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Singapore’s Temasek cuts employee compensation after FTX investment fails

Singapore’s Temasek cuts employee compensation after FTX investment fails
  • No misconduct by Temasek investment team
  • The senior management team took “collective accountability”
  • Temasek did not give details of the amount of liquidated compensation

May 29 (Reuters) – Singapore’s Temasek Holdings (TEM.UL) said it has cut compensation to the team that recommended the investment in now-bankrupt cryptocurrency exchange FTX and to senior management, as they take “collective accountability” for the failed investment.

The cuts were disclosed in a statement on Monday, in a rare announcement for sovereign funds whose investment decisions and compensation are not publicly informed. The move comes about six months after Temasek launched an internal review of its investment in FTX, which resulted in a $275 million writedown.

Temasek Chairman Lim Boon Hing said, “Although there was no misconduct by the investment team in reaching their investment recommendations, the investment team and senior management, who are ultimately responsible for the investment decisions made, are collectively held accountable and reduced in their compensation.” “. The statement posted on the Temasek website.

Temasek did not give details of the amount of liquidated compensation.

Zenon Capron, director of fintech research and advisory firm Capronasia in Singapore, said the loss by Temasek had damaged its reputation and it “has a responsibility to shareholders and the market to prove that it takes the matter seriously.”

“Reducing investment team compensation was a step in the right direction, however it remains to be seen if it will be enough to restore confidence,” Capron added.

Founded by Sam Bankman-Fried, FTX was once one of the most valuable startups in the fast-growing cryptocurrency sector globally, reaching $32 billion last year after raising $400 million from investors including SoftBank (9984. T).

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Temasek said the cost of investing in FTX was 0.09% of its portfolio’s net worth of S$403 billion (US$304 billion) as of March 31, 2022, and that it currently has no direct exposure to cryptocurrency.

Temasek also said last year that it had conducted “extensive due diligence” on FTX, with its audited financial statement then “demonstrated to be profitable.”

Other backers of FTX such as SoftBank and Sequoia Capital also cut their investments to zero after FTX filed for bankruptcy protection in the US in November.

“With FTX, as alleged by the plaintiffs and as acknowledged by senior executives of FTX and its subsidiaries, there was fraudulent conduct that was intentionally concealed from investors, including Temasek,” Lim said in a statement on Monday. “However, we are disappointed with the outcome of our investment and the negative impact on our reputation.”

Lim said Temasek seeks long-term sustainable returns by investing in early-stage companies.

“While there are inherent risks whenever we invest, we believe we must invest in new sectors and emerging technologies to understand how these areas impact the business and financial models of our current portfolio, and whether they will be drivers of future value in an ever-changing world.”

($1 = 1.3245 Singapore dollars)

Additional reporting by Urvi Duggar in Bengaluru and Yantoltra Ngoy in Singapore; Additional reporting from Xinghui Kok in Singapore; Editing by Lincoln Feist and Jacqueline Wong

Our standards: Thomson Reuters Trust Principles.

Yantoltra Ngoi

Thomson Reuters

Yantoultra Ngui is Southeast Asia deal correspondent with Reuters in Singapore, covering mergers and acquisitions and capital markets deals in a region fast emerging as a hot destination for start-up investors, unicorns and IPOs. He was previously a reporter for Bloomberg and the Wall Street Journal. Most notably, he was part of the Wall Street Journal team that covered the financial scandal at Malaysian state fund 1MDB. Yantolitra graduated with an MBA in Finance from University Putra Malaysia in 2010.

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