PSP Chairman Tan Cheng Bock questions Income’s broken promises on 2022 corporatisation

Dr Tan Cheng Bock, Chairman of the Progress Singapore Party (PSP), has raised concerns over whether NTUC Income has reneged on its 2022 promise to maintain NTUC Enterprise as its majority shareholder following its corporatisation.

In a Facebook post on Saturday, Dr Tan questioned the integrity of the assurances made by NTUC Income’s CEO, Andrew Yeo, in light of recent developments. A German insurance company, Allianz, has proposed to acquire at least 51% of NTUC Income’s shares, with NTUC Enterprise seemingly poised to sell its majority stake. Currently, NTUC Enterprise holds 72.8% of the shares in NTUC Income.

The announcement by Allianz on 17 July revealed its intention to purchase a controlling stake in NTUC Income, offering S$40.58 per share, valuing the transaction at S$2.2 billion.

In January 2022, NTUC Income transitioned from a worker’s co-operative insurer to a company, attracting significant public scrutiny.

The public questioned whether the move would compromise NTUC Income’s status as a social enterprise, established in 1970 to provide affordable insurance to low-income Singaporean workers.

In response, Mr Yeo assured in a letter to the Straits Times Forum that the corporatisation was a mere change in legal form and that NTUC Enterprise would continue as the majority shareholder.

“We would like to clarify that although Income was established as a cooperative in 1970 to provide essential insurance to underserved workers in Singapore, it is neither not-for-profit nor non-profit. We must first be a thriving and sustainable enterprise before we can fulfil our social commitments.”

“The corporatisation exercise changes only Income’s legal form from a cooperative to a non-listed corporate entity. The new entity will remain an NTUC social enterprise. NTUC Enterprise will continue to be the majority shareholder of the new entity,” wrote Mr Yeo.

This assurance was also documented in the minutes of the Annual General Meeting of NTUC Income Insurance Co-operative Limited in May 2022.

“Post-corporatisation, NTUC Enterprise will continue to be the majority shareholder of the new company, Income Insurance Limited,” the minutes stated.

However, Dr Tan highlighted that this promise appears at risk of being broken.

“A German insurance company, Allianz has offered to buy ‘at least’ 51% of the shares in NTUC Income. Surprisingly, NTUC Enterprise looks set to sell its shares to make Allianz the new majority shareholder in Income. That would be a big promise broken,” Dr Tan wrote.

Dr Tan pointed out that NTUC Enterprise has not backed Andrew Yeo’s promise to remain the majority shareholder.

Dr Tan urged the government to explain why this promise, made just two years ago, appears to be in jeopardy.

“NTUC Enterprise has not backed Andrew Yeo’s promise to remain the majority shareholder. And Singaporeans deserve to know why. The Government should explain why this promise, made about 2 years ago, has been broken so quickly,” Dr Tan concluded.

Former NTUC Income CEO, Tan Suee Chieh also voiced opposition to the sale, stating in a Facebook post, “Income has not only reversed its 2022 commitment to maintain NE [NTUC Entreprise] as the majority shareholder, but NE would also crystallise a significant capital gain through the sale of its shares. This gain, I argued in 2022, should be more fairly distributed to those shareholders who invested before NTUC Enterprise’s capital injection in 2015-2020.”

Serving as CEO from 2009 to 2013, Mr Tan had cautioned against the corporatisation of NTUC Income in 2022, calling for provisions to protect NTUC Income’s mission.

He advocated “for a fairer distribution of equity gains for shareholders who invested before NTUC Enterprise’s capital injection, but without success.”

He brought his concerns to the Monetary Authority of Singapore, which shared them with the Registrar of Cooperatives. However, the Registrar of Cooperatives declined to intervene.