The Mysterious Circumstances of How GIC was Formed

The Monetary Authority of Singapore (MAS) was suddenly reorganised in 1981.

“This began with an external review instituted by Deputy Prime Minister Goh Keng Swee after he became chairman in 1980. The review team, made up largely of officials who had worked for Goh in the Ministry of Defence, produced a critical report accusing the MAS of inefficiency and poor management of the country’s reserves,” Natasha Hamilton-Hart wrote in her book, Asian States, Asian Bankers: Central Banking in Southeast Asia.

“Foreign press commentary at the time saw these changes as unfair, and no evidence of anything other than cautious management was advanced.”

MAS reorganised

In the same year, Lee Kuan Yew in his book, From Third World to First: The Singapore Story, 1965-2000, Volume 2, said, “As our financial reserves grew with increased Central Provident Fund (CPF) savings (Singapore’s pension scheme) and yearly public sector surpluses, the MAS was not investing these funds long-term for best returns.

“I asked Keng Swee to review this. He formed the Government of Singapore Investment Corporation (GIC) in May 1981 with me as chairman, himself as deputy chairman, and Sui Sen and several ministers as board members,” Lee Kuan Yew said.

Goh Keng Swee formed GIC 1

Rothschild was brought in as a consultant to advise on GIC.

“A foreign merchant bank, Rothschild in London, advised on the establishment of the GIC,” Hamilton-Hart wrote.

Rothschild advised GIC

“Through Keng Swee’s links with David Rothschild, we appointed N.M. Rothschild & Sons Ltd as consultants,” Lee Kuan Yew also said.

Goh Keng Swee brought in Rothschild

Interestingly, Goh Keng Swee “produced a critical report accusing the MAS of inefficiency and poor management” but “An undisclosed number of those who left in the MAS in 1981 went to work in the new GIC.”

MAS staff work for GIC

In 1980, Goh Keng Swee became the MAS chairman.

In 1981, Lee Kuan Yew said that he felt that “the MAS was not investing these funds long-term for best returns”. These funds include Singaporeans’ CPF savings.

He asked Goh Keng Swee to “review this”.

Goh Keng Swee formed a review team but this team was “made up largely of officials who had worked for (him) in the Ministry of Defence”

They “produced a critical report accusing the MAS of inefficiency and poor management of the country’s reserves”.

However, “Foreign press commentary at the time saw these changes as unfair.”

Goh Keng Swee then “formed the Government of Singapore Investment Corporation (GIC) in May 1981.”

Lee Kuan Yew was made the chairman, Goh Keng Swee the deputy chairman, and Sui Sen and several ministers were made board members.

N.M. Rothschild & Sons Ltd were also appointed as consultants, through Keng Swee’s links with David Rothschild.

Today, Singaporeans’ CPF savings earn the lowest returns in the world and Singaporeans have one of the least adequate pension funds in the world.

However, the GIC has become the 8th richest sovereign wealth fund in the world, on the back of Singaporeans’ CPF.

Today, the government, namely the prime minister, two deputy prime ministers, several ministers and ex-ministers, still sits on the GIC’s board of directors.

GIC Board of Directors cropped

However, the government still claims that it “plays no role in decisions on individual investments that are made by GIC, MAS and Temasek“.

Government plays no role in GIC

The GIC also still claims that “The Government, which is represented by the Ministry of Finance in its dealings with GIC, neither directs nor interferes in the company’s investment decisions.

Government does not inteferes in GIC

The GIC also says that “It receives funds from the government for long-term management, without regard to the sources.

GIC has no regard to sources of funds

Can the GIC claim not to have any regard to the sources of funds it receives if the government also sits on the GIC’s board of directors?

Can the GIC claim not to know if it is using Singaporeans’ CPF to invest?

Lee Kuan Yew had said: “As our financial reserves grew with increased Central Provident Fund (CPF) savings (Singapore’s pension scheme) and yearly public sector surpluses, the MAS was not investing these funds long-term for best returns.”

He also said that the GIC was formed to manage the CPF savings for better returns.

Can the government/GIC suddenly forget this?

Not only that, today, Singaporeans’ CPF savings are also seeing the worst returns in the world.

What went wrong?

Advertisements

12 comments

  1. Henry Seck

    Dear Mr Roy Ngerng

    First and foremost let me thank you for your many emails with articles which I find interesting and informative.

    Though I have not the slightest idea how GIC works but I guess GIC is an entity that the government forms for the purposes of its own investments. So GIC I suppose will also take a large chunk of the GIC profits to enable it to pay its Board of Directors and other staff members. Sad to say, it seems that the returns on our CPF monies is not based on the gross returns of GIC investments but perhaps only a minute portion of the gross GIC returns were used to pay CPF MEMBERS as their returns are minimal as could be seen all these years. This is just my views only . It is just an opinion .

    Date: Sun, 14 Jun 2015 10:53:13 +0000To: henryseck@hotmail.com

    • Alan

      You are a fucking ass licker and a freeloader who wanted just to ope your mouth to be feed!

      This is just my views only. It is just an opinion .

  2. Desmond

    Singapore is truly a Fascist State run by Corporations in constellation with Lee and the International Banking Cartel. Roy must dig deeper into the rabbit hole while dumbing down his writings a little more for the benefit of the hapless sheep, in which the majority of Singaporeans unfortunately are..

    Look, Roy is not 100% CORRECT, but shouldn’t you give his views a go/ run for your buck as well?

    In the Long Run, I hope Roy won’t be bought off by the Govt. as he continues to grow in popularity.

  3. Immoral politicians must seek redemption

    Politicians today are getting away with higher levels of disgraceful behavior. … it was a shock when a high-level political official did something immoral or … The problem with allowing our leaders and media has been complicit in this moral decay, by providing only scant coverage and avoiding any “judging” action. these politicians and the media is taking the country in a dangerous direction that will make it easier for corrupt politicians to run the country.

    dear fellow citizens, PAP’s’ Immoral behavior becoming acceptable ?

  4. Singapore Citizen Mr. Teo En Ming (Zhang Enming)

    Subtle Denial of Medical Treatment by the Singapore Government for Mr. Teo En Ming (Zhang Enming)

    Mr. Teo En Ming (Zhang Enming)
    Singapore Citizen
    Targeted Individual
    5 July 2015 Sunday Singapore Time

  5. Pingback: Lee Kuan Yew on CPF | Singapore Politics: Blog
  6. Pingback: Burmese Generals, Drug Lords, and the Singapore Government | Singapore Politics: Blog
  7. Pingback: How the PAP Tried to Hide What They are Doing With Your CPF | The Heart Truths
  8. Pingback: Fake return figures of CPF fund manager GIC confirmed, CPF members will perpetually earn low returns | likedatosocanmeh

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s