SINGAPORE - Newly retired Temasek Holdings chairman S. Dhanabalan leaves behind as his most important legacy a sound and effective system of governance at the Singapore investment agency.
That was the assessment of Deputy Prime Minister Tharman Shanmugaratnam, who is also in charge of the Ministry of Finance, which is Temasek's shareholder.
This framework allows for the Temasek board to be accountable to the Government for its long-term performance, and also for clear ownership of responsibility by Temasek for its investment decisions, Mr Tharman said.
"Together with the board and management, Dhana moulded an ownership mindset in Temasek - which above all means thinking long-term rather than focusing on short-term bets," Mr Tharman said at Temasek's 39th anniversary dinner last Tuesday night.
He spelt out the Government's approach - to ensure that people of sound character and judgment are appointed to the board.
"We are careful not to have any role or influence in Temasek's investment decisions," Mr Tharman added.
And this has been the right approach, as it means Temasek can make commercial assessments without having to second-guess the Government, and the Government avoids being in a position where it is endorsing or vetoing a deal, or is seen to be doing so.
"This alignment in our thinking on the governance of Temasek remains an important advantage for the future. The Government holds the board accountable for Temasek's performance over time. Temasek has the flexibility to seize opportunities when they arise, and to take calculated risks aimed at growing the value of its portfolio over the long term," Mr Tharman said.
This approach was possible only because there are capable and trusted people on the board who work with the management to look after the Government's long-term interests, he added.
"Without Dhana in Temasek as chairman, the Government would not have found this confidence," Mr Tharman said.
This governance framework is especially significant, as Temasek operates at the "higher end of the risk spectrum of the nation's reserves". The Monetary Authority of Singapore, GIC and Temasek engage in different investment strategies, and take different degrees of risk.
Mr Tharman also noted that Temasek's governance framework has enabled management decisions which have produced good returns.
Newly appointed Temasek chairman Lim Boon Heng also spoke at the dinner, saying that the three core principles of long-term over short-term, the larger institutional good over individual interest and the habit of thinking and building for future generations "will continue to guide us, as they have guided previous generations of board, management and staff".
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