29th May 2023 – (Singapore) On 29th May, Temasek’s Chairman, Lim Boon Heng, announced that the investment team and senior management of Temasek have taken collective accountability and had their compensation reduced after the firm’s failed investment in cryptocurrency company FTX. The announcement came after an independent team conducted an internal review of the investment, which was presented to Temasek’s Board Risk & Sustainability Committee and its board.
Temasek’s investment in FTX was written off in November, which amounted to US$275 million (S$372 million). According to Mr. Lim, “there was fraudulent conduct intentionally hidden from investors, including Temasek, as alleged by prosecutors and as admitted by key executives at FTX and its affiliates.” He added that although there was no misconduct by the investment team in reaching their investment recommendation, the investment team and senior management, who are ultimately responsible for investment decisions made, took collective accountability and had their compensation reduced.
Temasek’s statement did not specify the size of the cut in compensation or how many staff were affected. In response to queries, Temasek said it had nothing to add to the statement by its chairman.
The failed investment in FTX serves as a reminder of the inherent risks involved in investing, particularly in emerging technologies and new sectors. While investments in these areas can yield high returns, they also carry a significant risk of loss. As aresult, it is crucial for investment teams and senior management to exercise caution and due diligence when making investment decisions.
Temasek’s investment in FTX was for a minority stake of about 1% in FTX International and about 1.5% in FTX US, totalling US$275 million. The cost of the investment was 0.09% of Temasek’s net portfolio value of S$403 billion as of March 31, 2022. Despite the loss, Temasek remains committed to delivering sustainable returns over the long term.