC credit limit breaches totalled $7m

FINANCE Minister Richard Hu told Parliament December 2, 1996) that the Government of Singapore Investment Corporation (GIC) has incurred losses from its investments made through Rockefeller & Company (Far East) Limited.

The GIC was seeking to recover those losses which were attributable to possible wrongdoing by the managing director of the company, he added.

Last month, it was reported that a GIC manager was charged with eight counts of corruption involving at least $2.4 million.

Taw Cheng Kong, 44, a regional manager in GIC's Asia-Pacific division, allegedly accepted bribes from Mr Kevin Lee Kwok-wing, the managing director of Rockefeller & Co (Far East) Ltd, to buy a total of 86.9 million shares of various companies for the GIC between 1991 and August this year.

To queries from opposition MP Low Thia Khiang yesterday, Dr Hu said discussions with the parties involved were under way, and it was premature to disclose the extent of the losses. He said that as soon as his ministry had the information, it would be made public, if Mr Low wanted.

Among other things, Mr Low also asked how the company had been selected by the GIC to be its fund manager, and whether the GIC tracked the portfolio investments of its fund managers.

Dr Hu explained that the basic criteria was that the company must have a good track record, was well established, particularly in its performance, and had a good reputation.

Rockefeller was an established company, he said, adding that it was a specific manager which caused the trouble, not the company itself.

In fact, it was the company itself which had reported the wrongdoing, he added.

The minister said that the GIC tracked the performance of all the fund managers it employed "principally based on the returns of the investments".

He added: "I would like to point out that when the fund of any sizeable amount is managed by fund managers, normally, the performance depends on market conditions and the ability to earn returns based on their investment portfolios.

"Now, if the company is doing reasonably well, to be able to identify the malpractices on the part of the trader is extremely difficult."

He said it was impossible for anyone to detect every single case of a dealer's transaction which might go wrong, considering the large size of the investments which the GIC was managing.

The risks involved in GIC investments were "very small", he said, adding: "Don't forget, the GIC has been in operation for many years and this is the first significant case we have come across. So the risk is relatively low."

Published in the Straits Times. Dec 3, 1996