Temasek's 'disappointing' $377 million loss in FTX caused reputational damage, says Lawrence Wong

Temasek Holdings writing off their investment in crypto exchange FTX is not just a financial loss, Deputy Prime Minister Lawrence Wong told Parliament on Wednesday (Nov 30).

It had also caused reputational damage, leading the state investor to initiate an internal review by an independent team to "study and improve" its processes and draw lessons for the future.

Wong, who is also Finance Minister, was responding to questions posed by several Members of Parliament (MP) about the impact of FTX's collapse.

FTX had filed for bankruptcy earlier this month, with its chief executive Sam Bankman-Fried facing allegations of misusing customer funds.

In a media statement on Nov 17, Temasek Holdings said it would write down its entire investment of US$275 million (S$377 million) in the crypto exchange.

The cost of its investment in FTX was also 0.09 per cent of its net portfolio value of S$403 billion as of March 31, according to Temasek.

Wong on losses: Part of investment and risk-taking

Describing the loss as "disappointing", Wong said: "It was even more so because [it] arose from what turned out to be a very badly managed company and from possible fraud and mishandling of customer funds."

When it comes to investment entities such as Temasek, Wong shared that the Government sets out its risk tolerance limits and ensures that the risks are not excessive.

Wong said: "The occurrence of investment losses does not in itself imply that the governance system is not working. Rather, this is the nature of investment and risk-taking.

"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."

An investigation needed?

The Workers' Party chief Pritam Singh asked if there's a threshold before the Auditor-General's Office steps in to audit an investigation into Temasek and its processes.

In a reply to Singh, Wong clarified that the Government would not rule out calling external auditors to conduct investigations into investment losses, but added that would mean it was not just a matter of an investment loss.

Wong said: "It would be something that we feel has gone wrong within the organisation, possibly, there might be negligence, there might be fraud, there might be misconduct." 

"So it has to be of that significant threshold for us to say, look, something is not right within the organisation. Let us commission or get the Auditor-General to go in and do a proper audit and investigation." 

MP Tan Wu Meng (PAP-Jurong), asked if the loss will cause Temasek to "shy away" from investing in new technology and early-stage companies.

In response to the supplementary question, Wong said that while there are start-ups "will not do well", several of them might prove to be "wildly successful" - something that the investment entities have recognised and will continue to "take such risks".

"That's why it's important to insulate our investment entities from these political pressures and let them do their jobs well commercially and professionally as they've been doing all these years."

ALSO READ: 'Not open to crypto speculation at all': FTX meltdown puts focus on Singapore’s digital asset stance

chingshijie@asiaone.com

No part of this article can be reproduced without permission from AsiaOne.