The lesson of Tarrin's plight: know your (time) limits
January 24, 2001
managers can learn a thing or two from the example set by John Olds, the
American executive who steered the Development Bank of Singapore to regional
success, says Thanong Khanthong.
Finance Minister Tarrin Nimmanahaeminda followed the management plan of John
Olds, he could have avoided the pitfalls that have destroyed his political
career for now.
joined DBS Group Holdings, the parent company of the Development Bank of
Singapore, in August 1998 as vice chairman and chief executive after a 24-year
stint at JP Morgan, the US investment bank.
Hsien Loong, Singapore's deputy prime minister and chairman of its monetary
authority, was responsible for recruiting Olds to run DBS. He reasoned that DBS
would need a truly professional management team to achieve its goal of becoming
a regional bank. Local talent was not enough to change the status of the bank in
which the government holds a 40-per-cent stake.
declared from the outset that he would stay for only two or three years to
perform the necessary surgery.
mandate was to make DBS a regional contender in banking and financial services.
Olds realised that it would be a painful process and that he would create
enemies. Therefore, he decided that once he had established the parameters, he
should step down and let a new management team with a fresh mandate carry on the
has been true to his promise. Last weekend, the bank's board announced his
resignation as vice chairman and chief executive. He will continue to serve as a
board member until May 12 and then become special adviser to the chairman. The
announcement marked the completion of the first phase of the restructuring of
took the finance job in November 1997 at the height of the financial crisis. His
aim was to end the panic, restore confidence and put the country back on the
path to economic growth. To do so, he would also have to wield the surgeon's
knew the financial and economic reforms would cause pain. A large number of
finance companies and banks would have to go, big corporates would face
bankruptcy and unemployment would rise. Furthermore, structural reforms,
encompassing everything from the legal infrastructure to regulatory practices,
would affect the Establishment.
would also end up creating a lot of enemies.
unlike Olds, Tarrin had political-career goals. He did not set a target for
himself, nor a timeframe for achieving his purpose.
economists believe that Tarrin has been guiding Thailand along the right path,
although the economic recovery will take time.
think he has got it right with the remedies for the Thai economy, but the
problem has to do with implementation. Everything appears to have come too late
or too little," said a fund manager in Singapore.
Tarrin needed to protect his own political career, he was only able to introduce
half-baked reforms and implementation was also often reluctant.
could not take on the banking system, as he would have liked, in the face of
resistance from the Establishment. He failed to introduce the tough legal
infrastructure that would have effectively addressed corporate debt
restructuring. He backed off when pitted against the defiant Bank of Thailand
governor MR Chatu Mongol Sonakul.
Tarrin decided to step down after the passage of the bankruptcy and foreclosure
laws in April 1999, let somebody else take over and become a special adviser to
the prime minister, he would have salvaged his political career.
would have regarded him as a champion of reform. The first phase of the Thai
reform process was completed after the passage of the bankruptcy and foreclosure
clinging on to his job to the end, Tarrin eventually became a liability for the
Democrat Party. In the three years since the crisis started, people became
impatient at the slow pace of reform and bored with the government. They wanted
change. And Tarrin came to be seen as a symbol of failure, although he had saved
the economy from complete ruin. The details did not matter. The public wanted
the Democrats to go.
two days before the January 6 election, Democrat leader Chuan Leekpai dumped
Tarrin. He promised the electorate that Abhisit Vejjajiva would replace Tarrin
as finance minister if the Democrats returned to power.
Tarrin's plight is also a lesson for managers in how to cope with a crisis - when you aim high, know your limits and set a time-frame for reaching them.