Singapore fund pledges greater transparency

Singapore fund pledges greater transparency

By Peter Thal Larsen and Martin Dickson in Davos

Published: January 27 2008 23:03 | Last updated: January 27 2008 23:03

Singapore’s Government Investment Corporation has promised greater disclosure about its activities, amid mounting concerns about the secretive fund’s influence after high-profile investments in UBS and Citigroup.

Tony Tan, deputy chairman of GIC and a former Singapore deputy prime minister, said the fund planned to become more transparent as part of a broader effort by sovereign wealth funds to agree a set of common standards.

“We have already decided that the circumstances have changed. The right thing to do is to move to a path of more disclosure,” Mr Tan said in a rare interview. “The greatest danger if this is not addressed directly, then some form of financial protectionism will arise and barriers will be raised to hinder the flow of funds.”

However, Mr Tan would not be drawn on what areas of disclosure GIC would improve, arguing that this was a decision for the Singaporean government.

GIC, which says it manages more than $100bn but is estimated by analysts to oversee three times that amount, has come under intense scrutiny after injecting $16bn in UBS and Citigroup. The investments, a departure from GIC’s low-key approach, have prompted politicians to question the fund’s influence, while some UBS shareholders have complained the investment dilutes existing investors.

Mr Tan insisted GIC was interested only in a financial return, and revealed the fund had recently rejected an offer from UBS to nominate a board director. “I think we want to be seen to be quite clear that we are not seeking control,” he said. Along with funds from Abu Dhabi and Norway, GIC is helping co-ordinate an effort by the International Monetary Fund to agree common standards for sovereign wealth funds.

Mr Tan said concerns in Europe and the United States were “understandable” and should be addressed. However, he said guidelines should be flexible, voluntary, and recognise that not all funds were the same.

GIC’s investments in UBS and Citigroup have prompted some observers to suggest it is becoming more aggressive. But Mr Tan said the fund had been able to invest such sums because it cashed in a significant chunk of its equity investments in 2007, before the market turmoil struck. He said the investments in UBS and Citigroup were unusual and did not reflect GIC’s “preferred mode of investment”.