Commentary: Income affair shows a S’pore that is out of touch 

The brouhaha over Allianz’s bid for Income Insurance

Finally, the man has spoken.

After nearly two weeks of silence, the missing piece in the Income Insurance’s jigsaw puzzle — the head honcho of Alllianz — has talked about his company’s proposed purchase of a majority stake in the company, beating the drum about (what else?) money.

Chief executive officer Oliver Baete said at his company’s second quarter earnings briefing in Frankfurt that he expects a double digit return on investment.

There was a teeny weeny bit of response to how the planned purchase has hit a sour note in Singapore, with some fearing that Income’s original purpose of being a social business will be lost.

He also noted that there was already “a lot of local noise” when the company first corporatised 2½ years ago, reported The Business Times.

The only other time Mr Baete touched on that topic was when he said Alllianz is fully committed to the cause of Income in providing “affordable insurance and healthcare cover”.

Allianz in July had revealed plans to buy a 51 per cent majority stake in Income Insurance, a few months after selling some of its US insurance businesses. NTUC Enterprise will hold up to a 49 per cent stake after the acquisition.

The news has been met with some strong objections.

‘Should never be sold’: Tommy Koh speaks up against Income Insurance-Allianz deal

The proposed merger with Allianz was done in such a fashion that is astounding at best and low class at worst. I will leave the merits and demerits of the proposed merger aside as much has been said about it. 

Instead, I’ll concentrate on what it tells of a system that has exposed an establishment that is very unlike that of a progressive and modern Government.

Many concerns emerged from the proposed sale

First, conflict of interest.

Income’s appointment of Morgan Stanley as the financial adviser for the planned deal smacks of a moral compass that seems out of whack with modern governance rules.

Although assurances were given that the chairman of Income, who is also the top officer at Morgan Stanley’s South East business, was not involved in making the decision on Allianz (he recused himself, according to an issued statement), it still left a sour taste.

Conflict of interest issues must not be decided only on a legal basis. The moral element is equally important.

Companies and governments must realise that a mature populace that is emerging is not going to keep quiet when they see such practices cropping up.

So many detractors

Two, the surprise entry of a big gun such as Mr Tan Suee Chieh challenging the proposed merger.

He is the former CEO of NTUC Income and NTUC Enterprise and a respected actuary, with a track record that is difficult to ignore.

Mr Tan did not just take a stand against the proposed deal — he also used social media to get Singaporeans to speak up against the proposed merger.

Singapore’s corporate chieftains don’t normally go public and take on the establishment over such matters.

His Facebook posts have added heat to the debate with public intellectual Tommy Koh and a former board member at Income, Audrey Chin, coming out publicly against the sale of the deal to a foreigner.

Trust is important

Three, trust. This goes to the heart of the angst. Opposition leader Tan Cheng Bock called the affair a “broken promise”. And this is what has riled up many.

When Income was corporatised two years ago, the insurance company’s CEO assured members that its social role will continue to be upheld.

Even more, he said it will be the main shareholder — but with a caveat, that this is subject “to the interests of Income, which must remain paramount”.

That caveat has been realised, with the proposed deal giving Allianz a 51 per cent stake.

Income has repeatedly stressed that the deal will be good for Income, given the unsustainable highly competitive environment. It is, however, still unclear what this means for the regular man.

Despite assurances, the general public remain unconvinced that the needs of the vulnerable and lower income group will be met.

This is where Income takes the hardest knock. The Singapore establishment considers trust as a cardinal principle of governance.

It will go to any length to defend its position because it has said many times that if trust is lost, everything is gone.

The power of social media

Four, social media. Without this tool, many would not have had an avenue to voice their concerns.

The online world had a field day as the mainstream media was reticent in its reporting, playing up official side’s views and stoking up anger not just at The Straits Times but also at officialdom.

Looking at how this story is playing out, one thing is clear.

The establishment is out of sync with a Singapore that is transitioning to a society that is not going to keep quiet when a wrong is done.

PN Balji is a veteran journalist and former editor at TODAY and The New Paper, with more than 40 years of experience in the newsroom.

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