17 August 2001

Singapore's shenanigans

Eric Ellis

EVEN when its interests are separated, or trying to appear separated, Singapore Inc can't help but bump into itself.
Take a court action that is titillating this litigious town, which has made a near art form out of court cases that wouldn't see the light of day elsewhere.
The case is of interest to Optus shareholders as it affects the company that many of them are about to be sold into: Singapore Telecommunications. Singtel is headed by Lee Hsien Yang, the 42-year-old son of Singapore's strongman, Lee Kuan Yew.
Government-owned SingTel has been hit with a suit from the city state's telecoms regulator, the Infocomm Development Authority. The regulator is seeking the refund of $S388 million ($421 million) it overpaid SingTel in compensation dating from 1997 for the loss of its monopoly.
It was a sweet deal. The regulator paid SingTel $S1.5 billion, for SingTel's lost earnings for the period that its original monopoly was to last. Sweeter still, the compensation did not attract tax.
That struck observers as odd. If SingTel had kept its monopoly and earned the $S1.5 billion as normal profits, it would have been taxed at the normal corporate rate. If the IDA was generous enough to compensate for the loss of profits, why wouldn't the compensation likewise attract tax? No comment, says the IDA's Jennifer Toh. The IDA simply says SingTel was informed last October that the compensation didn't attract tax, good enough reason for it now to demand it back.
The IDA was part of the authority that owned SingTel and is part of the Ministry of Communications, which has a senior official on the SingTel board.
But times have changed in Singapore, or at least have the appearance of changing. There's been a telco deregulation of sorts. SingTel may have lost its monopoly on fixed-line services but the Government has not lost control of Singapore telcos.
SingTel's major competitor, Starhub, traces its control back to a government-owned company, Singapore Technologies, managed by Lee Hsien Yang's sister-in-law.
Such detail is rarely mentioned in Singapore or, rarer still, examined by the media, itself firmly under the Government's thumb.
The IDA case moved The Straits Times to a rare comment from its news editor, Tammy Tan, who professed to being "shocked" by the regulator's bold action.
The idea of a regulator regulat ing perhaps is shocking in Singapore. But that's what regulators do in countries that purport to practise world's best standards of corporate governance, as Singapore does.
Tan says the action followed criticism in Australia about the foggy lines between government and business as put about by Kerry Stokes, executive chairman of the Seven Network and Geoff Stokes, chief executive of Qantas.
But what Tan didn't examine was why it took four years for the IDA to act against SingTel. Nor did the paper examine the personalities behind the legal action.
It might have started with IDA chief executive Yong Ying-I. She sits on the board of the Defence Science and Technology Agency, the arm of Singapore's defence ministry that "provides leading-edge technological solutions to the Singapore Armed Forces", including surveillance, a subject which has disquieted Australian defence analysts worried about the implications of SingTel's takeover of Optus-run Australian military satellites. Also on the board is Lee Hsien Yang, the SingTel CEO and her opponent in the tax case. Also on the board is Lee's sister-in-law Ho Ching, who heads StarHub, SingTel's competitor.
Yong is a member of one of Singapore's leading power families. Her father is Singapore's Chief Justice, Yong Pung How, who at various times has been chairman of Singapore Airlines, managing director of the quasi-central bank, managing director of the Government's main investment company and deputy chairman of the newspaper monopoly that owns The Straits Times.
The week before his daughter signed off on the suit against SingTel, Yong was terminating the political career of veteran Singapore opposition leader, Joshua Jeyaretnam, by dismissing his appeal against a bankruptcy order from a crippling defamation action.
Bankrupts cannot be parliamentarians and the two-minute court ruling meant that Jeya, as he is known in Singapore, will lose one of the three (out of 91) seats not controlled by Lee Kuan Yew's People's Action Party.
Lee Kuan Yew and Jeyaretnam have been frequent defamation sparring partners over the last 30 years in legal battles Lee has never lost. He's been able to employ expensive lawyers, like the two silks on either side of the IDA-SingTel action.
The IDA is being represented by Davider Singh and SingTel by K.Shanmugam. Both are familiar to the Lee family: both are MPs representing the ruling PAP, two of the handful of ethnic Indian Singaporeans to do so.
And it's also because both men have acted for PAP elders like Lee, Prime Minister Goh Chok Tong and Deputy Prime Minister Lee Hsien Loong, Lee's eldest son and elder brother of the SingTel chief.
Indeed, Singh was in court the day after Yong handed down his bankruptcy ruling against Jeyaretnam, representing Lee Kuan Yew in another defamation action against Jeyaretnam.
Singh, Shanmugam and Jeyaretnam have sparred often. In 1997, Jeyaretnam unsuccessfully represented opposition figure Tang Hong Liang, who soon after exiled himself to Melbourne, in a case brought by PM Goh, Lee Kuan Yew and six PAP colleagues. Goh was represented by Shanmugam and Lee by Singh.
In 1998, Singh represented Goh in another defamation case against Jeyaretnam. In 1995, Shanmugam acted for The International Herald Tribune in a case brought by Goh and the two Lees. Two years later, he was representing Goh in action against Jeyaretnam and in the same year himself successfully sued Jeyaretnam and members of his Workers Party for defamation.
This time, Singh and Shanmugam are in the intriguing position of being MPs from the party that has formed government for the past 40 years, representing two government instruments in a suit against each other.
Conflicts? Not to Singapore sensibilities, which are used to their leaders multi-tasking and have few avenues to air dissent.
But it might be frowned on in Australia by Optus shareholders, about to be taken over by a company that, on doing so, may soon have to hand back $S388 million of its cash pile that attracted Optus in the first place.
Singh didn't respond to requests to be interviewed, while Shanmugam said he couldn't find the time to speak, having to run off to a National Day dinner.