SINGAPORE – The information-sharing process between different agencies was among the key issues raised as MPs debated the move to halt German insurer Allianz’s planned offer for Singapore’s Income Insurance.
Whether the move affects the Republic’s attractiveness as a business destination was also surfaced by MPs during the debate on an urgent Bill to amend the Insurance Act on Oct 16.
A total of 16 MPs spoke for about four hours before the Bill was passed. All seven Workers’ Party MPs present abstained.
The proposed deal drew public outcry when it was announced in July. It was then raised in Parliament on Aug 6.
But the Government decided to halt the deal on Oct 14 after the Monetary Authority of Singapore (MAS) provided new information to the Ministry of Culture, Community and Youth (MCCY) after the August sitting.
This included Allianz’s plans to return $1.85 billion in cash to shareholders within three years after the deal is completed.
The sequence of events prompted several MPs to question why the MAS did not disclose this information earlier, with PAP backbencher Joan Pereira (Tanjong Pagar GRC) asking if the capital extraction exercise could have been shared during the August sitting.
“It is comforting to know that we continue to have good officers in the MAS who are alert and can pick out issues beyond their scope. However, could this information been shared earlier with the House when the topic was heavily debated in Parliament back in August?” she said.
WP MP Jamus Lim (Sengkang GRC) described the situation as “a communication breakdown that may reveal some troubling pathologies with how this government conveys information within itself, and with the public”.
“I wonder if it is only me that finds it troubling that there was no coordinated discussion between the two major relevant regulators, MAS and MCCY, in advance of the proposed deal,” he said.
Similarly, Progress Singapore Party Non-Constituency MP Leong Mun Wai said he was “seriously concerned at the process by which we arrived at the conclusion to block the deal”.
While noting the efforts put in by MCCY and MAS to scrutinise the transaction and draw up the Bill in question, he asked why relevant information about the high-profile deal was “being gatekept by different agencies within the Government”.
“I accept that sometimes, because of market sensitive information, it may not be possible to publicly disclose the full details of a proposed transaction. But in this case, we are talking about information being shared within the Government, between agencies,” he said.
“Throughout this whole affair, it seems that every gatekeeper is concerned only about the part of the process owned by them, and no one is keeping an eye on the overall outcome.”
Mr Leong also stressed the need for Income and its parent NTUC Enterprise to explain why they agreed to the capital reduction plan when both parties had earlier said that Income needed capital to provide affordable insurance.
In response, Second Finance Minister and MAS deputy chairman Chee Hong Tat said Mr Lim and Mr Leong had made “serious allegations” against public officers and government agencies and that it is unnecessary to throw them “under the bus”.
Mr Chee noted that MAS required time to assess the capital reduction plan which it received in mid-July, and that it is unfair to expect MAS to automatically be aware of the MCCY exemption given to Income earlier.
“It was only after we had a fuller understanding of the set of issues and after the Aug 6 Parliament sitting that the MAS team saw that there could be a connection to what MCCY was looking at.”
Mr Leong also termed the capital reduction plan as an “asset stripping exercise”, which drew an objection from Mr Chee who said that it is a deliberate and unfair description.
Mr Chee added that NTUC had acted in good faith and entered into the deal wanting to do the right thing, which is to strengthen Income so it could serve its policyholders and also to fulfil its social mission.
He acknowledged that there is a difference in views between what NTUC and Income have put up and what the Government feels is the right way forward.
“But we do not disagree with the objectives of why we are doing this, or why Income is doing this, the purpose of doing this is the right one, is to strengthen Income to do well, so that it can do good.”
Several MPs also raised concerns about how the rejection of Allianz’s offer on the grounds of public interest would affect Singapore’s attractiveness as a stable business centre to foreign investors.
Mr Liang Eng Hwa (Bukit Panjang) noted that Singapore has never been averse to foreign investors acquiring local companies, including iconic names such as Raffles Hotel. The hotel is owned by Qatar-based global hotel developer Katara Hospitality.
However, he acknowledged there could be “areas where unfettered free market may not serve us well”.
In stating his support for the Bill, Mr Liang called upon the Government to reaffirm the longstanding policy of positioning Singapore as an investment-friendly global hub.
WP MP He Ting Ru (Sengkang GRC) noted that passing legislation which has or is seen to have a retrospective effect must not be taken lightly. This refers to a law or legal decision that applies to events that took place before the law or decision was enacted or made, allowing a new law or change in the law to affect past events or conduct.
“This is especially so when it adversely affects the rights and interests of persons, and has the potential to hurt Singapore’s reputation for certainty, stability and predictability of our commercial laws,” she said.
Nominated MP Usha Chandradas also highlighted the rushed amendments.
“We need to be careful that we are not inadvertently sending a message to the world at large that it is possible for corporate deals to be suddenly overturned by the Government, for legislation to be rushed through and for carefully planned corporate negotiations to be disrupted,” she said.
Mr Chee said the Bill does not affect any completed transaction.
“There is no formal application yet by Allianz to obtain effective control and become a substantial shareholder of Income,” he added.
“The contractual terms of the transaction clearly state that it is subject to regulatory approval by MAS.”
Suggestions were also made about Income’s possible next steps, such as listing on the local bourse.
Nominated MP Keith Chua said that current options on the Singapore Exchange for profitable companies with a clear social mission are limited.
“A public listing would both bring in fresh capital and enable NE (Income’s parent NTUC Enterprise) to free up a portion of the Income investment.”