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Departure of Saw and Ng is a surprise yet not so surprise when comes to money and shareholdings

The resignation of Saw Phaik Hwa as CEO of SMRT and the ousting of Ng Ser Miang as Chairman of WBL have no relation except one is making good money and the other is not making enough money for their companies respectively.

Either making more money or not making enough money both have to go.  SMRT is making too much money but the larger population is not happy. WBL is not making enough money so the shareholders are not happy, even though Ng has a strong political connection in Singapore.

The greater surprise is Ng due also to his international standing as the Vice-President of the International Olympic Committee (IOC) while Saw’s resignation is expected and her leaving is only a question of timing.

For profit maximization and return on investment principles, the ousting of Ng is correct as the Company Board is responsible for the business performance to the shareholders.  If the shareholders are not happy, not making enough money, not getting better returns, even how strong your political connection is, you will have to go.

In this way, Saw is lucky or perhaps her political connection is even more ‘powerful’ than Ng and she can take her own time to resign and not to be ousted by the Board or shareholders but by the general public.

SMRT vs. WBL: Different structure of shareholding

When we look further to the share structure of the 2 companies we will see the difference. One is under the control of the government and the other is private owned and managed. 

SMRT is in fact a GLC that Temasek is the biggest shareholder; indirectly this is a government controlled company.  If the government is happy with your performance, you can keep your job, especially the ROI is good and there is good reason to keep the CEO.

However, WBL is very different.  The shareholders are private companies that they are keen to have higher returns. According to The Business Times (BT), while fund managers Third Avenue Management LLC and Aberdeen Asset Management voted against Ng, WBL's largest shareholders OCBC and its subsidiary Great Eastern supported him. At the end, Ng was ousted out by 54.64% of the shareholders.

It is not clear why SMRT wants to keep Saw even after major disruptions and delays of SMRT trains. Perhaps, Temasek sees it as a small matter in view of the profit that Saw has generated in the past few years. The more profit SMRT makes, the more Temasek will have the share of the profit.   It seems to be a cash cow for Temasek as its other investments can not guarantee such a stable and good return. 

However, this is a very short-sighed decision.  Train disruptions and delays will affect SMRT performance as it is the core business of the company.  In the longer run, SMRT will have to come out with higher maintenance cost, penalty, damages or even claims of liability. 

<A few shops here, a bazaar there and, in 2008, the first mini mall in an MRT station outside the city opened up. By the close of FY2011, SMRT posted almost $57 million in operating profit from rental income, up from an insignificant amount before 2003.>

No matter how good is the sale of the retail space, it is always a non-core business unless SMRT wants to go into property development with the help of Temasek, CapitaLand etc. Then it should not be awarded the licence to operate the train services.  

Value of political connected persons

For the WBL case, it seems that the private businesses are looking at performance. You keep your post if you keep up with the company expectation demanded by the shareholders. 

<In a recent interview, Straits Trading's executive chairman Ms Chew told The Straits Times: “WBL’s business is not a bad business but it could do much better."
WBL's key businesses span technology, automotive, property, and engineering & distribution. In Singapore, it distributes upmarket car brands such as Bentley, Bugatti, Jaguar, Land Rover, McLaren, Renault, Volvo. It has a substantial landbank in China with its business consisting of property development, property management and property investment.
It reported a 10.6 per cent decline in full-year net earnings to $89.1 million in its last financial year ending Sept 30.>

We used to have a lot of PAP MPs sit in the Board of Directors in SGX listed companies.  It is time to judge these MPs by performance rather than their PAP connection.  Their usefulness is limited and may only be applicable to GLC controlled companies but in private business it is better to practice the business way.   

Further to the high pay of ministers, these MPs are also over paid in their director’s fees.  Companies should judge the performance of these MPs like what the shareholders of WBL did to Ng.

It does make a difference whether it is a GLC or private business. It helps us to see the difference.


  1. Perhaps thw ousting of NSM (one-term NMP and found of TIBS [later SMRT Bus]) signals that there no smooth political career (MP level at least) of anybody in SG. And furthermore there's higher risk of "parachuting the talents" - no guarantee of securing the seats.


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