Income-Allianz deal: NTUC central committee did not know about capital reduction plan, says Desmond Tan
NTUC's central committee only found out about the capital reduction plan during the ministerial statement on Monday (Oct 14). It was later told that this plan was "commercially sensitive information", says deputy secretary-general Desmond Tan.
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SINGAPORE: The central committee of the National Trades Union Congress (NTUC) only knew about the capital reduction plan in the proposed deal between Income Insurance and Allianz when it was announced in parliament, said deputy secretary-general Desmond Tan on Wednesday (Oct 16).
Responding to questions from Members of Parliament (MPs) during the debate on the Insurance (Amendment) Bill, Mr Tan said that NTUC is a major shareholder of NTUC Enterprise, but does not get involved in the day-to-day running of operations.
NTUC Enterprise holds a 72.8 per cent stake in Income Insurance.
Mr Tan said that the NTUC’s central committee was briefed by NTUC Enterprise and Income Insurance on the “strategic imperatives” for the deal, but the capital reduction plan was not highlighted to the central committee.
“In fact, the central committee and myself only knew of this on Monday at the ministerial statement,” said Mr Tan, who is also senior minister of state in the Prime Minister's Office.
"And as I'm made aware now, from clarifications with (NTUC Enterprise) and Income, Income as a non-listed public company would have to comply with the legal responsibility of non-disclosure of commercially sensitive information on Allianz's plans post acquisition ... because as a non-listed public company ... Income is subject to the Singapore code of takeover and mergers."
The proposed Income-Allianz deal had sought to decrease the capital held by Income, returning some S$1.85 billion to shareholders within three years.
The central committee of the National Trades Union Congress (NTUC) only knew about the capital reduction plan in the proposed deal between Income Insurance and Allianz when it was announced in Parliament, said NTUC Deputy Secretary-General Desmond Tan. He pointed out that NTUC is a major shareholder of NTUC Enterprise but does not get involved in the day-to-day running of operations. Speaking in Parliament on Wednesday (Oct 16), he highlighted the key considerations of NTUC in the proposed deal and its commitment to the larger social mission. Mr Tan said Income has played an important role in providing affordable insurance for workers and Singaporeans. NTUC has reviewed the matter and accepts the Government's considerations and decisions on the proposed transaction. It also supports the Bill to amend the Insurance Act. Mr Tan said Income has committed to studying carefully the implications and will work closely with the relevant stakeholders to decide on the next course of action. From the outset, NTUC’s objective was to build a stronger Income so that it can do well and do good, he said. The labour movement will continue to “do right by our people” and what is necessary for the longer-term interests to serve workers and the people of Singapore, he added.
CONCERNS FROM MPS
Mr Tan was responding to questions from two MPs on the NTUC leadership's knowledge of the deal.
Nominated MP Raj Joshua Thomas pointed to an Aug 5 statement from NTUC president K Thanaletchimi and secretary-general Ng Chee Meng stating that Income would only be able to “continue to fulfil its social mission” if it has access to additional resources to scale up.
"So this begs the question – whether Income had briefed the NTUC leadership of the proposed initiative to reduce share capital," Mr Thomas said.
"I think that Income has a bit of explaining to do," he added.
Non-Constituency MP Leong Mun Wai presented similar questions during the close to four hours of debate, asking if NTUC’s leadership was briefed on the full details of the transaction, including the capital reduction plan.
Culture, Community and Youth Minister Edwin Tong told parliament in a ministerial statement on Monday that the deal had been blocked by the government.
Under the proposed transaction, which was announced on Jul 17, Allianz would have acquired a majority stake in Income. The announcement triggered a public outcry, with concerns over whether Income would continue its social mission.
Mr Tong said the government has decided that the deal in its current form would not be in the public interest.
While the government will not allow the proposed transaction to proceed, it is open to new arrangements if the concerns highlighted are fully addressed, said Mr Tong.
INCOME'S SOCIAL MISSION
Mr Tan also reiterated the social mission of Income, with efforts such as providing low-cost insurance schemes and keeping premiums affordable for lower-income workers.
NTUC’s social mission also extends beyond insurance into areas such as education and training and eldercare, he noted.
He said the government and NTUC both share the same strategic intent and broader objectives for Income and the co-op movement.
“But as far as the specifics of this transaction (are) concerned, there is now perhaps a difference in view, as (the) Minister (of) MCCY has clearly laid out the concerns over circumstances behind Income’s corporatisation and the minister's exemption given, as well as the terms and structure of the proposed transaction,” he said.
Mr Tan added that NTUC has reviewed the matter and accepts the government's considerations and decisions on the proposed transaction, and that it supports the Bill to amend the Insurance Act.
NTUC and other union leaders met Deputy Prime Minister Gan Kim Yong, Second Minister of Finance Chee Hong Tat and Mr Tong on Wednesday night after parliament was adjourned.
Labour chief Ng Chee Meng said the government's decision to block the deal and the implications of that decision were of key concern to union leaders who had supported the deal.
Mr Ng said the ministers had an "honest and productive engagement" with the union leaders.
"It was a platform for NTUC and our unionists to clarify the issues and be heard throughout this process," he said in a Facebook post.
"NTUC respects and accepts the government’s decision that the transaction cannot proceed in its current form.
"Our unwavering focus is on the well-being of our workers, and we will continue to put our workers first in all we do."
