Singapore’s Temasek Holdings (TEM.UL) slashed the salary for the team that suggested investing in the now-bankrupt FTX cryptocurrency exchange and senior management as they assume “collective accountability” for the failed investment.
On Monday, sovereign funds, whose investment decisions and compensations are private, announced the changes. The move was made six months after Temasek wrote down $275 million on its FTX investment.
“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 Chairman Lim Boon Heng said in a statement posted on the company’s website.
Temasek did not disclose compensation cuts. However, Zennon Kapron, director of fintech research and consulting firm Kapronasia in Singapore, said Temasek’s loss had damaged its reputation and “it had a responsibility to shareholders and the market to demonstrate that it was taking the matter seriously.”
Kapron added, “The cut in investment team compensation was a step in the right direction, but it remains to be seen if it will restore confidence.”
Last year, Sam Bankman-Fried’s FTX was valued at $32 billion after obtaining $400 million from investors like SoftBank (9984.T).
As of March 31, 2022, Temasek’s investment cost in FTX was 0.09% of its net portfolio value of S$403 billion ($304 billion) and had no direct exposure to cryptocurrencies.
Last year, Temasek stated it had done “extensive due diligence” on FTX, and its audited financial statement “showed it to be profitable.”
After FTX filed for US bankruptcy protection in November, SoftBank and Sequoia Capital wrote down their investments to zero.
“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,” Lim said in the statement on Monday. “Nevertheless, we are disappointed with the outcome of our investment and the negative impact on our reputation.”
Lim said Temasek invests in early-stage enterprises to generate sustained returns.
“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,” Lim said.
