I have not expected to defend a recent comment that the Changi Airport Group (CAG) is a wholly-owned subsidiary of Temasek Holdings. I must have stated the same fact at least half a dozen times previously on different occasions that I no longer include a reference for it.
I thank fellow netizens Bravo and faber who highlighted the possibility that Temasek Holdings may not own CAG and clarified some issues in the process. I conceded the possibility.
The corollary question deserves some clarity. Did Temasek Holdings receive a freeairport? Independent of the CAG ownership, Temasek Holdings is not exonerated from creative accounting due to other instances of state assets injection at under-valuation prices.
I am determined to retrace the chronology of events.
Raymond Lim, then Minister for Transport, Statement on 7 October 2008 at Changi Airport.
7. The new airport company will be a wholly-owned subsidiary of Temasek Holdings. You must be wondering who will be leading the two new entities. The new civil aviation authority will be piloted by Mr Lee Hsien Yang as Chairman and BG(NS) Yap Ong Heng as Director-General. At the flight controls of the new airport company will be Mr Liew Mun Leong as Chairman and Mr Lee Seow Hiang as CEO. All appointments willcome into effect on 1 Jul 09 when the new entities are given legal form.
Lim Hwee Hua, then Second Minister for Transport, Singapore Parliamentary Debates, Official Report (13 April 2009), vol. 85, 6.40pm
The Bill empowers the Minister for Finance to negotiate, enter into and carry out on behalf of the Government the sale of the airport company. The company will be incorporated initially as a subsidiary of the Minister for Finance Incorporated. As soon as practicable after the transfer date, the shares in the airport company may be sold to Temasek Holdings for a consideration to be determined.
8 The Government will be entering into negotiations with Temasek on the sale of Changi Airport Group to Temasek.
Changi Airport Group Annual Report 2009/2010 (page 92, section 11)
The estimated consideration payable to CAAS for the transfer of airport undertaking and other assets is $3,277,987,000. The consideration will be funded via a capital injection by the immediate holding entity, the Minister for Finance (Incorporated).
There was an additional capital injection of $3.1 million by MOF Inc. to CAG in FY2011 and a return of $703K in FY2012. The total to-date stands at $3.280 billion.
Singapore airport operator interested in bidding for Mactan project, By Darwin G. Amojelar, InterAksyon.com March 1, 2013 2:15 PM
MANILA – The operator of Changi International Airport in Singapore is interested in bidding for the P17.5 billion Mactan Cebu International Airport (MCIA) New Passenger Terminal Project.
Changi Airports International Pte Ltd (CAI) has written the DOTC-Bids and Awards Committee (BAC), seeking clarification on whether it could participate in the bidding for the MCIA project.
In its letter, CAI wanted to know if there was a conflict of interest if it were to bid for the project, considering that the Singaporean airport operator’s owner, Temasek Holdings, also owns majority of Singapore Telecommunications Ltd, which in turn has a 47.3 percent interest in Globe Telecom.
CAI is a wholly-owned subsidiary of CAG. Instead of feeling vindicated, I am even more troubled by some recent discoveries.
As Bravo pointed out, Temasek Holdings made no mention of CAG in its annual reports between 2009 and 2012. Neither did CAG mention Temasek Holdings in its annual reports over the same period. The inaugural and the subsequent two CAG Annual Reports stated MOF Inc. as the sole shareholder.
Changi Airport Group Annual Report 2009/2010 (page 106, section 24)
24. Immediate and ultimate holding entity
The Company’s immediate and ultimate holding entity is the Minister for Finance (Incorporated), incorporated in Singapore.
In fact, besides the two public anouncements about the corporatisation of CAG in 2008 and 2009, there was no further official update about the sale to Temasek Holdings in the past 4 years. The curious and obscure reference to MOF Inc. as the immediate and ultimate holding entity has not been projected onto the mainstream media (MSM). How does one resolve the conflicting accounts?
There is a mechanism to assign CAG to Temasek Holdings as provided in Article 148I(1) of the Constitution. Article 148I(2)(c) allows for such a transfer, in the exceptional case, without the consent of the President.
Article 148I, Constitution – Transfer of Government’s past reserves
148I.—(1) Notwithstanding any provision in this Part, a proposed transfer or transfer (whether by or under any written law or otherwise) by the Government of any of its reserves to —
(a) a Government company specified in Part II of the Fifth Schedule(referred to in this clause and clause (2) as the transferee company); or
(b) a statutory board specified in Part I of the Fifth Schedule (referred to in this clause and clause (2) as the transferee board),shall not be taken into account in determining whether the reserves accumulated by the Government before its current term of office are likely to be or have been drawn on if —
(i) in the case of a proposed transfer or transfer of reserves by the Government to a transferee company — the board of directors of the transferee company by resolution resolves that those reserves of the Government shall be added to the reserves accumulated by the transferee company before the current term of office of the Government; or(ii) in the case of a proposed transfer or transfer of reserves by the Government to a transferee board — the transferee board by resolution resolves, or any written law provides, that those reserves of the Government shall be added to the reserves accumulated by the transferee board before the current term of office of the Government.
(2) Any reserves transferred by the Government together with or under any undertaking, resolution or written law referred to in clause (1) shall be deemed to form part of the reserves accumulated by the transferee company or (as the case may be) transferee board before the current term of office of the Government as follows:
(a) where the Supply Bill for any financial year provides for the proposed transfer of reserves and the Supply Bill is assented to by the President — at the beginning of that financial year;
(b) where a Supplementary Supply Bill provides for the proposed transfer and the Bill is assented to by the President — on the date of such assent by the President; or
(c) in any other case — on the date those reserves are so transferred.
I do not know if the mechanism has been used in this context. Why isn’t the transfer more transparent? Temasek Holdings may simply answer the question: is it or is it not the parent of CAG?
Steve Wu
* Steve Wu is a physicist; he enjoys logical and critical analysis. Occasionally, he takes on issues which affect a little red dot on a tiny pale blue planet in an otherwise nondescript corner of an average galaxy in a vast universe.