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TEMASEK HOLDINGS AND ITS GOVERNANCE OF HBSP No.: NTU078


GOVERNMENT-LINKED COMPANIES Ref No.: ABCC-2016-001
Date: 16 February 2016
Shirley Koh and Boon-Siong Neo

In 1974, Temasek Holdings (“Temasek”) was formed to own and manage the Singapore
government’s shares in business assets on a commercial basis. Temasek’s mandate was to
maximize the value of these assets and investments in the long term. Temasek had a sole
shareholder – the Singapore government through the Minister for Finance (Incorporated),
which was the recipient of its declared dividends, as well as corporate taxes.
Since inception, Temasek had taken on various roles – passive custodian, proactive steward,
engaged shareholder, private equity investor, and active investor, all with the ultimate goal
of creating value in its portfolio to ultimately benefit Singapore as the country went through
structural changes. Between 1974 and 2015, Temasek’s portfolio value had grown from
S$354 million to S$266 billion; while its investments had proliferated from 35 formerly
Singapore government-owned companies to a global portfolio that comprised scores of
companies across diverse geographies and industries. Temasek’s portfolio companies were
guided and managed by their respective boards and management. Temasek’s philosophy was
to promote sound corporate governance in its portfolio companies, but to do so through
active shareholder engagement, not management intervention. One way it did so was in
helping its portfolio companies to form high-quality boards with a majority of independent
directors.
In July 2015, the Singapore Parliament approved adding Temasek as a contributor to the Net
Investment Returns (NIR) framework. This would permit the Singapore government to include
in its annual budget, a maximum of 50% of long-term expected real returns generated from
Temasek’s net assets. One important question that arose from this development was: what
would Temasek’s inclusion into the NIR framework mean for the company and its future?

Research Fellow Shirley Koh and Professor Boon-Siong Neo wrote this case from public sources. This case is
intended for class discussion and learning, and not intended as source research material or as illustration of
effective or ineffective management.
COPYRIGHT © 2016 Nanyang Technological University, Singapore. All rights reserved. No part of this
publication may be copied, stored, transmitted, altered, reproduced or distributed in any form or medium
whatsoever without the written consent of Nanyang Technological University.
The Asian Business Case Centre, Nanyang Business School, Nanyang Technological University, Nanyang
Avenue, Singapore 639798. Phone: +65-6790-4864/6552, E-mail: asiacasecentre@ntu.edu.sg

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HISTORICAL DEVELOPMENT OF SINGAPORE’S ECONOMIC GOVERNANCE

In 1965, Singapore became independent and given its lack of natural resources, economic development
was of utmost priority for the young nation. As the private sector was underdeveloped, the Singapore
government had to assume the role of state entrepreneur in order to “develop economically viable
businesses, retain and create jobs, and contribute to Singapore’s economic survival, progress and
prosperity.” 1 Hence, government-linked companies (GLCs) and government agencies were set up to
provide the infrastructure and services that would support the nation’s primary goals of economic growth
and employment.

In the 1970s, Dr Goh Keng Swee, then Deputy Prime Minister and architect behind Singapore’s economic
development, stressed that “the government as policy-maker should distance itself from its role as
shareholder in these companies [GLCs]”.2 Thus, Temasek was established in 1974 to hold investments in
companies previously held directly by the Minister for Finance (Incorporated), which became its sole
shareholder. With Temasek owning these GLCs, the government could focus on its core economic roles
of policy-making and market regulation.

In Singapore’s public administration, government ministries are supported by statutory boards that are
“public institutions created through legislation” and given “relatively more freedom to employ the
necessary human expertise and use financial resources to implement projects and programmes than their
parent ministries.”3 For example, the Ministry of Transport oversees the “development and regulation of
civil aviation and air transport, maritime transport and ports, and land transport”. 4 One of its statutory
boards, the Civil Aviation Authority of Singapore (CAAS) is tasked with regulatory functions in civil
aviation safety and security, air services, airports and aerospace industries; as well as licensing in the
provision of air services, the operation of airports and the provision of airport services and facilities in
Singapore. Singapore’s Changi Airport is managed by Changi Airport Group (Singapore) Pte Ltd, which
undertakes functions in airport operations and management, air hub development, commercial activities
and airport emergency services. Changi Airport Group is a wholly-owned private company of the Ministry
of Finance (GLC), while the national airline Singapore Airlines is a GLC majority-owned by Temasek
Holdings. So, in Singapore’s air transport arena, the ministry takes on the role of policy-maker, the
statutory board is the regulator and licence-granting agency, one GLC takes on airport operations and
management, and a Temasek portfolio company provides air transport to civilians, albeit in competition
with more than 80 other airlines serving Singapore.

TEMASEK’S BACKGROUND AND BOARD

“As with any private enterprise, if you do a major move, you will speak to your major
shareholders – it happens in the private sector. Obviously, we don't keep secrets from the
Government on major moves we want to make, we keep them informed. But basically at the end
of the day, the board and management of Temasek are responsible for the performance of
Temasek.”5

S. Dhanabalan, Chairman of Temasek, 2013

Temasek is an exempt private company and is not legally required to publicly disclose its financial results.
As a commercial investment company, Temasek is under the purview of the Singapore Companies Act
1
Temasek Holdings. (2002). Background and context of Temasek Charter 2002.
2
The architect of Singapore's prosperity. (2010, May 15). Straits Times Singapore.
3
Neo, B. S., & Chen, G. (2007). Dynamic governance: Embedding culture, capabilities and change in Singapore.
Singapore: World Scientific Publishing, p. 411.
4
Ministry of Transportation website http://www.mot.gov.sg/
5
Transcript: Remarks by Chairman of Temasek, Mr S Dhanabalan, to Singapore media, 23 July 2013.
Retrieved November 16, 2015 from http://www.temasek.com.sg/mediacentre/newsreleases?detailid=19992

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and other laws and regulations, with its business and policies guided by a board of directors, majority of
whom are non-executive independent business leaders from the private sector.

The Temasek board is responsible for decision-making on matters pertaining to overall long-term
strategic objectives, annual budget, annual audited statutory accounts, major investment and divestment
proposals, major funding proposals, CEO appointment and succession planning, and changes to the
board. In addition, the board and CEO have the constitutional responsibility of protecting Temasek’s past
reserves6, and approval from the President of Singapore has to be obtained before Temasek could draw
on its reserves.

Between 1974 and 1986, Temasek’s board chairman was J. Y. Pillay, who was then Permanent
Secretary (Revenue Division) for Ministry of Finance. During this period, Pillay also held a number of
concurrent appointments including Chairman of Development Bank of Singapore Ltd 7 (1979-1985),
Chairman of Singapore Airlines Ltd (1972-1996), and Managing Director of Monetary Authority of
Singapore and Government of Singapore Investment Corporation 8 (1985-1989). In fact, Pillay is best
remembered as the aviation veteran who built Singapore Airlines (SIA) into a world-class airline.

In January 1987, Pillay was succeeded as Chairman of Temasek by Lee Ek Tieng, who was then
Permanent Secretary (Revenue Division) for Ministry of Finance (1986-1989). During the years when Lee
was Chairman of Temasek (1987-1996), he was also the Permanent Secretary (Special Duties) in the
Prime Minister’s Office (1994-1999), Managing Director of Monetary Authority of Singapore (1989-1997)
and Managing Director of Government of Singapore Investment Corporation (1989-2007).

In 1996, S. Dhanabalan was appointed as Chairman of Temasek. Unlike his two predecessors who were
high-ranking civil servants at Ministry of Finance at the time of their appointments, Dhanabalan was a
retired politician and former Cabinet Minister. From 1981 to 2005, he was also a Director of Government
of Singapore Investment Corporation. During his 17-year tenure at Temasek, Dhanabalan also held
concurrent appointments as Chairman of SIA (1996-1998) and Chairman of DBS Group Holdings (1999-
2005). As Chairman of Temasek, he was credited for the company undertaking a “proactive shareholder
role in driving the governance of its companies” 9 and the Temasek portfolio expanding from S$70 billion
to S$215 billion over a 16-year period. 10 Dhanabalan appointed Ho Ching as Temasek’s Executive
Director in 2002 and Chief Executive Officer (CEO) in 2004. Ho, the spouse of Lee Hsien Loong,
Singapore’s Prime Minister since 2004, is the former CEO of Singapore Technologies, a Temasek
portfolio company prior to joining the Temasek board.

In 2013, following Dhanabalan’s retirement from Temasek days before his 76 th birthday, 65-year-old Lim
Boon Heng became the fourth Chairman. Lim is a retired politician, former Cabinet Minister
(Dhanabalan’s ex-colleague) and ex-union leader. While Lim did not have a background in banking and
finance, he had amassed business experience from his time as a senior executive of Neptune Orient Line,
and from overseeing cooperatives that were under the umbrella of Singapore’s National Trades Union
Congress.

“Because of the early years of history, the first 15 years or so of being very closely connected
with the Government, the key decisions were made in close consultation with the Government,

6
Temasek’s past reserves are defined as its total assets minus liabilities (reserves) accumulated during previous
terms of Government.
7
Development Bank of Singapore and Singapore Airlines were two of the 35 companies in Temasek’s portfolio in
1974. The former later became part of DBS Group Holdings Ltd.
8
Government of Singapore Investment Corporation was renamed GIC Private Limited. It was formed in 1981 to
manage Singapore’s foreign reserves.
9
Keynote speech by S. Dhanabalan, Chairman, at the Asian Business Dialogue on Corporate Governance 2002.
31 October 2002. Retrieved November 16, 2015 from
http://www.temasek.com.sg/mediacentre/speeches?detailid=8629
10
Statement on Temasek Holdings Chairman succession. (2013, July 22). Today (Singapore).

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including the appointment of the chairman, the appointment of directors, the appointment of the
CEO. In fact before Ho Ching, all the CEOs were civil servants.”11

S. Dhanabalan, Chairman of Temasek, 2013

“[Afternote to quote: the Temasek CEO before Ho Ching was another senior executive from the
Singapore Technologies group, not a civil servant; the General Managers or Presidents before that were
civil servants seconded to Temasek.]”12

TEMASEK CHARTER

In 2002, after Ho Ching was appointed Executive Director, one of her immediate tasks was to draw up the
Temasek Charter, in consultation with the Ministry of Finance. The Charter described Temasek’s mission,
role and responsibilities, as well as outlined its long-term investment approach given that portfolio
diversification was in the pipeline. As Temasek began to set its sights on Asia and beyond, the Charter
summed up “how Temasek would work with its portfolio companies to ensure financial discipline and
sound governance in building significant international or regional businesses.” 13

In July 2002, the first version of the Charter was released (see Exhibit 1A). The key points of the
Charter’s background and context (see Exhibit 1B) were as follows:

 Temasek would focus on developing internationally competitive companies.

 The government would continue to own and control companies for strategic reasons revolving around
national security, economic development and social policies. Temasek would uphold its stewardship
of these GLCs.

 The GLCs could partner other companies or shareholders in their overseas ventures. Temasek could
provide support to these GLCs “through the issuance of new shares, or mergers or acquisitions”.

 Temasek might make selective investments in “new businesses with regional or international potential
in order to nurture new industry clusters” that could involve “high risk, large investments or long
gestation periods”.

 Temasek would “continue to rationalise and consolidate its shareholdings” in order to enhance the
shareholder returns. Temasek would “continue to divest companies that no longer required
government control” or companies with little potential in regionalization or globalization.

In 2009, the Temasek Charter was updated and released in conjunction with Temasek’s 35 th anniversary
(see Exhibits 2A and 2B). The 2009 Charter highlighted Temasek’s commitment towards corporate
social responsibility and the wider community, but it contained no reference to Singapore or the
government. Two years earlier, Temasek had set up Temasek Trust, its philanthropic arm, to “oversee the
financial management and disbursement of Temasek’s philanthropic endowments and gifts.” 14 Since then,
Temasek began to place more emphasis on its community stewardship role, as demonstrated by its
Charter.

11
Transcript: Remarks by Chairman of Temasek, Mr S Dhanabalan, to Singapore media, 23 July 2013. Retrieved
November 16, 2015 from http://www.temasek.com.sg/mediacentre/newsreleases?detailid=19992
12
ibid.
13
Temasek Charter reiterates Temasek’s focus on long-term value: Temasek updates Charter on its 35th
anniversary. (2009, August 25). Temasek news release.
14
Temasek Holdings. (2015). Temasek Review 2015.

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Since 2012, the Charter had emphasized Temasek’s three key roles of “active investor and shareholder”,
“forward-looking institution” and “trusted steward” (see Exhibits 3 and 4). As a ‘work-in-progress’, the
Charter would be revised again in the future to keep up with the times.

PRIVATIZATION OF STATUTORY BOARDS

In 1985, Singapore was facing an economic recession and its government decided to embark on a
privatization strategy as a means of restructuring the economy. Three objectives for the privatization were
given: “to withdraw from commercial activities that no longer need to be undertaken by the public sector;
to add breadth and depth to the Singapore stock market by the floatation of GLCs and the statutory
boards and through the secondary distribution of government-owned shares; and to avoid or reduce
competition with the private sector.”15

In February 1986, the newly-formed Public Sector Divestment Committee headed by Michael Fam, then
chairman of Fraser and Neave, was appointed to identify GLCs that should be privatized. A year later, the
Public Sector Divestment Committee released a report that listed 41 GLCs that should be privatized over
the next decade. The Committee also recommended that further research on the privatization of four
statutory boards be carried out. These four statutory boards were Singapore Telecom, Public Utilities
Board, Port of Singapore Authority, and Civil Aviation Authority of Singapore. Out of the 41 GLCs, 27
were owned by Temasek while statutory boards and ministries owned the remaining. The types of
privatization put forth included public listing, complete divestment and reduced government shareholding.

In June 1989, Coopers and Lybrand, which had been commissioned to conduct a feasibility study on the
privatization of Singapore Telecom, submitted a report to the Ministry of Communications and Information.
The findings of the report recommended that Singapore Telecom, the statutory board housing the
telecommunications and postal departments, be privatized. Between 1986 and 1989, Singapore Telecom
had registered double-digit growth in its annual net revenue, which strengthened its candidacy as the first
statutory board to undergo privatization.

In 1992, the Telecommunication Authority of Singapore, a statutory board under the Ministry of
Communications was formed and became the new regulator of Singapore’s telecommunications and
postal industries. The old Singapore Telecom was corporatized 16 and became a wholly-owned subsidiary
of MinCom Holdings Private Limited (MinCom), a newly-formed holding company under Ministry of
Communications.

In the first half of 1993, ownership of Singapore Telecommunications Private Limited (“SingTel”) was
transferred from MinCom to Temasek. In October 1993, 11% of total shareholding of SingTel was publicly
listed on the Stock Exchange of Singapore while 89% was held by Temasek. 17 In later years, Temasek’s
stake in SingTel was progressively reduced through share placements.

On 1 October 1995, the corporatization of Public Utilities Board (PUB) spun off two new companies,
Singapore Power Pte Ltd and Tuas Power Pte Ltd, while PUB remained as the regulatory body for
electricity and gas provision, and the statutory board responsible for the nation’s water supply. Both
Singapore Power and Tuas Power were wholly-owned subsidiaries of Temasek. Singapore Power
became the holding company of five independent subsidiaries: two electricity (power) generation
companies, PowerGen (Senoko) Pte Ltd (“Senoko”) and PowerGen (Seraya) Pte Ltd (“Seraya”), one

15
It pays to keep GLC shares: Study. (1993, March 26). Straits Times Singapore.
16
When an organization is corporatised, it remains government-owned but it has the flexibility to implement private
sector practices such as offering more competitive remuneration and better career advancement to its employees.
17
SingTel share history. Retrieved November 16, 2015, from http://info.singtel.com/about-us/investor-
relations/singtel-share-history

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electricity transmission and distribution company, an electricity supply company and a gas company.
Tuas Power took charge of the construction and operations of the upcoming Tuas power plant.

Initially, Singapore Power was scheduled to be publicly listed in mid-1996; but the plan was later
indefinitely shelved. Instead, the government announced in 1999 that the three electricity (power)
generation companies (gencos), Tuas Power, Senoko and Seraya would be divested at an opportune
time. In 2001, ahead of the divestment, the ownership of Senoko and Seraya was transferred from
Singapore Power to Temasek, with Singapore Power retaining its power grid and power supply business.
In 2008, all three gencos were successfully divested by Temasek (details in a later section).

On 1 October 1997, two years after the corporatization of PUB, the Port of Singapore Authority (PSA)
became the third statutory board to be corporatized and was renamed PSA Corporation Limited. A year
earlier, a new statutory board, the Maritime and Port Authority of Singapore (MPA) had been formed to
take over the regulatory functions of the PSA. PSA Corporation continued to be the operator of container
terminals in Singapore. In 2002, Temasek announced that the shares of PSA Corporation would not be
publicly listed in the immediate future. In December 2003, PSA International Private Limited, a wholly-
owned subsidiary of Temasek, was incorporated as the main holding company for the PSA Group, to
reflect PSA’s internationalization focus. In 2015, PSA International was still wholly owned by Temasek.

On 1 July 2009, nearly 12 years after the corporatization of PSA, Singapore Changi Airport was
corporatized. The timing had been delayed by market uncertainties that arose from unforeseen events
such as the Asian financial crisis, 9/11 terrorist attacks and Severe Acute Respiratory Syndrome (SARS)
outbreak. Changi Airport Group (Singapore) Pte Ltd (CAG), which was incorporated on 16 June 2009,
became the new operator of Changi Airport and also took charge of the government’s investments in
overseas airports. The restructured Civil Aviation Authority of Singapore would continue with its regulatory
functions in air traffic services, air services negotiations, safety and customer service. The corporatization
would provide the new company with “more flexibility to innovate, to be responsive and to be nimble to
changing industry conditions and new competitive challenges”. 18 While it was announced as early as
2009 that CAG’s ownership would be transferred from Ministry of Finance to Temasek, this had yet to
take place at the time of writing. One given explanation was that the construction of Changi Airport’s
Terminal Four and Jewel (a new retail and entertainment extension), and the expansion of Terminal One
required huge financial outlays and hence, the transfer was postponed.

THE “CUSTODIAN” YEARS (1974-2002)

Since its inception in 1974, Temasek has been wholly owned by the Minister for Finance (Incorporated).
Temasek’s initial portfolio comprised 35 GLCs that had a combined valuation of S$354 million (see
Exhibit 5). These GLCs were in industries that were critical to Singapore’s economic growth – banking,
aviation, shipping, shipbuilding and defence technology.

“For many years Temasek continued in that mode [of owning the companies], making some
small investments, basically looking after the companies it had inherited.”19

S. Dhanabalan, Chairman of Temasek, 2013

In the 1980s, Temasek had started to reduce its stakes in GLCs that “could stand on their own and were
no longer of national or strategic importance”.20 Companies such as Ethylene Glycols, a manufacturer of

18
Corporatised airport still soaring high. (2015, July 1). Straits Times Singapore.
19
Transcript: Remarks by Chairman of Temasek, Mr S Dhanabalan, to Singapore media, 23 July 2013. Retrieved
November 16, 2015, from http://www.temasek.com.sg/mediacentre/newsreleases?detailid=19992
20
Temasek cannot divest stakes in GLCs overnight. (2000, May 4). Retrieved November 16, 2015, from
http://www.temasek.com.sg/mediacentre/medialetters?detailid=10656

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chemicals, Cerebos Singapore, a manufacturer of chicken essence, and Mitsubishi Singapore Heavy
Industries were fully divested. For Temasek, investment and divestment decisions were exercised based
on value tests and long-term returns. Like any investment holding company, Temasek acquired stakes in
companies that it expected to generate positive returns on investment, be they GLCs, private companies
operating in or outside Singapore, or start-ups. Temasek had exited from companies that were
underperforming or could not be turned around, such as Construction Technology (sold at a loss in 1996)
and Micropolis (liquidated in 1997).

Over a period of 28 years, Temasek had divested approximately 70 or so companies, either completely or
partially.21 Then, there were companies in Temasek’s portfolio that had increased exponentially in their
market capitalization. For example, DBS was valued at S$49 million in 1975; in 2002, Temasek’s
shareholding in DBS was valued at S$2.3 billion. Another example was SIA. In 1975, SIA was valued at
S$91 million; in 2002, Temasek’s shareholding in SIA was valued at S$8.2 billion. 22

In 1990, Temasek established an in-house fund management unit and began to invest in private equity
funds. In the 1990s, two former statutory boards, Singapore Telecom and PUB were corporatized and
transferred to Temasek.

For the financial year ended 31 March 2002, Temasek’s portfolio was S$77 billion compared with S$354
million in 1974. Its consolidated group revenue was S$42.6 billion and net profit was S$4.9 billion. Its
return on average assets was 5.1% while its return on average equity was 9.2%.

From 1974 to 2004, Temasek’s total shareholder’s return (TSR) by market value averaged 18% per
annum. However, over the 10-year period from 1994 to 2004, which was marked by the Asian financial
crisis, global economic downturn, 9/11 terrorist attacks and the SARS outbreak, Temasek’s TSR only
averaged 3% per annum.

“There were some attempts to invest, especially during the Asian financial crisis, but not in a
great concerted way. It was only from 2002 onwards that Temasek began to really seek to
invest outside Singapore. First of all we decided to focus on an emerging Asia because we
could see that rapid growth in Asia – China, India, Indonesia, Thailand, Vietnam and so on. And
then we began to look at other emerging markets like those in Latin America.”23

S. Dhanabalan, Chairman of Temasek, 2013

THE “ACTIVE INVESTOR” YEARS (2002-2015)

“We want [Temasek-linked] companies to focus on their core competencies. If they cannot grow,
they will be the lunch themselves”24

Ho Ching, Executive Director, 2002

For years, there had been grouses from local small and medium-sized companies about GLCs competing
with them in the small, overcrowded domestic market. GLCs were also diversifying into unrelated but
profitable local businesses such as property development and food retail. Thus, an imperative task for
Temasek was to steer its GLCs into developing core competencies or new technologies that enabled
them to expand into new overseas markets.

21
Temasek Holdings. (2004). Temasek Review 2004, p. 11.
22
It's S'pore Inc against the world. (2002, August 29). Business Times Singapore.
23
Transcript: Remarks by Chairman of Temasek, Mr S Dhanabalan, to Singapore media, 23 July 2013. Retrieved
November 16, 2015 from http://www.temasek.com.sg/mediacentre/newsreleases?detailid=19992
24
Temasek Charter. (2002, July 4). Business Times Singapore.

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Between 2002 and 2004, Temasek divested its shareholding in 36 companies including Natsteel, CPG
Corporation Pte Ltd, Changi International Airport Services Pte Ltd and Singapore Pools. In the same
period, Temasek invested S$3.3 billion in 35 companies including Hyflux, Cosco Corporation, Olam
International and YHI International in Singapore; US-based Quintiles; banks in Indonesia, India and Korea;
and Matrix Laboratories, Tata Consultancy Services and ICICI OneSource in India. Temasek’s long-term
investment goal was to reshape its “portfolio with one-third of [its] asset exposure in Singapore, one-third
in the developed economies (including US, Canada, Europe, Japan and Australia), and the remaining
one-third in the rest of Asia”. 25 Tasked with managing Temasek’s capital resources, a wholly-owned
subsidiary, Fullerton Fund Management Company was set up.

In 2004, Temasek began to publicly disclose its financial results in its annual Temasek Review so as to
provide more transparency in its investment activities. It also received a corporate credit rating of
AAA/Aaa by Standard & Poor’s and Moody’s, respectively. In 2005, Temasek issued its first bond, which
was denominated in US dollars and targeted at investors worldwide.

In 2006, a Temasek-led consortium acquired a 49.6% controlling stake in Thailand's Shin Corp from the
family of then Thai Prime Minister Thaksin Shinawatra. The acquisition created a backlash in Thailand.
For starters, the sale had given the Shinawatra family a 73-billion-baht (S$3.03 billion) “tax-free windfall”26.
Then, the amendment of Thailand’s Telecommunication Operation Act, which raised the cap of foreign
ownership in Thai telecoms companies from 25% to 49%, had become effective on the same day as the
Shin Corp sale. Finally, one Thai senator had criticized the sale as “tantamount to selling off radio
frequencies that were the national assets to foreigners”.27

In November 2007, Temasek was mired in another controversy. Temasek was fined by Indonesia’s
Business Competition Supervisory Commission (KPPU) for violating anti-monopoly law because of its
cross-ownership in Indonesia’s two largest telecommunications companies, PT Telekomunikasi Selular
(Telkomsel) and PT Indosat. Temasek then had a 56-percent shareholding in SingTel, which in turn, had
a 35-percent stake in Telkomsel. ST Telemedia, a wholly-owned subsidiary of Temasek, owned 39.96
percent of Indosat. Temasek had a deemed 20-percent stake in Telkomsel and a deemed 31-percent
stake in Indosat.28 Temasek, which denied violating the law, filed appeals against KPPU’s ruling but was
rejected by the Indonesian courts. In June 2008, ST Telemedia sold its stake in Indosat to Qatar Telecom.

In 2008, Temasek was adversely impacted by the global economic crisis. Its portfolio market value shrank
from S$185 billion to S$130 billion as one-third of its portfolio was invested in the financial services sector.
A year later, Temasek’s portfolio market value recovered to S$186 billion following a recalibration of its
investment and divestment strategies.

In March 2015, Temasek's portfolio was valued at S$266 billion, up from S$103 billion a decade ago (see
Exhibit 6). The portfolio had 28% asset exposure in Singapore, 42% exposure in Asia (excluding
Singapore) and 30% exposure in the rest of the world. Temasek’s investments were diversified across
varied industry sectors (including financial services, telecommunications, technologies, transportation,
real estate, energy, and life sciences). Exhibits 7 and 8 show how Temasek’s portfolio had changed in its
industrial and geographical exposure at five-year marks from 2004 until 2014.

“Temasek is a long-term investor. As I had outlined five years ago, this means we will act to
enhance long-term value, and will not divest for divestment’s sake. We don’t intend to raid the
larder, nor sell the family jewels, for short-term gains. We will jealously guard our interests, and

25
Temasek Holdings. (2005). Temasek Review 2005, p. 10.
26
Thai premier calls new election but refuses to step down. (2006, February 25). New York Times.
27
PM: Shin sale my kids' idea; Says he'll avoid conflict of interest charges in 73-billion-baht, tax-free sell-off to
Singapore's Temasek. (2006, January 24). Bangkok Post.
28
Temasek’s anti-trust appeal nixed. (2008, September 12). Today (Singapore).

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will invest, rationalise, consolidate or divest where it makes sense, and where we can achieve
clear sustainable value.”29

Ho Ching, Executive Director and CEO, 2009

TEMASEK’S APPROACH TO CORPORATE GOVERNANCE

“A sound framework of governance founded on integrity, professional management and


commercial discipline has been and will continue to be the cornerstone for the growth and
success of Temasek and its portfolio companies.”

Background and Context of Temasek Charter 2009

The following figure highlights Temasek’s approach to governance and value creation.

Source: Temasek Review 2009

In Temasek’s view, a corporate governance framework would encompass “principles of appropriate


transparency, checks-and-balances, sensible reward systems and a professional and objective
management” in order to attain “a pragmatic balance between accountability, empowerment and
organizational agility”. 30 The philosophy of Temasek was that its portfolio companies’ decision-making
process had to demonstrate transparency and accountability, which were brought about by
institutionalizing good corporate governance practices, and not through its own participation in the
management of the entities.

In his speech about corporate governance, Dhanabalan, Chairman of Temasek (1996-2013) underscored
the “paramount emphasis” that Temasek placed on the “character, values and competence of the people
who lead the company at Board and management level” as “the most important requirements for the

29
Speech by Ho Ching, Executive Director & CEO, at the Institute of Policy Studies, Singapore, 29 July 2009.
Retrieved November 16, 2015, from http://www.temasek.com.sg/mediacentre/speeches?detailid=8600
30
Temasek Holdings. (2004). Temasek Review 2004, p. 34.

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success of a company”.31 Temasek believed that a high-quality board and management team were sine
qua non in supporting sound corporate governance; hence, a formal succession planning process for
their boards and management had to be in place.

“Where GLCs are not doing well, the management has to sort out the problems. If necessary,
the board may need to make management changes, or the shareholders including Temasek
may need to make board changes.”32

Deputy Prime Minister and Finance Minister Lee Hsien Loong, 2002

Over the years, Temasek had reiterated publicly that it was not involved in its portfolio companies’
commercial or operational decision-making, except where shareholder approval was required. The
portfolio companies had their individual management teams and boards of directors to run their business
on a commercial basis.

“We cannot forbid a listed company from doing certain activities, just because the government
happens to own shares in it. It is wrong both legally, and also from a policy point of view. GLCs,
especially listed GLCs, must operate commercially. That doesn't mean DBS should go into
manufacturing chips, or PSA should start an airline business. The decisions must make
business sense, and fit the companies' business strategy.”33

Deputy Prime Minister and Finance Minister Lee Hsien Loong, 2002

Temasek was known to hold stakes in rival companies operating in the same industries (e.g., Keppel
Corporation vs. SembCorp Industries; DBS Group Holdings Ltd. vs. Standard Chartered PLC). Hence, it
was keen to steer clear of any controversy of unfair competition. However, this never deterred Temasek
from creating opportunities for the sharing of non-sensitive and non-privileged knowledge and information
(e.g., risk management issues, internal audit issues, board directors’ remuneration) among its investee
companies.

As an institutional shareholder, Temasek sought to add value to its portfolio companies by undertaking a
“proactive stewardship role” in the following areas:

 nomination of capable and high-quality Board candidates;

 performance-based compensation schemes for employees including stock options;

 approval of material transactions such as mergers and acquisitions; and

 institutionalizing of corporate governance practices.34

Temasek’s management staff rarely appeared on the boards of its portfolio companies and when they did,
they were appointed in their own individual capacity. (In 2004, the former made up 7% of the directorships
on the boards of 34 major Temasek-linked companies. In 2005 and 2006, this figure stood at 4%. This
figure was absent in subsequent Temasek Review publications.) Instead, the company expended
considerable effort into developing a good network of “people who are successful, who have interests in

31
Keynote speech by S. Dhanabalan, Chairman, at the Asian Business Dialogue on Corporate Governance 2002.
31 October 2002. Retrieved November 16, 2015, from
http://www.temasek.com.sg/mediacentre/speeches?detailid=8629
32
It's S'pore Inc against the world. (2002, August 29). Business Times Singapore.
33
ibid.
34
Keynote speech by S. Dhanabalan, Chairman, at the Asian Business Dialogue on Corporate Governance 2002.
31 October 2002. Retrieved November 16, 2015, from
http://www.temasek.com.sg/mediacentre/speeches?detailid=8629

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this part of the world [Asia], who are friendly to Singapore, who can form the pool from which we can draw
directors for Temasek as well as for Temasek[-linked] companies”.35

Starting in 1999, two years after the Asian financial crisis, Temasek had advocated a number of changes
aimed at improving the governance of Temasek-linked companies (defined as companies where it held at
least a 20-percent stake). These changes were:

 separating the roles and responsibilities of Chairman and CEO;36

 limiting the tenure of the Chairman and Board of directors to two terms (or six years) or in exceptional
circumstances, a maximum of three terms (or nine years);

 limiting each Board director to hold a maximum of six principal directorship; and

 implementing new performance benchmarks such as economic value added (EVA).37

In later years, the company also advocated that “the Chairman and CEO roles be held by separate
persons, independent of each other, to ensure an appropriate balance of power and greater capacity of
the board for independent decision making”38 and that “boards be independent of management in order to
provide effective oversight and supervision of management”. 39 The company was also against “excessive
numbers of executive members on company boards”.40

As Temasek diversified its investments outside of Singapore, it was guided by the Temasek Charter. To
demystify its businesses and operations, Temasek began to release its annual report (Temasek Review)
to the public from 2004 onwards. The company’s rationale was that with the globalization of its
investments and growth in partnerships with international co-investors, demonstrating greater disclosure
and transparency in its financials, goals and activities would be beneficial.

HOW TEMASEK CREATED VALUE – EXAMPLE OF POWER GENERATION COMPANIES


(1999-2008)

Besides being an investor and a shareholder, Temasek had also contributed to Singapore’s economic
growth as an asset owner whereby it nurtured the growth of newly privatized GLCs before taking them
public or divesting them for profits. One notable example was the power generation companies (gencos).

In 1999, Temasek was mulling over the divestment of Tuas, which was formed in March 1995. The plan
was later shelved because market sentiment was weak and the government had decided to restructure
the power generation market. Temasek worked closely with the Singapore regulators and government
authorities “to ensure an orderly transition to a stable and competitive power generation market in
Singapore.”41 In 2001, Singapore Power’s two gencos, Seraya and Senoko were sold to Temasek for
S$2.818 billion42 and Temasek became the direct owner of all three gencos – Seraya, Senoko and Tuas.

35
Transcript: Remarks by Chairman of Temasek, Mr S Dhanabalan, to Singapore media, 23 July 2013. Retrieved
November 16, 2015, from http://www.temasek.com.sg/mediacentre/newsreleases?detailid=19992
36
In 1999, Keppel Corporation, PSA Corporation, and their subsidiaries were the only Temasek-linked companies
that had yet to separate the Chairman and CEO functions.
37
Temasek fine-tunes stewardship of its companies. (1999, June 25). Business Times Singapore.
38
Temasek Holdings. (2012). Temasek Review 2012, p. 46.
39
Temasek Holdings. (2013). Temasek Review 2013, p. 54.
40
Temasek Holdings. (2012). Temasek Review 2012, p. 46.
41
Temasek successfully completes divestment of Tuas Power; Power genco sold to China Huaneng Group for
S$4.235 billion. (2008, March 14). ENP Newswire.
42
Interview: Singapore SembCorp seeks 12% ROE in power company bid. (2002, February 20). Dow Jones Energy
Service.

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Singapore Power remained in the business of electricity distribution and supply, but not in the electricity
(power) generation business.

In April 2001, the Energy Market Authority (EMA), a statutory board under the Ministry of Trade and
Industry, was formed with the regulatory function of Singapore’s electricity and gas markets including
overseeing their liberalization. In January 2003, the National Electricity Market of Singapore (NEMS), a
competitive wholesale electricity market, became operational. The NEMS ran a trading platform for the
purchase and sale of electricity, which heated up competition among the gencos. In January 2004,
vesting contracts were introduced as a replacement of price caps for the three Temasek-owned gencos;
although new licensees were exempted from the vesting. A vesting contract requires a genco to sell a
given quantity of electricity at a given price, which in turn, helps to guard prices against fluctuations.

One key phase of the electricity market liberalization concerned the sale of the three Temasek gencos,
which were the dominant players in power generation.43 In 2002, Temasek had announced that 2004 was
the earliest that the gencos would be put up for sale because of challenging market conditions following
the Enron collapse. However, three months after vesting contracts had been introduced, electricity prices
decreased from S$92.64 per megawatt-hour to S$83.74 per megawatt-hour. The gencos were also hit by
challenges posed by market overcapacity and stagnant market demand (the three gencos produced a
total of more than 9,000 megawatts of electricity while peak demand was about 5,100 megawatts).

Before the year 2003 drew to an end, press announcements about the impending retirement of Shum
Siew Keong, Managing Director of Seraya, and Lau Khoon Choy, President and Chief Executive Officer
of Senoko, were made. Shum was succeeded by 48-year-old Neil McGregor who “had more than twenty
years of management experience in the international power, gas and deregulated electricity industry
environment”.44 Lau’s successor was Roy Adair who had “the requisite experience of operating in the
competitive electricity environment” in both the U.K. and Australia.45

In February 2004, Seraya retrenched 110 (25 percent) of its employees, who received the severance
package in accordance to the collective agreement between the Union of Power and Gas Employees
(UPAGE) and the company. Seraya also entrusted UPAGE with the disbursement of S$300,000 in
‘Economic Assistance Payments’ to the company’s retrenched union members, with each individual
collecting between S$2,600 and S$5,000.46 Six months later, a downsizing exercise also took place at
Senoko and led to the departure of 126 employees (28 percent of staff). The retrenched employees
received the severance package agreed between UPAGE and Senoko.47

In 2005, the media reported that Temasek had been conducting a review of the electricity market to
assess the interest of investors in its gencos.48 In early 2006, Temasek announced that it would divest its
three gencos after the government’s implementation of the gas code. While Senoko depended on
Malaysian and Indonesian piped gas as its main fuel, both Seraya and Tuas relied on Indonesia-imported
gas. Hence, having an open-access, integrated gas system where gas from different sources would be
mixed in one grid, would help improve supply security and level the playing field of gencos and gas
suppliers.

In mid-2007, Temasek confirmed that the sale of its three gencos was underway and was expected to be
completed by mid-2009. According to Wong Kim Yin, Temasek's managing director of investments, the
gencos had attracted much interest from potential investors since 2006; although he did not reveal the
identities of the interested parties.49 Wong also pointed out that “conditions are conducive for divestment”

43
More power to liberalisation. (2003, January 4). Business Times Singapore.
44
Our Page: A newsletter of the Union of Power and Gas Employees. January 2004, p. 5.
45
Our Page: A newsletter of the Union of Power and Gas Employees. January 2004, p. 6.
46
Our Page: A newsletter of the Union of Power and Gas Employees. June 2004, p. 8-9.
47
Our Page: A newsletter of the Union of Power and Gas Employees. November 2004, p. 8.
48
Temasek seen reviewing power market. (2005, January 13). Business Times Singapore.
49
Long-awaited genco sale finally takes off. (2007, June 20). Business Times Singapore.

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given the strong economic growth forecasts of Singapore and that “the regulatory framework governing
the competitive wholesale supply of gas and power is also complete.” 50 The gencos would be divested
one at a time, with no limit placed on foreign ownership. The Ministry of Trade and Industry had
rationalized that foreign ownership of gencos would not pose a problem to energy security as “foreign
owners will not be able to walk away with their power plants”.51

In October 2007, Tuas was the first Temasek genco to be put for sale as it had attracted “the strongest
investor interest”.52 Among the three gencos, Tuas was the smallest but the most profitable. Its revenue
and earnings before interest, tax, depreciation and amortization (EBITDA) for the year ended March 2007
was S$2.267 billion and S$331 million, respectively. Tuas also had the newest power plant in Singapore.
With an installed capacity of 2,670 megawatts, Tuas had a 26% share of the local electricity market. By
contrast, in 1999, Tuas was just a new genco starting out and running at a loss. If it had been sold then, it
was unlikely to have fetched more than S$2 billion, which was its market-estimated price tag in 2007.

Preparation for the Tuas divestment had taken Wong Kim Yin, Temasek's managing director of
investments and his team 18 months of hard work. The Tuas sale was important as it would set a price
benchmark for the subsequent sales of the two remaining gencos. The divestment process comprised
two stages and lasted around five months. In the first stage, information packs or Memoranda of
Information were given to potential investors who then submitted their indicative proposals to Temasek.
From these proposals, Temasek shortlisted a number of bidders for the second stage, which saw these
bidders making site visits, going through Tuas’ financials and management presentations, and conducting
their own due diligence. These bidders then submitted their binding offers and Temasek selected the
winning bid based on “integrity, transparency and price.”53

According to the media, six bidders were shortlisted for the second stage of the Tuas sale. On 14 March
2008, Temasek signed an agreement to sell 100 percent of Tuas to SinoSing Power Pte Ltd, a wholly-
owned subsidiary of China Huaneng Group for the cash consideration of S$4.235 billion. The sale was
completed on 24 March 2008.

According to Wong Kim Yin, “China Huaneng is an established player with a strong track record in the
power business. Its proposal through SinoSing was the most attractive. It emerged as the winner based
on clear considerations of price and acceptable commercial terms. We have no doubt that the future
growth and development of Tuas Power as an anchor power provider in Singapore will benefit from the
experience and resources that China Huaneng brings.” 54 China Huaneng was China’s largest power
generation company and had an installed generation capacity of over 71,000 megawatts. It also had a 50-
percent stake in OzGen, a genco in Australia. China Huaneng’s S$4.235-billion purchase was a
testament of the company’s confidence in Tuas’s growth potential.55

In July 2008, Senoko, the biggest among the three gencos, was put up for sale. With an installed capacity
of 3,300 megawatts, Senoko had a 30-percent share of the local electricity market. Its revenue and
EBITDA for the year ended March 2008 was S$2.495 billion and S$245 million, respectively.

After the first stage of the divestment process, Temasek had shortlisted five bidders. Concerned that the
shortlisted bidders could encounter difficulty in arranging for bank financing due to the global credit
crunch, Temasek offered them the option of ‘staple financing’ or a pre-arranged financing package
through its two sale advisers, Morgan Stanley and Credit Suisse. On 5 September 2008, Temasek sold
Senoko to the five-member Lion Power consortium formed by France’s GDF Suez and Japan’s Marubeni,

50
Long-awaited genco sale finally takes off. (2007, June 20). Business Times Singapore.
51
ibid.
52
Tuas Power is first Temasek genco to go on sale. (2007, October 19). Business Times Singapore.
53
ibid.
54
Temasek successfully completes divestment of Tuas Power; Power genco sold to China Huaneng Group for
S$4.235 billion. (2008, March 14). ENP Newswire.
55
China Huaneng snaps up Tuas Power for $4.2b. (2008, March 15). Business Times Singapore.

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Kansai Electric Power Company, Kyushu Electric and Japan Bank for International Cooperation. Besides
the cash consideration of S$3.65 billion, Lion Power also assumed Senoko’s net debt of S$323 million.
According to Gwendel Tung, Temasek's director of investment, “The Lion Power consortium partners are
all established industry players with strong track records in power investments globally. Lion Power's
proposal was the most attractive in terms of price and commercial terms among a field of highly reputable
investors.”56

In October 2008, Seraya, the last of the three gencos was put up for divestment. With an installed
capacity of 3,100 megawatts, Seraya had a 30-percent market share in power generation. Its revenue
and net profit after tax for the year ended March 2008 was S$2.79 billion and S$218 million, respectively.
Seraya was promoted as a “quality asset” by Temasek with references to its “strong cash flow”, “strategic
location in Singapore” and “able management.”57

The timing of the Seraya sale was an attempt to leverage on the strong investor sentiment from the
earlier two genco sales; before market conditions worsened from the global financial crisis. Temasek
again offered ‘staple financing’ to the three shortlisted bidders. However, on 25 November 2008,
Temasek stopped the Seraya tender process, which was originally scheduled to close on 2 December
2008 because of adverse market conditions.58 The market believed that investor interest in the Seraya
sale was weak and that indicative bids from the first stage were lower than what Temasek had expected.

On 3 December 2008, Temasek announced that Seraya had been sold to YTL for a cash consideration of
S$3.6 billion after Temasek accepted YTL’s unsolicited proposal. YTL also assumed Seraya’s net debt of
S$201 million. According to media reports, the managing director of YTL and his team had met up with
Temasek’s senior management over two days to negotiate and seal the Seraya deal. To help YTL finance
the acquisition, DBS Bank provided the company with S$2.25 billion in loan facilities. As the divestment of
Seraya drew to an end, Temasek’s Wong Kim Yin gave his concluding statement, “Temasek had fulfilled
its commitment to help develop a competitive power generation market in Singapore.”59

CORPORATE GOVERNANCE

“The corporate governance crisis in Corporate America shows us that although its corporate
governance system generally functions well, it is not foolproof. In fact, no amount of legislation
or imposition of rules can prevent willful fraud or impropriety.”60

S. Dhanabalan, Chairman of Temasek, 2002

A 2014 study reported that in general, Singapore Exchange-listed Temasek-linked companies had better
corporate governance practices than their non-Temasek counterparts.61 This finding appeared to suggest
that Temasek’s efforts in the championing of corporate governance had paid off. However, Temasek’s
long-drawn quest was not without its challenges, as illustrated by the following cases.

56
Temasek sells Senoko Power to Japanese consortium; Power genco sold to Marubeni-led Lion Power consortium
for an enterprise value of about S$4.0 billion. (2008, September 9). ENP Newswire.
57
Temasek goes ahead with sale of PowerSeraya. (2008, October 8). Business Times Singapore.
58
Lights go out on PowerSeraya sale. (2008, November 26). Business Times Singapore.
59
YTL ups the ante to clinch PowerSeraya. (2008, December 3). Business Times Singapore.
60
Keynote Speech by S Dhanabalan, Chairman, at the Asian Business Dialogue on Corporate Governance 2002.
The Oriental, Singapore. 31 October 2002. Retrieved November 16, 2015, from
http://www.temasek.com.sg/mediacentre/speeches?detailid=8629
61
Sim, I., Thomsen, S., & Yeong, G. (2014). The state as shareholder: The case of Singapore. Singapore: Chartered
Institute of Management Accountants; Centre for Governance, Institutions and Organisations, NUS.

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SembCorp Logistics62

In 2003, accounting fraud was uncovered at the Indian subsidiary of SembCorp Logistics by the newly-
appointed deputy managing director, an accountant by training. The subsidiary’s revenues were
overstated by S$15.5 million for the financial period from 2000 to 2002 and by S$1.3 million for 2003.63 In
addition, S$3 million in expenses was wrongly classified under fixed assets. The subsidiary terminated
the errant employees and also considered taking legal action against them.

ST Marine, a division of Singapore Technologies (ST) Engineering 64

In the Standard & Poor’s inaugural Transparency and Disclosure Survey published in November 2001,
Singapore Technologies (ST) Engineering was rated as one of Singapore’s companies with the highest
level of corporate transparency and disclosure in Asia Pacific. ST Marine was a division of ST
Engineering. In 2011, a number of former and current high-ranking employees of ST Marine (including the
former group financial controller and two former presidents) were arrested on suspicions of graft and
accounting fraud. Investigations by Singapore’s Corrupt Practices Investigation Bureau (CPIB) revealed
that between 2004 and 2008, these employees had paid a total of more than S$500,000 in bribes to ST
Marine’s customers in exchange for company contracts. Another employee was found to have made
fraudulent petty-cash claims of more than S$500,000.

Olam International Ltd.

Olam International Ltd. (Olam) was a Singapore Exchange-listed global supply chain manager and
processor of agricultural products and food ingredients. Temasek’s investment in Olam began with a
13.76% stake in 2009. In November 2012, Muddy Waters, a short-seller that made financial gains from
betting that a company’s share price would fall, had published a 133-page report that discredited Olam’s
accounting practices and acquisitions, business model and solvency. Muddy Waters had taken a short-
selling bet against Olam. Despite Olam’s rebuttal that it was not at risk of insolvency and it filing a
defamation suit against Muddy Waters and its founder in retaliation, the share prices of the embattled firm
plunged by 14% in a week.

In early December 2012, Olam announced that it would be selling US$750 million in bonds and US$500
million in warrants to shareholders in a deal backed by Temasek. Olam had also formed a subcommittee
comprising its non-executive Chairman, lead independent director and chairman of Olam’s audit and
compliance committee, as well as governance and nomination committee, and two independent directors
to conduct an internal review. In January 2013, Olam issued a public statement that its subcommittee had
found Muddy Waters’ accusations to "have no basis in fact and provide no reason for concern".65

The Olam-Muddy Waters’ fallout saw Temasek raising its stake from 16.3% to 23% over a period of four
months and becoming Olam’s biggest shareholder. In April 2013, Olam revealed its new strategy aimed
to “generate free cash flow more quickly, reduce its gearing and capital expenditure and make its
business less complex.”66 In May 2014, Temasek raised its stake in Olam to 58.5%. The substantial
financial injection by Temasek was expected to shield Olam from market volatility, boost market
confidence, as well as provide long-term support for its strategy and business model.

On 1 October 2014, Kwa Chong Seng, a former deputy chairman of Temasek Holdings (1997-2012) was
appointed as an independent non-executive director at Olam and on 31 October 2015, became Olam’s
non-executive chairman. Kwa was concurrently the chairman of the Boards of Neptune Orient Lines
(another Temasek-linked company), Singapore Technologies Engineering (another Temasek-linked
62
SembCorp Logistics was 31% owned by Temasek and held through SembCorp Industries in FY2004.
63
SembCorp set to sue auditors. (2003, October 2). Lloyd's List.
64
ST Engineering was 55% owned by Temasek in FY2004, the year the graft started.
65
Olam acts to clarify doubts. (2013, January 3). Business Times Singapore.
66
Temasek offer lifts Olam clear of Muddy Waters. (2014, March 17). Business Times Singapore.

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company) and Fullerton Fund Management Co. (a wholly-owned Temasek subsidiary). With Kwa’s
appointment, Olam’s stakeholders could expect higher standards of company corporate governance.

Standard Chartered PLC

In July 2006, Temasek purchased an 11.5% stake in Standard Chartered PLC (StanChart) from the
estate of the late Singapore tycoon Khoo Teck Puat. Temasek’s stake in the London-listed bank rose to
19% in less than two years and maintained at about 18% in the years thereafter. Since 2013, StanChart
had been mired in a difficult business downturn that had led to decreasing profits (see Table 1). As at
January 2015, the StanChart shares were trading at prices that were 25% lower than what Temasek paid
for in 2007.67

In the third quarter of 2012, StanChart was hit by a legal scandal that cost the bank US$340 million in
settlement. The U.S. regulators accused StanChart of flouting U.S. trade sanctions laws by concealing
transactions of Iranian customers – transactions that added up to US$250 billion. The scandal raised
concerns that StanChart’s corporate governance might not be as sound as what had been projected to
the shareholders.

In May 2012, Temasek, the largest StanChart shareholder had abstained from voting for the re-election of
some of the bank’s executive directors. According to sources that were familiar with the company,
Temasek had been pushing for more non-executive directors and fewer executive directors to be
appointed on StanChart’s board, and its abstention was meant to convey its displeasure with the bank. 68
In response, StanChart had publicly attributed Temasek’s abstention to “a misinterpretation of UK
corporate-governance requirements”.69 In May 2013, Temasek again abstained from voting for the re-
election of four executives to StanChart’s board, which left little doubt about its stand pertaining to
“excessive numbers of executive members on company boards”. 70 By December 2014, the number of
executive directors on the StanChart board had decreased to three (see Table 2), which demonstrated
some degree of success on the part of Temasek.

Table 1: StanChart’s Profit before Taxation (FY2006-2014)

Financial Year 2006 2007 2008 2009 2010 2011 2012 2013 2014
Profit before tax
3,178 4,035 4,568 5,151 6,122 6,753 6,851 6,064 4,235
(US$ mil)
Source: StanChart’s annual reports

Table 2: StanChart’s Board Composition (2008-2015)

Executive Directors Non-Executive Directors Chairman Total


Dec 2014 3 13 1 17
Jan 2013 6 14 1 21
Dec 2011 6 10 1 17
Dec 2010 5 10 1 16
Dec 2009 6 9 1 16
Dec 2008 4 8 1 13
Source: StanChart’s annual reports

67
Temasek should sit tight on troublesome stake in StanChart. (2015, January 1). Financial Times.
68
Singapore slings arrow at bank. (2012, October 3). The Wall Street Journal.
69
Global finance: Bank says Temasek misread U.K. Rules. (2012, October 5). The Wall Street Journal.
70
Temasek Holdings. (2012). Temasek Review 2012.

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In the cases of SembCorp Logistics and ST Marine, Temasek had chosen not to intervene and had given
the companies leeway to fulfil their responsibilities. Temasek had gone to the rescue of Olam plausibly
because Olam’s business fundamentals were sound and its balance sheet as at 30 June 2012 was its
“strongest” since the company’s IPO in 2005. 71 In the case of StanChart, Temasek had exercised its
shareholder rights through the AGM vehicle to improve governance. In the aforementioned examples, it
was noteworthy that Temasek had not interfered in the companies’ business operations in addressing the
governance issues.

CONCLUSION – THE UNIQUENESS OF TEMASEK

In a span of four decades, Temasek had seen its role evolve from custodian to active shareholder and
private equity investor, as the national economy underwent restructuring and transformation, and
globalization became the new reality. From the 1970s to the early 2000s, Temasek had contributed to
Singapore’s industrialization through its ownership and management of GLCs, as well as the
development of local enterprises through its financial investments. Beginning from the mid-1990s,
Temasek had worked with the government regulators to liberalize the telecommunication and power
generation markets, and privatize port operations, waste management and public housing development,
to name a few. In 2002, Temasek had turned to regionalization and internationalization as the main
strategy for enhancing the value of its assets including its GLCs. Since then, its stakeholder base had
widened beyond its sole shareholder (the government), to include investors of its bonds, partners,
investees and the wider community.

Temasek’s investments were financed using dividends and other cash distributions received from its
portfolio companies and other investments, divestment proceeds from sale of its investments, and the
occasional use of debt instruments such as Temasek-issued bonds. Temasek paid out dividends to its
sole shareholder, as well as contributed corporate taxes to the government’s revenue. So one relevant
issue was: how had Temasek’s sole shareholder, the Minister for Finance (Incorporated) evaluated its
past performance?

“The only reasonable way of evaluating Temasek's performance therefore, like that of any large
investor, is to look at how the losses and gains add up, and how its overall portfolio performs
over time. The facts are that Temasek has produced strong returns on its overall portfolio over
time – taking the investments that have done well with those that have turned bad; and taking
the boom years with the subsequent years when markets went bust. Temasek has in fact made
large investment gains over the course of the market cycle that began in 2003, including the
boom that lasted till 2007 as well as the subsequent bust.

Compared to any relevant market indices, or to other reputable institutional investors, Temasek
has performed respectably. Temasek has achieved total shareholder returns by market value of
slightly over 15% per year on average (in US dollar terms) over the cycle. This compares with a
6% annualised gain in the global equity market indices (MSCI World). A weighted index of
global, Asian and Singapore equity market indices would have delivered more than 6% but still
significantly less than Temasek’s gains of 15% per year. Temasek’s annualised returns are also
higher than what several other well-regarded investors have earned over the cycle. But while
Temasek has performed better than many other large investors over this six-year market cycle,
it is not realistic to expect it to outperform in every cycle. It is also not realistic to expect it to
avoid losses on every individual investment, or losses on its overall portfolio when the markets
go through sharp corrections.”72

Tharman Shanmugaratnam, Minister For Finance, 2009

71
Olam acts to clarify doubts. (2013, January 3). Business Times Singapore.
72
Speech by Mr Tharman Shanmugaratnam, Minister for Finance, 28 May 2009, 1:30 pm at Parliament.

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Temasek had stated publicly that “neither the President of the Republic of Singapore nor the Singapore
government, our shareholder, is involved in our investment, divestment or other business decisions,
except in relation to the protection of Temasek’s own past reserves.” 73 In fact, Temasek’s government
shareholder took a long-term view of Temasek’s investments and performance, which helped to cushion
the company against losses incurred in the short term or during market correction.

Temasek had been held up as the exemplar of a successful state-owned enterprise (SOE) in the mass
media as well as in scholarly literature. One research report lauded Temasek for “operating with a clear
business mandate and at arm’s length from the government.”74 One often-asked question was whether
the Temasek model could be replicated elsewhere, for example, in China, Vietnam or South Africa. After
all, the factors behind the Temasek success story were no secret (the Temasek Charter served as a good
reference guide). Among the factors cited were proper demarcation of the state’s role as
owner/shareholder and as policymaker/ regulator; compliance of laws and regulations in foreign markets
by both Temasek and its GLCs; adherence to high standards of corporate governance; and focus on
long-term sustainable value.75 In October 2015, Bloomberg News reported that the Beijing-based State-
owned Assets Supervision and Administration Commission was studying Temasek as a model for China’s
SOE reform and had established formal communication with Temasek.76

Unlike Temasek and its single broad-based goal of delivering sustainable value over the long term, SOEs
in other geographic regions could be tasked with multiple goals, some of which might be conflicting such
as promoting technological productivity vs. reducing unemployment. Also, some governments might find
difficulty in taking a hands-off approach in the operations of their SOEs or might intervene out of political
reasons. Essentially, the Temasek model had been developed in a small country with strong rule of law,
an uncomplicated governing framework and a reputation for low corruption and high efficiency. Would the
Temasek model be valid in a different context and setting?

On 13 July 2015, the Constitution of the Republic of Singapore (Amendment) Bill was passed. Through
this legislation, Temasek was added as a contributor to the Net Investment Returns (NIR) framework,
which permits government spending of a maximum of 50 percent of long-term expected real returns
generated from net assets managed by GIC 77, the Monetary Authority of Singapore and Temasek
Holdings. As the long-term expected real return rates are averaged out over a 20-year period and
reviewed annually, they would be less vulnerable to cyclical volatility and short-term fluctuations and
economic pressure. With Temasek’s inclusion into the NIR framework and the subsequently bigger
revenue pool, the NIR contribution to the national budget would rise from 2 percent to 3 percent over the
next five years with higher fiscal spending projected in anticipation of greater healthcare costs, transport
investments and human capital investments.78 What implications would Temasek’s inclusion into the NIR
framework present for the company, its governance, the protection of its past reserves and its future?

As Temasek entered upon a new phase in its history where new challenges and responsibilities awaited
the company, one constant remained. Corporate governance would continue to be the cornerstone for the
growth and success of Temasek and its portfolio companies, and its importance would likely grow.

73
Temasek Holdings. (2015). Temasek Review 2015, p. 62.
74
Sim, I., Thomsen, S., & Yeong, G. (2014). The State as shareholder: The case of Singapore. Singapore:
Chartered Institute of Management Accountants; Centre for Governance, Institutions and Organisations, NUS
75
Soko, M. (2015). Lessons from SOE governance reforms in Singapore. Retrieved October 19, 2015, from
http://www.gsb.uct.ac.za/Newsrunner/Story.asp?intContentID=2503
76
China state company research head eyes Temasek model, not Russia. (2015, October 2). Bloomberg news.
77
GIC is wholly owned by the Government of Singapore and manages Singapore’s foreign reserves.
78
Second Reading Speech by Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister for Finance, for
the Constitution of the Republic of Singapore (Amendment) Bill. Retrieved January 28, 2016 from
http://www.mof.gov.sg/news-reader/articleid/1513

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EXHIBIT 1A

TEMASEK CHARTER 2002

Temasek Holdings holds and manages the Singapore Government’s investments in companies, for the
long term benefit of Singapore.

By nurturing successful and vibrant international businesses from its stable of companies, Temasek will
help to broaden and deepen Singapore’s economic base.

Temasek will work with its companies to:

▶ ▶ Values

Promote and maintain a strong culture of integrity, meritocracy, excellence and innovation;

▶ ▶ Focus

Foster a strong focus on core competence, value creation, customer fulfilment and shareholder returns;
and divest non-core businesses, so as to maximise long-term shareholder benefit;

▶ ▶ Human Capital

Nurture and cultivate a strong and internationally competitive cadre of board and management leadership,
as well as outstanding employees to build successful businesses;

▶ ▶ Sustainable Growth

Support and institutionalise high standards of business leadership, financial discipline, operational
excellence and corporate governance to achieve scaleable and sustainable growth; and

▶ ▶ Strategic Development

Shape strategic developments, including consolidations, mergers, acquisitions, rationalisation or


collaborations as appropriate, to build significant international or regional businesses.

Temasek will divest businesses which are no longer relevant or have no international growth potential.

Temasek may also, from time to time, invest in new businesses, in order to nurture new industry clusters
in Singapore.

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EXHIBIT 1B

BACKGROUND AND CONTEXT OF TEMASEK CHARTER 2002

Background

1. Temasek Holdings was formed in 1974 as a focal point to hold and manage the Singapore
government’s investments in companies for the long-term benefit of Singapore.

2. Many of its businesses have their roots in the history of Singapore’s economic development. For
instance, Singapore Airlines was formed through the demerger of Malaysia-Singapore Airlines after
Singapore’s separation from Malaysia, and SembCorp Marine evolved from the commercialisation of
the naval dockyard facilities when British military forces withdrew from the Far East. In each case, the
goals were to develop economically viable businesses, retain and create jobs, and contribute to
Singapore’s economic survival, progress and prosperity.

Relationship with Temasek Companies

1. In the next phase of Singapore’s economic development, Temasek aims to build and nurture
internationally competitive businesses. These can leverage on Singapore’s competitive strengths, and
in turn, enhance Singapore’s economic resilience.

2. Temasek expects all its companies to continually innovate, explore new technologies or markets,
operate on sound commercial principles, and deliver commercial returns in a globally competitive
environment.

3. Temasek will exercise its shareholder rights to influence the strategic directions of its companies. But it
does not involve itself in their day-to-day commercial decisions.

4. Temasek will continually review its stable of companies, and rationalise or consolidate them where it
makes commercial and strategic business sense, so as to enhance long-term shareholder returns.

Group A Businesses – Government Ownership and Control

1. Government needs to own and control companies for various reasons. These include:

 Critical resources – where ownership of a resource is critical to Singapore’s security or economic


well-being, or where the business is a natural domestic monopoly for which a market-based
regulatory framework has not yet been established. These include water, power and gas grids,
airport, and seaport; or

 Public policy objectives – where ownership enables the government to achieve specific public
policy objectives, by providing services or assuring control for the public good. These include
gaming, public broadcasting, subsidised services in healthcare, education and housing, and
various public amenities like the zoo and bird park.

2. The government will continue to hold majority or significant stakes in such Group A companies, for so
long as there is specific requirement for government ownership or support. Should such businesses
become no longer strategic to Singapore, or when viable market alternatives or regulatory frameworks
are in place, the government will divest or dilute its shareholdings.

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3. Where Temasek has stewardship of Group A companies on behalf of the government, Temasek will
ensure their financial discipline and sound management, with a clear focus on customer orientation,
strategic and operational effectiveness and economic viability in order to fulfil their respective missions.

Group B Businesses – International / Regional Potential

1. Regardless of ownership, Singapore companies cannot depend solely on the domestic market for their
long-term growth, particularly in view of the trends in technology, liberalisation and deregulation.

2. Group B businesses within the Temasek stable are those with the potential to grow beyond the
domestic market, into the regional or international markets. Companies such as PSA Corporation have
internationalised to leverage onto the global network, while others, such as DBS Bank, have expanded
beyond their domestic market base to take advantage of regional opportunities.

3. Temasek is open to Group B companies partnering other companies or shareholders to regionalise or


internationalise where it makes strategic or commercial sense. Temasek is prepared to dilute its stake
through the issuance of new shares, or mergers or acquisitions in order to support the long-term
success of these companies as regional or international players.

4. Temasek may also, from time to time, invest in new businesses with regional or international potential
in order to nurture new industry clusters. These are likely to be in new growth sectors which entail high
risk, large investments or long gestation periods, where private enterprise in Singapore is unable or
unwilling to assume risks. Temasek will be highly selective in making such new investments.

Rationalisation and Divestments

1. Since its inception, Temasek has progressively divested its stake in companies which are no longer
strategic to Singapore or relevant to Temasek’s mission. It has also publicly listed major companies
which have evolved from statutory boards, such as Keppel Corporation and Singapore
Telecommunications, to broaden their share ownership base and support their growth. Temasek
companies have in turn divested their non-core assets and listed some of their major shareholdings
over the years.

2. Temasek will continue to rationalise and consolidate its shareholdings, where there are opportunities
to improve shareholder returns. It will continue to divest businesses which no longer require
government participation, or which have limited potential for regional or international growth. This will
enable Temasek to focus its financial and management resources in areas where it can make a
distinct contribution to developing the Singapore economy through successful international and
regional enterprise.

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EXHIBIT 2A

TEMASEK CHARTER 2009

Temasek Holdings is an investment company managed on commercial principles to create and deliver
sustainable long-term value for our stakeholders.

Temasek is an active value-oriented investor and may increase, reduce or hold its investments in
companies or other assets, or pioneer innovative products or businesses in order to create and maximize
shareholder value.

Temasek is an active shareholder and aims to achieve sustainable returns by engaging the boards and
managements of its portfolio companies to:

▶ ▶ Values

Foster a deep culture of integrity, meritocracy and excellence;

▶ ▶ Focus

Maintain a clear focus on core competence, customer fulfilment, innovation, commercial discipline and
consistent value creation;

▶ ▶ Human Capital

Cultivate high calibre board and management leadership, as well as committed and responsible
employees;

▶ ▶ Sustainable Growth

Institutionalise superior business leadership, financial discipline, operational excellence and sound
corporate governance;

▶ ▶ Strategic Options

Create strategic options to build significant international or regional brands or businesses.

Temasek is a responsible corporate citizen and is committed to contributing part of its returns to
encourage the growth and development of the wider community.

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EXHIBIT 2B

BACKGROUND AND CONTEXT OF TEMASEK CHARTER 2009

A Modest Beginning

1. Temasek Holdings was incorporated in 1974 as a private investment company by the Government of
Singapore to separately hold and manage investments in companies, start-ups and joint-ventures. This
is to provide a commercial focus through a clear structure of responsibility and accountability.

2. Several of Temasek’s successful portfolio companies have their roots in the history of Singapore’s
modern economy. For instance, Singapore Airlines was formed through the de-merger of Malaysia-
Singapore Airlines after Singapore’s separation from Malaysia in 1965, and SembCorp Marine evolved
from the commercialisation of the naval dockyard facilities left by the British when they withdrew their
forces from the Far East in 1971. In each case, the goals were to develop economically viable
businesses on a sound commercial footing, to create and retain jobs, and to contribute to Singapore’s
economic survival, progress and prosperity.

3. Over the years, Temasek has divested many of its initial holdings, listed several successful companies,
and expanded its portfolio to cover a diverse range of blue chip Singapore, Asian and global
companies, as well as promising emerging businesses.

4. The success of Temasek as well as many of its portfolio companies is anchored in a culture of integrity,
meritocracy and excellence.

A Robust and Comprehensive Governance Framework

1. A sound framework of governance founded on integrity, professional management and commercial


discipline has been and will continue to be the cornerstone for the growth and success of Temasek
and its portfolio companies.

2. Like the board members of all companies incorporated under the Singapore Companies Act, the Board
directors of Temasek have a fiduciary duty to ensure the proper governance and management of their
company.

A Broad Base of Stakeholders

1. Companies do not exist in isolation. They are part of the socio-economic fabric with a responsibility
towards society and the broader citizenry. Their success is derived from the support of the community,
of their partners and customers, and of governments and regulators, who provide a conducive
environment for growth and stability. In turn, companies can play a constructive role to support the
well-being and progress of their community.

2. Temasek is a commercially-driven investment company and is responsible to its sole shareholder, the
Singapore Government, for delivering sustainable long-term returns. As a Fifth Schedule company
under the Singapore Constitution, Temasek is also responsible to the President of Singapore for the
protection of Temasek’s past reserves.

3. Temasek is a responsible corporate citizen. It continues to work in good faith with its various
stakeholders to foster responsible growth and stability for a shared future of opportunities and well-
being.

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4. Temasek’s broad base of stakeholders includes its shareholder, its institutional and other bondholders,
its fellow shareholders and partners in companies, funds and joint ventures, its portfolio companies
and their boards and management. It also includes Temasek’s employees, Temasek Trust and other
non-profit philanthropic beneficiaries such as Temasek Foundation and Temasek Cares, the
governments, authorities and regulators of the markets in which Temasek has investments, and the
wider community.

Relating to the President of Singapore

1. As the Singapore Government’s investment in Temasek forms part of the nation’s assets and Temasek
has grown significantly over the years, it was designated a Fifth Schedule Company under the
Singapore Constitution in 1991. This Fifth Schedule status for Temasek provides for the President of
the Republic of Singapore, elected directly by the citizens of Singapore and acting in his discretion and
independently of the Government of Singapore, to exercise certain powers over the Board and Chief
Executive Officer (CEO) appointments and the operating budget of Temasek, as part of the President’s
constitutional role to safeguard the integrity of key appointments and institutions and to protect the past
reserves of the nation.

2. To ensure that the Board members and CEO are men and women of high integrity who will guide and
manage Temasek professionally, the President’s concurrence is required for the appointment or
removal of Board members and its CEO. Renewal of Board membership is also subject to the
concurrence of the President.

3. In addition, the Board of Temasek is required to ensure that Temasek’s annual operating budget or
any proposed transaction does not draw on Temasek’s past reserves. The Chairman and CEO are
required to report to the President every half year on the position of Temasek’s reserves. The
President’s approval is needed for any transaction which may draw on the past reserves of Temasek.

4. The President of Singapore is not involved in the operations or business decisions of Temasek.

Relating to Temasek’s Shareholder

1. Temasek is a professionally and independently managed investment company wholly owned by the
Singapore Government through the Minister for Finance (Incorporated). It has the mandate to operate
as an independent investment company to create and deliver sustainable long-term shareholder value.

2. Just as Temasek’s portfolio companies are accountable to Temasek and its fellow shareholders for
their performance and results, Temasek is in turn accountable to its own shareholder for its
performance and results.

3. Temasek is audited by international audit firms, and provides audited annual financial reports and
periodic updates to its shareholder.

4. Temasek is a commercially managed investment company. In its business and strategic direction,
Temasek is independently guided by its Board of Directors, with its investment, divestment and other
business decisions taken by its Board and/or management.

5. The Singapore Government, as shareholder, does not involve itself in the operations and business
decisions of Temasek. Neither does the Government direct or influence the investment or divestment
decisions of Temasek.

6. Temasek manages the assets it owns. It does so independently of, and plays no role in, the
management of Singapore’s official foreign reserves and other Government reserves.

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Relating to Temasek’s Portfolio Companies

1. Companies in Temasek’s portfolio are managed by their respective managements, under the guidance
of their boards of directors. Their long-term success depends on their commitment to develop human
capital, foster a strong culture of excellence and integrity, build sustainable competitive advantages,
and maximise long-term shareholder returns, while acting as responsible corporate citizens.

2. Temasek places significant weight on the quality, competence, effectiveness and independence of the
boards to guide its portfolio companies. They are instrumental in providing sound strategic directions
and guidance to management, for instituting talent management and leadership review and succession
planning, and for fostering sound corporate values of integrity, meritocracy and excellence.

3. These boards are accountable to all their shareholders in accordance with the relevant legislation or
listing regulations in the respective jurisdictions. Temasek does not involve itself in the day-to-day
commercial decisions or business operations of its portfolio companies.

4. As an active and constructive shareholder, Temasek will exercise its rights as a shareholder to help
create sustainable value in a fair and equitable manner in accordance with the laws and regulations
governing businesses and companies.

Relating to the Community

1. Temasek has long been a contributor to the community in many ways.

2. Temasek decided in 2003 to put aside a share of the economic profit or positive wealth added that it
has achieved each year for community purposes. This commitment was formalised with the launch of
the Temasek Trust in 2007 with an initial endowment of S$500 million. Future contributions will depend
on Temasek achieving positive wealth added.

3. Beneficiaries include non-profit philanthropic organisations such as the Temasek Foundation for
building people and building bridges between peoples, the Singapore Millennium Foundation for
research and education, the Singapore Technologies Endowment Program for exchange programs
and the Temasek Life Sciences Laboratory for life science research.

4. In addition, Temasek’s staff are also active as a team and individually through their volunteer efforts to
support communities and charitable needs in Singapore and elsewhere.

Institutionalising Financial Discipline

1. Temasek has institutionalised its financial discipline by systematically enlarging its stakeholder base
through its annual performance disclosures, credit rating, and an international bond program. Temasek
has also instituted various governance, investment and risk management processes and systems, to
ensure good governance and a culture of integrity and professionalism. As a professional and
responsible investor, Temasek abides by the laws and regulations of the various relevant markets, and
makes the necessary disclosures in accordance with the listing regulations.

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EXHIBIT 3

THE TEMASEK CHARTER 2012

Temasek is an active investor and shareholder.

We deliver sustainable value over the long term.

Temasek is a forward looking institution.

We act with integrity and are committed to the pursuit of excellence.

Temasek is a trusted steward.

We strive for the advancement of our communities across generations.

Source: Temasek Review 2012

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EXHIBIT 4

THE TEMASEK CHARTER 2015

Temasek is an active investor and shareholder. We deliver sustainable value over the long term.

 Temasek is an investment company. We own and manage our assets based on commercial principles.

 As an active investor, we shape our portfolio by increasing, holding or decreasing our investment
holdings. These actions are driven by a set of commercial principles to create and maximise risk-
adjusted returns over the long term.

 As an engaged shareholder, we promote sound corporate governance in our portfolio companies. This
includes the formation of high calibre, experienced and diverse boards.

 Our portfolio companies are guided and managed by their respective boards and management; we do
not direct their business decisions or operations.

 Similarly, our investment, divestment and other business decisions are directed by our Board and
management. Neither the President of Singapore nor our shareholder, the Singapore Government, is
involved in our business decisions.

Temasek is a forward looking institution. We act with integrity and are committed to the pursuit of
excellence.

 As an institution and as individuals, we act with integrity and are guided by our Temasek values.

 We foster an ownership culture which puts institution above individual, emphasises long term over
short term, and aligns employee and shareholder interests.

 We pursue excellence as an institution by developing our people, capabilities and processes.

 We challenge and reinvent ourselves to stay relevant in a rapidly changing world. We do things today
with tomorrow in mind.

Temasek is a trusted steward. We strive for the advancement of our communities across generations.

 Temasek is a responsible corporate citizen. We engage our communities based on the principles of
sustainability and good governance.

 We support community programmes that focus on building people, building communities, building
capabilities and rebuilding lives in Singapore and beyond.

 We engage stakeholders in the development of sound governance practices.

 Under the Singapore Constitution, Temasek has a responsibility to safeguard its past reserves.

Source: Temasek Review 2015

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EXHIBIT 5

TEMASEK’S PORTFOLIO AT INCEPTION (1974)

Companies that are still within the Temasek portfolio, directly or indirectly in March 2015

1. Development Bank of Singapore Ltd (now part of DBS Group Holdings Ltd)
2. Jurong Bird Park Pte Ltd (now part of Wildlife Reserves Singapore Pte Ltd)
3. Jurong Holdings Pte Ltd (now part of SembCorp Industries Ltd)
4. Jurong Shipbuilders Pte Ltd (now part of SembCorp Industries Ltd)
5. Jurong Shipyard Pte Ltd (now part of SembCorp Industries Ltd)
6. Keppel Shipyard Pte Ltd (now part of Keppel Corporation Ltd)
7. Neptune Orient Lines Ltd
8. Primary Industries Enterprises Pte Ltd (now part of SATS Ltd)
9. Sembawang Holdings Pte Ltd (now part of SembCorp Industries Ltd)
10. Singapore Airlines Ltd
11. Singapore Airport Duty-Free Emporium Pte Ltd (now jointly owned by SIA & SATS)
12. Singapore Zoological Gardens (now part of Wildlife Reserves Singapore Pte Ltd)

Companies that had been divested from the Temasek portfolio or liquidated.

1. Acma Electrical Industries Ltd


2. Cerebos Singapore Pte Ltd
3. Chemical Industries (F.E.) Ltd
4. Instant Asia Cultural Shows Pte Ltd
5. Insurance Corporation of Singapore Ltd
6. International Development and Construction Corporation
7. Intraco Ltd
8. Metrawood Pte Ltd
9. Ming Court Hotel Ltd
10. Mitsubishi Singapore Heavy Industries Pte Ltd
11. National Engineering Services Pte Ltd
12. National Grain Elevator Ltd
13. National Iron & Steel Mills Ltd (became Natsteel which was divested in 2002)
14. Singapore Cable Car Pte Ltd
15. Singapore General Aviation Service Company Pte Ltd
16. Singapore National Printers Pte Ltd
17. Singapore Offshore Petroleum Services Pte Ltd
18. Singapore Textiles Industries Ltd
19. Singapore Treasury Building Pte Ltd
20. Singmanex Pte Ltd
21. Sugar Industry of Singapore Ltd
22. United Industrial Corporation Ltd
23. United Vegetable Oil Pte Ltd

Source: Temasek Review 2015

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EXHIBIT 6

TEMASEK NET PORTFOLIO VALUE FROM INCEPTION TO 2015

Source: Temasek Review 2015

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EXHIBIT 7

TEMASEK’S PORTFOLIO BY INDUSTRY IN 2004, 2009 AND 2014

I. S$90 billion portfolio value as at March 2004

II. S$130 billion portfolio value as at March 2009

III. S$223 billion portfolio value as at March 2014

Source: Temasek Review 2004, Temasek Review 2009 and Temasek Review 2014

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EXHIBIT 8

TEMASEK’S PORTFOLIO BY GEOGRAPHY IN 2004, 2009 AND 2014

I. S$90 billion portfolio value as at March 2004

II. S$130 billion portfolio value as at March 2009

III. S$223 billion portfolio value as at March 2014

Source: Temasek Review 2004, Temasek Review 2009 and Temasek Review 2014

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EXHIBIT 9

SELECTED MILESTONES OF TEMASEK

Year Milestone
1974 Incorporation of Temasek Holdings.
1993 Ownership of Singapore Telecommunications transferred to Temasek.
Public listing of Singapore Telecommunications.
1995 Corporatization of Public Utilities Board; Singapore Power and Tuas Power became
wholly-owned subsidiaries of Temasek.
1996 Appointment of S Dhanabalan as Chairman of Temasek.
1997 Corporatization of Port of Singapore Authority, which became wholly-owned subsidiary
of Temasek.
2001 Ownership of PowerGen (Senoko) and PowerGen (Seraya) transferred from Singapore
Power to Temasek.
2002 Appointment of Ho Ching as Executive Director of Temasek.
Release of Temasek Charter.
Investment strategy driven by regionalization and internationalization.
2004 Appointment of Ho Ching as CEO of Temasek.
Start of annual publication of Temasek Review, Temasek’s annual report.
2005 Issuance of first Temasek bond.
2006 Acquisition of Thailand’s Shin Corp by Temasek-led consortium.
2007 Temasek Trust, philanthropic arm of Temasek Holdings set up.
Temasek fined by Indonesia’s Business Competition Supervisory Commission for
violating anti-monopoly law because of its cross-ownership in PT Telekomunikasi
Selular and PT Indosat.
2008 Divestment of Tuas Power, PowerGen (Senoko) and PowerGen (Seraya) by Temasek.
2009 Temasek’s portfolio market value dropped from S$185 billion to S$130 billion due to
global financial crisis.
Update of Temasek Charter.
2010 Temasek’s portfolio market value recovered to S$186 billion.
2012 Update of Temasek Charter.
2013 Retirement of S Dhanabalan as Chairman of Temasek.
Appointment of Lim Boon Heng as Chairman of Temasek.
2015 Temasek’s portfolio valued at S$266 billion.
Temasek added to the Net Investment Returns (NIR) framework.

Source: Created by authors.

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