CEOs of SMRT and NOL: To be axed, to fall on own sword or not at all

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An honorable member of the Coffee Shop Has Just Posted the Following:

For a cack-handed response to so far the mother of all disruptions, one can hardly do any worse than SMRT CEO, former Lieutenant General Desmond Kuek who, in reply to reporters’ questions as to why the problems were not identified earlier, said that because the MRT system is old, even with intensified maintenance, it was impossible to find out all the inherent problems.

Is not the need to invest to update and to renew an “old” system a foremost requirement for a transportation company?

But the cack-handedness did not stop just with Mr. Kuek. The CEO of the Land Transport Authority, SMRT’s principal regulator, former Rear-Admiral Chew Meng Leng, was silent as to the regulatory framework which ought to require the PTO (Public Transport Operator) make sufficient investment to ensure the chance of such severe disruptions would have been minimal.

Natural aristocrats don’t sack each other?

Inevitably, there were calls for the dismissal of Messrs. Kuek and Chew and even the Transport Minister another former Rear Admiral Liu Tuck Yew, who presided over a litany of issues over trains, buses and taxis. Meanwhile, away from the spotlight, NOL helmed by former Lieutenant General Ng Yat Chung continues to flounder in the high seas.

Last week Deutsche Bank co-CEOs Juergen Fritschen and Anshu Jain announced their resignations as their positions had become untenable when shareholders holding 39%, yes just 39% of the bank’s capital voted against the management board over their own cack-handed handling of a very difficult strategy review. Five CEOs of global banks had lost their jobs this year. Will the axe fall on Messrs. Kuek, Chew, Liu and Ng or will they opt for the honourable ritual of falling on their own swords? But unlike Herr Fritschen and Mr. Jain untenable their positions are not and that have little to do with talent or performance.

The difference? Messrs. Kuek, Chew, Liu and Ng are the box standard for membership of that certain “natural aristocracy” preferred by Prime Minister Lee Hsien Loong at a recent speech at the LKYSPP if that is meant by kinship not of blood but of shared background of scholarship, career escalators or connectedness to the nexus between government, civil service and state directed enterprises, preferably all of the afore-mentioned. They are deemed to have the “right stuff” to rule and to lead even if this is rested on a set of examination results and unseemly rapid promotions. That is those who has no need “to scrape and to bow” according to the Prime Minister. One should then not be so surprised by the all-round cack-handed performance.

Much like the “inbred losers”, the modern British derogative term for the old European aristocracy, it may be bad manners and may besmirch one’s own reputation to sack one’s own peers or be sacked by them. Or worse it might invite unwelcome but necessary heightened scrutiny over performance and accountability over one’s actions, the sort of things that seem meant for the lower order of beings.

The Invisible hand of Temasek?
Here is a thought, controversial or not depending on one’s disposition; is the delivery of dividends to majority shareholder, Temasek Holdings, the paramount concern over all else including the need for sufficient investments to minimize the serial disruptions?

Back in January this year, Standard Chartered Bank CEO Peter Sands was ousted and Chairman John Peace to leave in 2016, according to the Financial Times, after a period of pressure from Temasek who owned 17.2% of the bank acting in concert with Aberdeen Asset Management. It is far easier to axe the CEOs of 54.5% owned SMRT and 66.9% owned NOL. But Sands and Peace are not in the same club as Kuek and Ng it seems. Again had SMRT and NOL not been majority owned by Temasek, would shareholders especially the activist sort, allowed their companies to be helmed by CEOs who had zero private sector experience? The answer is no. Best man for the job really?

One may think that when the Prime Minister spoke about a natural aristocracy, he may be pining for a bygone age. But if by that term is meant a class of people to whom the 2 generals and 2 admirals count as their peers, then it is plain that academic qualifications and connectedness are nothing without being tested, scrutinised and made accountable. The natural aristocracy is no way to future proof the nation.

Chris Kuan

* Chris was regional head of capital markets for Asia Pacific until his retirement. He writes opinions and commentaries mostly on economic and financial matters.


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