UPDATE 2-Singapore's Temasek says Goodyear not taking CEO role

Tue Jul 21, 2009 7:09am EDT

* Ex-BHP Billiton Goodyear was to become CEO on Oct 1

* Ho Ching to remain CEO

* Differences over certain strategic issues cited as reason

* For more on Temasek and Goodyear, click [ID:nSP442466] (Adds detail on strategy, background)

By Saeed Azhar

SINGAPORE, July 21 (Reuters) - Singapore's Temasek said Charles (Chip) Goodyear has decided not to become the chief executive of the state investment firm due to differences over strategy, less than six months after accepting the post.

Ho Ching, the wife of Singapore's prime minister and the current CEO, will continue to remain executive director and chief executive, Temasek said in a statement on Tuesday.

"In Singapore, all these successions at this level are planned quite carefully and for this to happen now is quite unusual," said Song Seng Wun, senior regional economist at CIMB.

Sources familiar with Temasek said the announcement came out of the blue, with senior managers called into a meeting about half an hour before the news was made public.

Goodyear, the former CEO of BHP Billiton (BHP.AX), was ready to take over from Ho on Oct 1 as the sovereign wealth fund's first foreign CEO.

With 40 percent of its holdings in financials, the market meltdown last year saw Temasek's portfolio lose nearly a third in the eight months to November, sparking unprecedented criticism in Singapore about its strategy. The size of its portfolio shrank to $84 billion as of Nov. 30.

"Four months into the leadership transition, the Temasek Board and Mr Goodyear have concluded and accepted that there are differences regarding certain strategic issues that could not be resolved," the statement said.

The decision came after analysts said Goodyear could overhaul the firm's investment strategy after Temasek lost more than $4 billion this year after dumping stakes in Bank of America (BAC.N) and Barclays (BARC.L).

"I'm sorry that we are unable to continue with the leadership transition. Temasek has a fantastic platform and I wish the Board, Ho Ching and the team all the best," Goodyear was quoted as saying in the Temasek statement.

Goodyear was also widely expected to trim Temasek's financial holdings and move aggressively into commodities and energy and into emerging market infrastructure and consumer retail sectors, analysts and bankers have said. [ID:nSIN190820].

"Chip's experience in the resources sector would have come in very handy in the next cycle of growth. They will have to look for someone of similar calibre if they need to invest in that sector," CIMB's Song said.

Goodyear descends from a U.S. lumber baron and hails from the halls of Ivy League universities and Wall Street, but is best known for his reign at the Australian mining giant BHP.

Goodyear joined then debt-ridden BHP in 1999 as chief financial officer, and was instrumental in growing the company into the world's top miner, via a merger with South Africa's Billiton, with a market value bigger than the GDP of some countries it operated in. [ID:nSP436549]

The decision Ho puts back in the hot seat, extending a five-year run as head of Singapore's smaller of two sovereign wealth funds, behind Government of Singapore Investment Corp.

Ho has guided the fund through a number of controversial investments including stakes in Thai and Indonesian telecoms firm earlier this decade. ($1=1.455 Singapore Dollar) (Additional reporting by Kevin Lim; Editing by Lincoln Feast)