Singapore punishes state fund managers who invested in FTX

‘We are disappointed with the outcome of our investment, and the negative impact on our reputation’

Singapore’s state-owned conglomerate Temasek says it has docked wages for staff who were involved in the company’s investment in the now-bankrupt cryptocurrency exchange FTX.

The measure is being taken as a form of “collective accountability” for the failed investment, Temasek said on Monday.

“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,” the company noted in a statement.

FTX, the cryptocurrency exchange founded by American entrepreneur Sam Bankman-Fried in 2019, was once one of the most valuable start-ups in the world, and had over one million users at its peak in July 2021.

The start-up, which had a valuation of $32bn in 2022, collapsed in November last year.

Temasek’s move to cut staff compensation comes six months after the Singapore-based conglomerate initiated an internal review that led to a writedown of its entire $275m investment in FTX.

“An independent team has conducted an internal review of the investment and the findings were directly presented to the Board Risk & Sustainability Committee and to our Board,” Temasek said in its Monday statement.

The loss sufffered by Temasek from the FTX collapse dented its reputation and the company “had a responsibility to shareholders and the market to demonstrate that it was taking the matter seriously,” Zennon Kapron, director of fintech research and consulting firm Kapronasia, told Reuters.

“With FTX, as alleged by prosecutors and as admitted by key executives at FTX and its affiliates, there was fraudulent conduct intentionally hidden from investors, including Temasek,” Temasek’s chairman Lim Boon Heng said.

“Nevertheless, we are disappointed with the outcome of our investment, and the negative impact on our reputation,” he added in the statement.

Mr Lim said Temasek seeks to deliver sustainable returns over the long term by investing into early-stage companies.

“While there are inherent risks whenever we invest, we believe that we have to invest in new sectors and emerging technologies to understand how these areas may impact the business and financial models of our existing portfolio, and whether they would be drivers of future value in an ever changing world,” the Temasek chairman added.

The company has not disclosed how much was cut from its investment team’s compensation.

Mr Bankman-Fried faces 13 counts of criminal fraud. He has denied stealing money from FTX’s customers, pleading not guilty to fraud and conspiracy.