Source : The Straits Times, Feb 11, 2008Even though the battle for the tin mining firm puts them on opposing sides, The Straits Times looks at how the Lee and Tan families share a common history through OCBC Bank.TWO of Singapore’s most famous corporate families - the Lees and the Tans, which have been linked for decades through OCBC Bank, now find themselves on opposite sides of the fence.
The Lee family, the largest shareholder of OCBC, and the Tan family, that of the late Mr Tan Chin Tuan, a long-standing chairman of OCBC are now vying for control of The Straits Trading Company, an equally venerable company with tin mining and property interests.
On Jan 6, the Tan family made an offer of $5.70-a-share for the company. On Jan 24, the Lee family, made a counterbid of $5.76-a- share. The Tans swiftly responded on Jan 28 by raising their offer to $6.50 per share.
The Tans own about 22.4 per cent of Straits Trading.
The Lee family owns only about 6 per cent. But as it is a key shareholder in OCBC and Great Eastern Holdings, which also own Straits Trading shares, it is seen to represent about 32 per cent of the company.
The apparent clash between the two families - and the direct involvement of the usually reticent Lees - has set tongues wagging in corporate Singapore.
Just how far back do their links go? And what does today’s tussle for Straits Trading say about a decades-old relationship?
The Lee FamilyTHE Lee family is the largest shareholder of OCBC and a regular fixture on the Forbes rich list with a fortune previously estimated at US$3 billion (S$4.3 billion).
The foundations of the family’s fortune were laid with Mr Lee Kong Chian, the father of current OCBC director Lee Seng Wee.
Mr Lee Kong Chian hailed from Fujian province, China, arriving here in 1903 at the age of 10.
He was talent-spotted by famous rubber tycoon Tan Kah Kee. One of the richest men in Asia,
Mr Tan wanted to expand his rubber business overseas and hired Mr Lee as his manager, mainly because of his grasp of the English language.
Not only did Mr Lee land the job, he also eventually married Mr Tan’s daughter, Ai Lay.
The Great Depression gave the financially conservative Mr Lee the chance to buy acres of rubber land at rock-bottom prices.
With the wealth he made from rubber, he expanded into pineapples, coconut oil, saw mills and biscuits.
But other than being the ‘Rubber and Pineapple King’, he was behind the creation of what is now known as OCBC.
Facing a banking crisis, three banks - Oversea-Chinese Bank, Ho Hong Bank and Chinese Commercial Bank - merged to form the Oversea-Chinese Banking Corporation, the largest bank in Singapore then.
Mr Lee was seen as the merger’s chief architect. He became OCBC’s vice-chairman, then chairman in 1938 - a post he held until just before his death in 1967.
But while he was a banker and a rich businessman, he gave back generously to society.
In 1952, he founded the Lee Foundation, leaving it as much as half his fortune. Mr Lee had three sons and three daughters. His youngest son Seng Wee, 77, is a director at OCBC. Second son Seng Tee handles the rubber businesses while eldest son Seng Gee, 86, is chairman of the Lee Foundation.
The three daughters are Siok Kheng, Siok Tin and Siok Chee.
The Tan FamilyIF MR Lee is associated with the birth of the bank, then Mr Tan, who spent half a century at OCBC, is hailed as the man who expanded its empire.
Born in 1908, he was the son of a general manager of the Oversea-Chinese Bank.
After his father died when he was a teenager, a family friend offered him a job at Chinese Commercial Bank.
He helped in the merger and in 1933, was promoted to be the manager of OCBC Properties and a new subsidiary Eastern Realty Company. He attended property auctions and was on the lookout for bargains for the bank.
As joint managing director of OCBC’s overseas operations, he ran the bank’s operations from India until the end of World War II.
Over the next couple of decades, Mr Tan was to spearhead the bank’s investments into a variety of non-banking businesses, many of which are household names today.
These included Straits Trading, Raffles Hotel, department store Robinson & Co, beverage giant Fraser & Neave, Malayan Breweries (now known as Asia Pacific Breweries), Wearnes and others.
One of the earliest deals he was involved in was taking a stake in Raffles Hotel.
It had rankled OCBC that whenever it wanted to book a dining suite to entertain its clients, Raffles Hotel always turned the bank down. Eventually, Mr Tan helped OCBC secure the shares of one of the directors who died and he eventually became the first Asian on the board.
As the British and other foreigners exited Singapore, Mr Tan thought it was a good opportunity for the locals to take over such non-banking businesses. This was how OCBC came to own shares in Straits Trading, which was set up by a German entrepreneur to smelt tin late in the 19th century.
What laid behind his investment philosophy was a belief in growing the OCBC group, with the bank at its core. The companies in the ‘OCBC stable’ could support each other, with each other’s services.
From 1966, he was chairman and managing director of OCBC until 1983 when he retired and was made life president.
He died in 2005.
As OCBC invested in other companies, Mr Tan did likewise personally. A shrewd investor, he was a very wealthy man in his own right.
He had three children - son Keng Siong and daughters Kheng Choo and Kheng Lian. The latter of the two daughters is the mother of Ms Chew Gek Khim.
Ms Chew, 46, runs a group of family investment vehicles headed by Tecity. Word has it that she was groomed from an early age by her grandfather to take over.
Mr Tan’s nephew, Dr Tony Tan, was also general manager at the bank before entering politics in 1979. He went on to become its chairman and chief executive between 1992 and 1995.
The winds of changeBOUND inextricably by the pivotal roles they played in the history of one of Singapore’s largest banks, the two families have had close ties for decades.
This is why the battle for Straits Trading is startling to observers, and could be a signal that after three generations, the winds of change are starting to blow.
There are a few theories as to why this is happening now.
One theory has to do with OCBC’s recent sale of its stakes in companies like Robinson and Raffles Hotel.
There is speculation that the Tan family is unhappy with the moves, which could be seen to be detracting from the legacy that Mr Tan had built up.
And this could be why his granddaughter - Ms Chew - could be bidding for control of companies like Straits Trading, which he helped bring into the OCBC stable.
Opposed to an earlier sale of 29.9 per cent of Robinson by OCBC to Indonesia’s Lippo Group, Tecity has now accepted an offer from Dubai’s Al Futtaim group for its shares in Robinson.
Ms Chew pointedly said:’Robinson is no longer part of the stable of companies my grandfather was instrumental in building.’ Al Futtaim will ‘understand and cherish the brand’.
OCBC’s stake sales have been driven by changes where financial regulators hold banks back from having significant non-banking businesses.
But the Tan family could be worried that any decreasing involvement of the Lees in the bank could speed up the divestment process. Although Mr Lee Seng Wee’s son Tih Shih, 44, sits on the OCBC board, none of the third generation of the Lees is as closely involved in the banking business as previously.
With rumblings - on and off - that the Lees could exit the business and OCBC be swallowed up, the new owners of OCBC - or its managers - could accelerate the break-up of the bank’s stable of companies. The Tans still own stakes in many of those companies and may have to deal with less-than-friendly majority owners.
Finally, with the passage of time, the original partnership forged between Mr Lee and Mr Tan is just not as strong.
Many see the Straits Trading tussle as proof that the relationship has now become much more business-like.
As investors wait to see if the Lee family will raise its offer, there may have been a time-out during the Chinese New Year period. Business was apparently put to one side, with an exchange of gifts.
He helped to set upOCBC A WELL-KNOWN philanthropist and rubber tycoon, Mr Lee Kong Chian came from Fujian province in China and was instrumental in the setting up of OCBC Bank.
It was formed in 1932 from the merger of three banks in Singapore. Mr Lee was OCBC chairman from 1938 to 1964. He died in 1967.
He helped bank to expand MR TAN Chin Tuan was known as ‘Mr OCBC’ after having served at the bank for half a century.
He was appointed chairman and managing director in 1966 and subsequently retired in 1983. Mr Tan remained the bank’s life president until his death in 2005.
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