Singapore Technologies TelemediaTemasek Holdings is the investment arm of the Singapore government, with direct ties to the Chinese government and military. Despite these contacts, its subsidiaries have American defense contracts .One Temasek holding, Singapore Technologies Telemedia, owns a U.S. fiber optic telecommunications network used by the government, considered by the Department of Homeland Security to be extremely sensitive.
In January 2002, Singapore Technologies Telemedia struck a deal with Hong Kong-based Hutchison Whampoa to buy U.S. domestic telecommunications giant Global Crossing and bring it out of bankruptcy. (Global Crossing and Hutchison Whampoa had partnered in 1999 to pursue Internet and telecommunications opportunities in Hong Kong.) The deal drew federal scrutiny because Hutchison Whampoa’s CEO, Li Ka-shing, had been a business partner of the Chinese government and military, whose spies had been stealing U.S. nuclear secrets for decades.
The FBI and Pentagon initially objected to the deal. In January 2003, Global Crossing sent a formal notice to the Committee on Foreign Investment in the United States, a cross-agency federal panel charged with screening foreign companies trying to take over domestic firms with either authority over or impact on U.S. homeland security. Over the next few months, CFIUS had trouble reaching a consensus about the takeover.
In the meantime, Global Crossing had pulled in the big guns to advocate for the deal. Former Defense Secretary William Cohen had been with Global Crossing when the deal was announced, although he left in April 2002. While the government reviewed the potential sale of Global Crossing, two of its representatives—Pete Aldridge, a former Air Force Undersecretary for Acquisition, Technology and Logistics, who later made a fortune with major defense contractors like Lockheed Martin, and Richard Perle, a former Assistant Defense Secretary under President Reagan and major advocate of the 2003 invasion of Iraq—had access to classified defense information through their positions on Pentagon advisory boards. Aldridge stepped down from his Pentagon board, but Perle stayed on despite receiving a $125,000 lobbying retainer from Global Crossing to push the U.S. government to approve the sale. (He was promised $600,000 if the sale went through, but when his conflict came to light, he turned down all compensation and quit the Pentagon board.)
On April 30, 2003, a month after Perle’s conflict of interest made the papers, CFIUS officially launched an investigation of the deal. Hutchison Whampoa backed out the next day, and Singapore Technologies bought a 61.5% stake in Global Crossing.
Singapore and Global Crossing continued to have ties after the deal was scuttled. In April, 2006, PSA International, a Singapore port operator wholly owned by Temasek, bought a 20 percent stake in Hutchison Whampoa. A senior consultant from Singapore Technologies still sits on the board of Hutchison Whampoa.
Other Temasek subsidiaries are still hiring top U.S. defense and administration officials, picking up Pentagon contracts, and passing CFIUS review. In 2001, Retired U.S. Army General John G. Coburn became CEO and chairman at VT Systems, a Singapore Technologies Engineering—and therefore Temasek—holding. Coburn also sits on the board of iDirect, a 2005 Singapore Technologies acquisition. VT Systems, iDirect, and their subsidiaries hold close to $200 million in U.S. defense contracts.
Even though the Committee on Foreign Investment in the United States has had jurisdiction in approving recent deals concerning VT Systems, CEO Coburn insists it is an American company. "It's incorporated in Delaware," he said. "The profits from the company will be put back into the company, and it employs Americans.”
- Arcapita summary
- Global Crossing summary
- Hutchison Whampoa summary
- Cohen Group summary
- Aldridge summary
- Coburn summary
- Cohen summary
- Ka-Shing summary
- http://web.archive.org/web/20030512010447/http%3A//singapore.usembassy.gov/ep/2001/G LC2000.html
- http://www.cfoasia.com/archives/200610-01.htm (Dubai World runs holdings of emirate of Dubai; DW oversees Dubai Ports World and Istithmar.)
- 1/28/2002: Global Crossing announces Hutchison deal, files for bankruptcy, still 50/50 with Hutchison on HGC (http://bankrupt.com/global.txt)
- 4/8/2002: GC announces Cohen’s resignation
- 4/30/2002: Hutchison buys out GC’s half of HGC (http://archives.cnn.com/2002/BUSINESS/asia/04/30/hk.hutch.biz/index.html)
- 1/24/2003: GC sends formal notice to CFIUS
- 2/7/2003: GC sends plan to CFIUS (http://www.law.com/jsp/article.jsp?id=1045187910909)
- 2/11/2003: CFIUS meeting, couldn’t reach consensus
- 2/24/2003: CFIUS must complete review
- 2/28/2003: Bush quietly adds Ridge and DHS to CFIUS
- 4/28/2003: If no decision, then formal CFIUS investigation required, and Bush must make decision personally
- 4/29/2003: still nothing
- 4/30/03: CFIUS announces it will officially investigate the deal
- 5/1/03: Hutchison pulls out