Posted by: bigtalksingapore | November 18, 2008

Singapore Town Council ignorant about high risk bond investment ?

S$16 million dollar is evaporating (Maybe already evaporated) from Singapore Town Council fund !

They said that it is only a small sum that our town council can afford and should not affect town council services.
Maybe they considered it as “Peanut” compared to the total town council fund, about 0.6% (See attachment #2).
If this is how they think, then it will be a very dangerous thinking.
If we lose 0.6% of the fund today, how about 0.61% tomorrow ?
Losing the people money like this can never be justified in the eye of normal citizens.
And S$16m is really no small sum in the eye of normal citizens, so they shouldn’t make comment like “Small sum”.

They also state that town council can invest up to 35% of its fund (See attachment #2).
Let me see, S$16m ~0.6%  => 1% ~ S$26.67m  => 35% ~ S$933m => 100% ~ S$2.67 billion.
Wait, let me see. “My Paper” reported that town council has accumulated a total of about S$1 billion (See attachment #5).
That’s not right with the figure above (S$2.67 billion). Something is amiss here (Scratch head….).

A few questions that we should ask from this saga…

  1. Invest-able town council fund is capped at 35%.
    Does it mean that everything is done legally and above table ?
    So nobody should be responsible for the total of S$16m losses ?
    Would this be classified as a “Honest Mistake” again ?
    .
  2. Can the 35% invest-able fund be used in high risk investment like the mini-bond and notes involved ?
    Assuming the guideline is that it should not be invested in high risk investment, there will be two scenario.

    • Scenario One:
      Town council may have invested in the mini-bond and notes thinking that it is low risk and “Guarantee”.
      So, they are also victim of the “mis-leading” tactics by the banks.
      Considering Singapore civil servants (Especially the high ranking one) are one of the best paid in the world (And should be the highest intelligence and character).
      And they still kana tricked by the bank, how can you expect normal citizens to to be “Not Trick” by the banks.
      So, it would mean that banks are engaging in really “Dishonest” tactics and should be investigated and prosecuted.
      .
    • Scenario Two:
      Town council may knew that the mini-bond and note investment is high risk.
      But they still proceed to gamble with the money because of the high return.
      Then it would mean a breech of guideline and investigation and possible prosecution should be considered.
      .
  3. Regard to item #2 above, if we assume that the guideline allow investment in high risk financial products, it would be a bigger problem.
    Cos, allowing town council to play with high risk investment is like gambling with people money.
    We must never forget how Nick Leeson gambled with Bank Baring money and cause the Bank to bankrupt ?
    And there are many more similar cases like this.
    I hope this is not the case.
    .

Attachment #1: My Paper, 18 Nov 2008, Page B1
20081118a5_towncouncillose16mininvestment_mypaperpgb1

.

Attachment #2: Today, 18 Nov 2008, Page 1
20081118a1_towncouncillose16mininvestment_todaypg1

.

Attachment #3: Today, 18 Nov 2008, Page 2
20081118a2_towncouncillose16mininvestment_todaypg2.

Attachment #4: My Paper, 18 Nov 2008, Page A8
20081118a3_towncouncillose16mininvestment_mypaperpga8

.

Attachment #5: My Paper, 18 Nov 2008, Page B3
20081118a4_towncouncillose16mininvestment_mypaperpgb3

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