On 30 November 2022, Deputy Prime Minister and Finance Minister Lawrence Wong explained in Parliament regarding the loss of investment by Temasek in the failed crypto-currency exchange FTX; describing it as disappointing but reassured the nation the it will not impact the Net Investment Returns Contribution, as the NIRC is tied to the overall expected long term returns of Temasek investment entities and not to individual investments.
The DPM said that it is disappointing when there is a loss by our investment entities, as in the case of Temasek’s investment in FTX. Even more so, because the loss arose from what turned out to be a very badly managed company and from possible fraud and mishandling of customer funds. The fact that other leading global institutional investors like BlackRock and Sequoia Capital also invested in FTX does not mitigate this.
What happened with FTX therefore has not only caused financial loss to Temasek, but also reputational damage. Temasek recognises this and has issued a comprehensive statement to explain its due diligence process and the circumstances leading to its investment in FTX. Temasek has also initiated an internal review by an independent team to study and improve its processes, and to draw lessons for the future.
DPM Wong explained that he is confident that the Temasek Board and management team will learn and improve from this experience, and at the same time see this FTX loss in the broader context of Temasek’s performance in early-stage investments. After writing-off the FTX investment, Temasek’s early-stage portfolio as at March this year has generated an internal rate of return in the mid-teens over the last decade, better than industry averages.
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