Asia Sentinel

Investment banks have always been the most outrageous of all the many alley cats in the financial services industry. Nothing must get in the way of profit, least of all telling their investor clients the honest truth about companies and countries.

Xie, whose forceful views have long gained attention, had the temerity to cast some doubt on the wonders of Singapore’s economic success and drew attention to its role as money launder for assorted crooks and corrupt officials from Indonesia. In particular he wondered, according to the email, why, given its record in this regard, it had been given the honor (such as it is) of hosting the IMF/World bank annual meeting last month.

Xie’s nine-paragraph email says in part that “I tried to find out why Singapore was chosen to host the conference.  Nobody knew. Some said that probably no one else wanted it. Some guessed that Singapore did a good selling job. I thought that it was a strange choice because Singapore was so far from any action or the hot topic of China and India. Mumbai or Shanghai would have been a lot more appropriate. “

In point of fact, when the World Bank and IMF chose Singapore as the venue for their 2006 meetings, they had been shell-shocked by a long series of violence-strewn meetings in European and other world capitals as protesters took to the streets to demonstrate against the institutions’ role in promoting globalization.  Singapore was picked as a garrison state that could hermetically seal off their meetings against inconvenient marchers.  But Singapore proved too assiduous in quelling dissent for the two institutions. It was too much even for Paul Wolfowitz, the president of the World Bank and, prior to his appointment one of America’s chief neocons. He demanded successfully that Singapore at least allow in a handful of demonstrators.

Xie went on to say that “ASEAN has been a failure. Its GDP in nominal dollar terms has not changed for 10 years. Singapore’s per capita income has not changed either at $25,000. China’s GDP in dollar terms has tripled during the same period.”

Some of the participants, he thought, “were competing with each other to praise Singapore as the success story of globalisation. Actually, Singapore’s success came mainly from being the money-laundering centre for corrupt Indonesian businessmen and government officials. Indonesia has no money. So Singapore isn’t doing well. To sustain its economy, Singapore is building casinos to attract corrupt money from China.”

The leaked email was soon making its way around the region. That proved to be embarrassing enough to guarantee Xie’s departure.  A spokesperson for Morgan Stanley merely told the press that: “We do not comment on personnel issues. We do not elaborate on the reasons of our employees’ departure.”

Xie’s email points up the fact that Singapore was not only the conduit for the flight of billions of dollars in Indonesian (especially Indonesian Chinese) capital during the 1997 crisis, nor that it offered refuge to owners of Indonesian banks who had looted them before leaving for the safety of this ethnic enclave. Nor that the 2001 collapse of Asia Pulp and Paper – with US$12 billion worth of debts one of the biggest corporate disasters of all time and by southeast Asian standards at least the equal of Enron – went very close to members of the Singapore elite who miraculously emerged unscathed from the supposedly incorruptible and strict enforcers of corporate and banking law and regulation.

Morgan Stanley has proved once again that Singapore has western institutions in its pocket, and none more so than the bulge-bracket banks. But being browbeaten isn’t exclusive to Singapore. In a famous briefing note to investors in 1996, maverick strategist Albert Edwards of the investment bank then known as Kleinwort Benson, described Malaysia’s economic policy of promoting high economic growth against a high current account deficit and shrinking foreign reserves as “Noddynomics.”  That occasioned a personal trip from Kleinwort officials to Kuala Lumpur to apologize after Edwards’ note made its way to Reuters news service.

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