The High Court yesterday (Oct 17) gave the final approval for the bailout and nationalisation of failing public transport operator SMRT. Today (Oct 18) will be the last day of trading on the Singapore Exchange.
Current major shareholder of SMRT (54%), Temasek Holdings (TH), is the country’s sovereign wealth fund company headed by the Prime Minister’s wife, Ho Ching. TH’s wholly-owned subsidiary, Belford, will buyover the remaining 46% from other shareholders in the private market at S$1.2 billion.
It is understood that the S$1.2 billion fund indirectly comes from CPF funds, which was lent to TH using low-interest bonds, at 2.5% per annum, called the Special Singapore Government Securities (SSGS).
On Sep 29, shareholders met up in a meeting and an overwhelming majority holding 92.9% of the shares voted for the nationalisation offer by TH. The dramatic meeting saw shareholders openly singling SMRT CEO Desmond Kuek out for incompetency.
With the nationalisation by TH, train breakdowns will be directly answered for by the Singapore government. The SMRT CEO, Desmond Kuek, a former army general appointed by the ruling party PAP government, will remain in his seat despite leading the organisation into its downfall.
In an earlier interview with state media, Desmond Kuek admitted that had the Singapore government not buy over the physical assets of SMRT, the company would have ran into hefty losses and may eventually become insolvent.
Desmond Kuek is the second army general who ran a former national company into losses, after the sell off of shipping company Neptune Orient Line by general Ng Yat Chung.
Earlier this week, the Singapore government signaled their intention to spend a further S$4 billion on the public bus system to protect the profits of the bus service companies. Cronyism remains Singapore’s biggest bugbear to a progressive economy despite its numerous claims on non-corruptibility.