Charles Ong, chief strategist at Temasek, has taken a leave of absence to join the newly created private equity firm RRJ Capital. He will joining a fellow Temasek alumni and his bother Richard Ong‎. This is another chapter in history of the Ongs and Temasek. This chapter might the one that is less than proper.

The problem isn’t that Charles shouldn’t get the chance to run a fund. His mid-career crisis should be encouraged. The problem is Temasek is blurring ethical lines with his transfer. It’s one thing to create a new fund or form a new subsidiary for one person’s benefit or to keep them from leaving. It’s another thing to loan out a person to a fund that should be in theory competing against Temasek. While RRJ has money in its fund from Temasek, beyond normal regular financial reporting, RRJ should not have any type of day to day communications with the firm. A strategic relationship would be different, but this isn’t one. I’m sure Ong has been busy signing confidential agreements. RRJ Capital should treat Temasek like any other shareholder/investor. I don’t think it’s possible to do that with Ong in the role that he is in.

While this is par for the the course with Middle Eastern SWFs, this type of arrangement is new with Temasek.

"They have found a home for him," said one banker who has dealt with Charles. "It does show that he is clearly not on the succession list," said the banker, who asked not to be named. "They are giving headroom to the younger lot to grow." (Reuters)

I would disagree. Temasek would not go though the trouble of transferring him, unless they want to keep him. It’s clear that Charles Ong wants a new challenge and has set a goal of creating a new investment fund as it. Temasek is willing to let him pursue it up to a point. Since the idea behind Seatown failed (whose fault it was is not clear), this is giving him another chance to create a fund.

Temasek will benefit from this move. It would benefit even more if they had create a new subsidiary with the Ong brothers. It could, I suppose, also let Seatown actually do what it was set up to do.