In the past decade, we have become all to used to corporate accounting scandals. Respected companies like Olympus, Lehman Brothers, AIG, and the most notorious fraudster Bernie Madoff have all been caught blatantly manipulating accounting statements dating back many years. As a result of their behavior, those responsible lost their jobs or went to prison. What happens when arguably the largest accounting restatement in the history of human existence due to fraudulent accounting practice takes place in the Singaporean government? Nothing. Absolutely nothing. Between September 2011 and April 2012, the government of Singapore restated its public finances raising it cumulative surplus from 1990 to 2010 from $271 billion SGD to $429 billion SGD. Through an unannounced accounting restatement which Statistics Singapore data does not reflect, the cumulative surplus between 1990 and 2002 increased from $189 billion SGD to $311 billion SGD. In other words, due to an accounting restatement of its own public finances, Singapore increased the size of its budget surplus by $158 billion SGD. While a restatement increasing the size of the Singaporean surplus may at first seem like a good thing, it is in fact not a good thing. The last Singaporean balance sheet listed $705 billion SGD in assets but also $359 billion SGD in debt giving it only $346 billion SGD in net assets. In other words, through the investment magic of Temasek Holdings and GIC, Singapore managed to turn $428 billion SGD in government surpluses into $346 billion SGD in net equity. The larger the surpluses in Singapore means the larger the losses and discrepancies in Temasek and GIC. This restatement as a couple implications. First, given the historical length and size of the accounting restatement, the government should be held accountable to provide detailed information about restated items. $158 billion SGD restatements destroy any credibility and demand a public explanation. Second, those responsible at the highest levels should be held accountable for accounting manipulation dating back more than twenty years. $158 billion SGD is not an accounting rounding error. A restatement of $158 billion is a deliberate manipulation. Third, given the restatement, there is absolutely no way Temasek and GIC claims of long term returns can be considered accurate. $428 billion SGD in surpluses does not turn into $346 billion in net equity by earning 7-17% over more than twenty years. For a government who claims to value accountability and transparency, its attempt to cover up a restatement of $158 billion SGD or approximately 50% of GDP is appalling. At what point does a restatement become worthy of a public statement by the government: $300 billion, $500 billion, $1 trillion? If Singapore was a company, people would deservedly have lost their jobs. Only in Singapore is a $158 billion SGD accounting fraud standard operating procedure.
Posted on: Wed, 05 Mar 2014 01:53:26 +0000
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