Chris K:
The MAS is banker to the SG Government. The SG Government Treasury manages all cashflows for the Government through its accounts with the MAS. In the pool of funds in MAS are monies the SG Government generated thru the issuance of SGS and Special SGS, land sales, tax revenues and expenditures.
The net of the last 2 items are nearly always positive, therefore budget surplus. From this pool of funds in the MAS account, funds are allocated to GIC to manage and as capital injections to Temasek. In the historic past, funds were used to capitalized the GLCs which are then transferred to Temasek.
So the long and short of it all, is – Temasek has got CPF monies. No ifs, not buts, no eeeerrrrr….
btw, in those 4 charts describing the flow of funds from CPF to the GLCs, Uncle Leong and Roy omitted a crucial piece. The arrow pointing from the CPF emblem to “CPF Invested in etc” box is very misleading because it shows as if the CPF funds went directly into the GLC. This is not the case. There should be a box that say “SG Government Treasury” and then from there an arrow pointing to “CPF Invested in etc”.
Call me pedantic, nit-picking or anything, but that missing box makes all the difference as to whether those CPF monies going in are debt investment or equity investment. The govt will argue it is debt and in those days would have been a loan, as Special SGS were not “invented” at the time.
If it is debt, there will be no argument of getting just an interest rates not the capital appreciation of the GLCs. Then the absolutely crucial point is whether those loans are properly constituted as loans or were they a “fictitious” instrument.
If they are “fictitious”, then we have a case against the govt for taking a piece of the GLCs. It will on this that the battle will be won or lost on the issue of getting a share of the “very good returns” generated by Temasek. Uncle Leong and Roy should make this clear, otherwise they open themselves to attack.
Just my advise.
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Trust et al:
@Chris K, you are right to point out that the nature of the funds flowing in from the CPF board to a particular GLC is crucial. You say it is crucial to ascertain “whether those CPF monies going in are debt investment or equity investment” – the inference being that a mere debt is recoverable by way of repayment of principal together with some interest but an equity investment would give the the CPFB, as the citizens’ funds’ trustee beneficial ownership in a significant proportion of the shareholding of the government in those GLCs.
But it seems to me that a conceptually more elegant result can be reached another way. This is by treating a proportion of the cash injections of CPF funds to the government treasury (wherein as you explained all funds including CPF funds would be commingled) as being impressed with a trust in favour of the beneficiaries of the CPF funds.
These trust monies were used first of all to create income generating assets for the government and then subsequently spun off through “self-dealing” or non-arms length “sale/transfer” to the GLCs Roy and Uncle Leong discussed in the article.
The extent to which these assets were subsequently “monetized”, i.e, their profits or income generating potential unpacked or unlocked, is the extent to which the government must render an account to the CPFB on behalf of all its beneficiaries. This is the argument I would make. Actually Uncle Leong’s and Roy’s diagrams do not alter the fundamental position. The flows of funds from CPFB shown in their diagram are the flows of trust monies (in my view) regardless or not of whether there are “instruments” like SSGS or even seemingly proper “loan agreements” between any government agency and CPFB.
Such a “loan agreement” would be tantamount to compelling the trustee to surrender the trust assets for a paltry interest payment when the “borrower” had overwhelming coercive power over the trustee and far more profitable uses for the funds in prospect, relative to which a minuscule interest payment would be derisory.
Trust law cuts through the formalities to get at the realities behind the formalities of purported transactions, and the power relations between the trustee and other parties as well as the respective identities of the parties dealing with the trustee (in this case the government and the CPFB which is a mere agency of the government). The overriding concern of trust law is always to ensure that the beneficiaries’ ownership of the monies is REAL not some reassuring mantra devoid any real teeth or bite! I hope this clarifies.