Wednesday, August 15, 2007

Failed State Ventures with Public Funds

n January 1998, it was revealed that a US diskdrive maker Micropolis, was taken over by ST technologies, and sank with losses of S$ 575 million. (1)

DBS, 37% percent owned by temasek holdings, lost heavily in acquiring Thai Danu bank, quoted to be an "expensive mistake". (2) The bank indicated the size of its mistake when it said it was raising its stake in the bank from 241mil to 763.4mil SGD

SIA acquired 25% of a troubled Airline, Air New Zealand in April 2001. The carrier's operational and and financial troubles caused its share price to nosedive. The NZ govt was force to bail out and diluting SIA's share to 5 percent. By Oct '04, SIA estimated to have lost over NZ$500 mil, according to investment director for Macquarie Equities. (3)

At the height of the tech boom in '01, SIA showed further ineptitude was revealed when it acquired 49 percent of Virgin Atlantic, for Aus$1.6 Billion. Boss of Virgin, Sir Branson must be laughing his way to the bank as he received top dollar and remain in charge. (4) Paying top dollar for 49% stake, and still leaving Branson in charge... good or bad business acumen?

In 2000, GIC purchased 15 million shares in Australia's Macquarie Corporate Telecom and ~$3 a share, making the GIC the largest shareholder in a company on a downward slide. A year later, the telco announced that it was losing money and share prices fell drastically. The GIC, left with depreciated shares, had to sell 14million shares at 18 cents a share. (5)

Charted Semiconductor Manufacturing, (temasek has 60% stake) bled money from 2001-4. (6) Having inferior technology to their Taiwanese rivals, didn't make any profit in 2000-4.(7)

(1)ST Jan 16 1998
(2)ST March 7, 2000
(3)ST October 6 2004
(4)The Australian, February 16-17 2002
(5) The Age (Melborne), April 11 2001
(6) The Economist, August 14 2004
(7) The Australian, October 28, 2004

Taken from "The Singapore Miracle - Myth and Reality" Rodney King

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