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Temasek conducting internal review to draw lessons on FTX loss; current audits stringent and sufficient: DPM Wong

SINGAPORE — State investment firm Temasek Holdings has initiated an internal review by an "independent team" which will "study and improve its processes, and to draw lessons for the future", following its investment losses from failed cryptocurrency platform FTX. 

Deputy Prime Minister Lawrence Wong, who is also Finance Minister, speaking in Parliament on Nov 30, 2022.

Deputy Prime Minister Lawrence Wong, who is also Finance Minister, speaking in Parliament on Nov 30, 2022.

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  • State investment firm Temasek Holdings is conducting an internal review to study and improve its processes following investment losses from FTX
  • There is no need for additional governance for Temasek and GIC as existing standards and audits are sufficient and more stringent than for regular companies, said DPM Lawrence Wong
  • He was responding to parliamentary questions filed by parliamentarians on Temasek's investment losses due to FTX's collapse
  • Although the losses had damaged the reputation of Temasek, he noted that its early-stage portfolio still performed better than industry averages
  • He added that Temasek is not subject to audits by the Auditor-General's Office and this will only take place if the Government believes there is negligence, fraud or misconduct within the organisation


SINGAPORE — State investment firm Temasek Holdings has initiated an internal review by an "independent team" which will "study and improve its processes, and to draw lessons for the future", following its investment losses from failed cryptocurrency platform FTX

Speaking in Parliament on Wednesday (Nov 30), Deputy Prime Minister Lawrence Wong also said that there was no need for additional governance for Temasek and GIC, a sovereign wealth fund, as existing standards and audits are sufficient and more stringent than for regular companies. 

“There is therefore no need for additional audit requirements or parliamentary committees. Instead, we should insulate the boards from political pressures,” said Mr Wong, who is also Finance Minister. 

There is therefore no need for additional audit requirements or parliamentary committees. Instead, we should insulate the boards from political pressures.
Deputy Prime Minister Lawrence Wong, who is also Finance Minister

He was responding to parliamentary questions filed by 20 Members of Parliament (MP) and Non-Constituency Members of Parliament (NCMP) on the collapse of FTX and its impact on Temasek, which had invested in the firm.

Among other things, MPs asked about additional safeguards the Government would take to regulate cryptocurrency trading or investment. 

Mr Wong later clarified, in response to a supplementary question posed by Leader of the Opposition Pritam Singh, that the review of the FTX investment would be conducted internally by Temasek. 

It will be led by people who are separate from the investment team that decided to invest in FTX and “will not be clouded by what (investment) steps were taken”. The review team will report directly to Temasek’s board, said Mr Wong. 

FTX, which had been one of the largest crypto exchanges in the world, filed for bankruptcy earlier this month. It had struggled to raise billions in funds to stave off a collapse after investors tried to pull out their funds in the crypto equivalent of a bank run.

The move led Temasek to announce shortly afterwards that it would write down all of its US$275 million (S$376.7 million) investment in the company, which had also counted other major institutional investors such as Sequoia Capital as its investor. 

On Saturday, former Temasek chief executive officer Ho Ching said Temasek had been left with "egg on the face" as a result of the writedown. Madam Ho is currently chair of Temasek's philanthropic arm Temasek Trust.


In his response, Mr Wong addressed Temasek’s investment in FTX and laid out the Government’s stance on the exposure of investment entities and statutory boards to digital assets and cryptocurrencies. 

He said that the Government does not prescribe guidelines on the allocation of specific assets or asset classes, whether for cryptocurrencies or other assets. This applies to statutory boards as well as Singapore’s investment entities —  Temasek, GIC and the Monetary Authority of Singapore (MAS). 

For investment entities, the Government sets out its risk tolerance limits and monitors for appropriate diversification in asset classes, sectors, and geographies. It also ensures that downside risks are not excessive, said Mr Wong.

The Government does not prescribe an exclusion list for specific assets, but holds the boards and management teams responsible for formulating investment strategies in accordance with the Government’s overall risk tolerance, he added.

However he noted that there are risks involved in investing in new technology and early-stage companies, both of which are areas in which Temasek and GIC invest. 

“(Even) with genuinely revolutionary technology, there are risks. Many start-ups will fail, while a few will prove successful and grow into industry leaders like Tencent and BioNTech,” he said.

While Temasek and GIC have some investments in the digital asset space, such as blockchain technology, they have no direct exposure to cryptocurrencies, he added. 


Mr Wong described the losses from FTX as disappointing, adding that it is even more so because it turned out to be the result of a very badly managed company and possible fraud.

“What happened with FTX therefore has not only caused financial loss to Temasek, but also reputational damage.

“Temasek recognises this and has issued a comprehensive statement to explain its due diligence process and the circumstances leading to its investment in FTX,” he added. 

On the internal review by Temasek, Mr Wong said that he is confident that the board and management team will learn from the experience.

He also asked MPs to view the FTX investment loss in the broader context of Temasek's performance in early-stage investments. 

He noted that after writing off the FTX investment, Temasek's early-stage portfolio as of March this year had generated an internal rate of return in the mid-teens in percentage terms over the last decade.

This was better than industry averages, he said.

Mr Wong said that the losses will also not impact Net Investment Returns Contributions (NIRC), which is the single largest contributor to the Government's budget. 

This is because the NIRC is tied to overall expected long-term returns of investment entities rather than individual investments. 

The NIRC framework allows the Government to spend up to 50 per cent of the net investment returns on net assets invested by GIC, MAS and Temasek, while the remaining is put back into the state’s reserves to preserve its growth for future use. 


Addressing questions on audit requirements for investment entities, Mr Wong explained that Temasek is audited by commercial auditors while GIC, which manages public funds, is audited by the Auditor-General. 

Both GIC and Temasek are subject to the President’s oversight of their budgets and key appointments. Questions raised by MPs in Parliament about the performance of entities are also addressed by Ministry of Finance, he said.

While the investment entities publish their performance with respect to broad market indices, the Government evaluates entities based on their long-term performance. 

“(And) their track records show that they have performed creditably, even in challenging environments,” said Mr Wong. 


Concluding his speech, Mr Wong said that the Government is taking FTX’s loss seriously, but that it did not imply that the governance system for investment entities here is not working.

“Rather, this is the nature of investment and risk-taking,” said Mr Wong.

“What is important is that our investment entities take lessons from each failure and success, and continue to take well-judged risks in order to achieve good overall returns in the long-term,” he said.


Following Mr Wong’s response, a robust exchange took place as 12 Members stood up to ask supplementary questions. 

Workers’ Party MP Leon Perera (Aljunied Group Representation Constituency (GRC)) asked why Temasek is not subject to audit by the Auditor-General's Office (AGO), given that the agency also audits ministries and statutory boards that own private companies.

The fact that Temasek is a private entity should not mean that it does not need to be subject to audits by the AGO, he said.

In response, Mr Wong said that it is “not unusual” for private auditors to audit public agencies. Even statutory boards are subject to commercial auditors rather than AGO, he added. 

“It’s not unusual that AGO has a remit largely within the public service, government ministries, but... for a commercial entity like Temasek, which also within it has a portfolio of listed entities, well I think we should let commercial auditors do their job, and so far they have been doing a very good job,” he said.

Mr Perera later asked again why Temasek is not subject to audit by AGO. He noted that ministries, statutory boards, GIC and private companies under ministries and statutory boards are subject to AGO’s audits, on top of commercial audits. 

“Not all statutory boards are subject to AGO’s audits," said Mr Wong.

"In fact, where there are issues that come up, be it in a town council, a statutory board, or it could be in Temasek, if there are reasons, we will have no hesitation to ask the Auditor-General to go in and do a full audit.” 

He later added, in response to Mr Singh’s question, that the Auditor-General will step in if the Government feels that something has gone wrong with the organisation, such as negligence, fraud or misconduct. 

“So it has to be of that significant threshold for us to say, ‘Look, something is not right within the organisation. Let us commission or get the Auditor-General to go in and do a proper audit’…and we will not rule out if something like this were to happen,” said Mr Wong.

Mr Zhulkarnain Abdul Rahim (Chua Chu Kang GRC) noted that Mr Wong had spoken about reputational damage to Temasek from the FTX collapse due to fraud allegations.

He asked if Temasek would reserve its rights to make any particular financial claim, should the need arise, even though it has already written off its losses for FTX. 

To this, Mr Wong said that Temasek “is on top of this and will reserve its rights to do so”. 

In her supplementary question, Ms Tin Pei Ling (MacPherson) noted that despite the failings of cryptocurrencies, blockchain-based digital infrastructure may still be useful in other aspects. 

She asked if Singapore's investment entities have been or will continue to invest in such companies, and for their investment performance so far. 

Mr Wong said that there are other companies in the digital asset space that GIC and Temsaek have invested in.

GIC has a broadly diversified global portfolio, within which it has limited exposure to early stage companies. Temasek, which largely invests in equities, has exposure to early-stage companies which accounts for about 6 per cent of its overall portfolio. 

For both entities, the exposure to early stage companies will include investments in digital assets. However, these investments are diversified across a broad range of different sectors, he said. 

He said there may be promising use cases for blockchain, but some of the earlier optimism about blockchain has proved to be “too optimistic”. He said that MAS had been criticised by members of the House for moving too slow to invest in blockchain technology. 

“So that general enthusiasm has proven to be overly optimistic,” said Mr Wong. 

He added that the Government is pursuing pilots of the technology in the financial sector and investment entities must do their own due diligence in deciding whether or not to invest in specific blockchain projects.  

Related topics

MAS Lawrence Wong FTX

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