PRIVATISATION OF SINGAPORE TELECOM (Engagement of American lawyers)

Mr Low Thia Khiang asked the Minister for Finance whether American lawyers were engaged in the privatisation of Singapore Telecom.

Cdre Teo Chee Hean (for the Minister for Finance): Mr Speaker, Sir, the answer is yes. In the privatisation of Singapore Telecom, Sullivan and Cromwell of New York were engaged by Temasek Holdings and Singapore Telecom to advise on international law, including US law in relation to the international tranche.

Mr Low Thia Khiang (Hougang): Sir, why was there a need to advise on international law when the privatisation was carried out in Singapore?

Cdre Teo Chee Hean: Mr Speaker, Sir, the Member should be aware that the laws regarding commercial transactions in different countries may be different and therefore specialised legal advice was required for a listing of this kind which was put out in many different countries.

Mr Low Thia Khiang: Is the Minister saying that there is no such expertise available in the local law firms?

Cdre Teo Chee Hean: Sir, for a privatisation of this kind where it is a very large and complicated privatisation process, I think it is prudent to go to where the knowledge resides.

Mr Low Thia Khiang: Sir, would the Minister agree that this does not seem to be in congruence with the Government's decision to sever its links with the Privy Council? We said that we in Singapore want to establish a legal practice or legal standard by ourselves.

Cdre Teo Chee Hean: Mr Speaker, Sir, I think the Member has got the two issues quite unnecessarily confused together. Whether or not we go to the Privy Council is a separate issue, ie, whether we consider them to be an appropriate body to take up appeals in particular cases. Here, we have gone to engage experts in this area in order to advise us on what are the correct procedures in the case of a public offering of shares.

Mr Low Thia Khiang: There are two questions here: Firstly, what is the legal cost of engaging the American lawyers? Secondly, I asked the question why there was no competent law firm or expert in Singapore who could give the same sort of service.

Cdre Teo Chee Hean: Sir, the issue at hand here is going to where the best advice is available. As I said, the Singapore Telecom offer was a very large offer made in many different countries and we should go to the lawyers who could offer us the correct advice in these countries so that the share offer could proceed without legal hitches.

Mr Low Thia Khiang; Sir, what about the legal costs involved?

Cdre Teo Chee Hean: I do not have all the costs before me. But the segment that I have suggests that the fees are in the order of US$145,000 plus expenses. Seen in relation to the size of the offer, I think this is quite reasonable.

Mr Low Thia Khiang: Sir, the privatisation exercise was done in Singapore, but the Minister mentioned about going to the best lawyers for advice on international law because of the huge public offer of shares. Why was there a need to do that? Would the Minister explain further?

Cdre Teo Chee Hean: I would be glad to enlighten the Member on the intricacies of such a share offering, particularly when it involves many other countries. While Singapore Telecom is a Singapore company, the Member should know that the shares were also on offer to nationals and companies in many other countries. The 'C' tranche, for example, of 450 million shares initially on offer was a very large offer and was taken up by many investors in many different countries quite successfully because of the advice given.