Oct. 12 (Bloomberg) -- Morgan Stanley asked two bankers to leave after they distributed an e-mail critical of Singapore that cost Andy Xie, the firm's former chief economist in Asia, his job, three people with knowledge of the situation said.

Celicia Ong, a Singapore-based equity saleswoman, and Hani Abuali, a proprietary trader and managing director in Hong Kong, were asked to resign after they forwarded the e-mail, said the people, asking not to be identified because the information is confidential. The e-mail was marked ``internal'' and shouldn't have been distributed outside the bank, they said.

Ong's clients included Government of Singapore Investment Corp., which manages more than $100 billion of the country's reserves, the people said. Xie left New York-based Morgan Stanley on Sept. 29 after he characterized Singapore as an economic failure dependent on illicit money from Indonesia and China.

``We don't wish to comment,'' GIC spokeswoman Loh Wei Ling said today, when asked whether they received the e-mail from Morgan Stanley or information about its contents. Morgan Stanley doesn't comment on personnel issues, said spokeswoman Cheung Po- ling by telephone from Hong Kong.

The departures were reported yesterday by capital markets news service IFR Asia, which said the two bankers' resignations will be effective in January to ensure they receive their bonuses, citing a person it didn't identify.

E-mails sent earlier today to Ong, an executive director, and Abuali at their Morgan Stanley addresses were bounced back. Abuali's automated reply said he will be ``out of the office'' through Jan. 2 and referred queries to Scott Gaynor, a Hong Kong-based Morgan Stanley banker.

IMF Meeting

Gaynor declined to comment when contacted by telephone and said he wasn't able to pass on Abuali's contact details. There was no listing under the name Abuali in the Hong Kong telephone directory. Calls to the Singapore number of Celicia Ong, the only entry under that name, went unanswered.

Xie, a Shanghai-born economist who worked at Morgan Stanley for nine years, sent the e-mail to his colleagues after attending the International Monetary Fund and World Bank annual meetings last month in the Southeast Asian island state. The economist questioned why Singapore was chosen to host the conference, and said delegates ``were competing with each other to praise Singapore as the success story of globalization.''

``Actually, Singapore's success came mostly from being the money laundering center for corrupt Indonesian businessmen and government officials,'' Xie wrote in the e-mail. ``Indonesia has no money. So Singapore isn't doing well.''

Advisory Role

Morgan Stanley is the second-ranked adviser this year on mergers involving Singapore companies, handling $6.5 billion of transactions, data compiled by Bloomberg show. It advised Temasek Holdings Pte., the Singapore government's investment company, in the purchase of a 9.9 percent stake in Mumbai-based Tata Teleservices Ltd.

In stock sales, Morgan Stanley is the No. 4 underwriter in Asia outside Japan. It hasn't underwritten a Singapore deal this year, Bloomberg data show.

Singapore's $118 billion economy is recovering from three recessions since the 1997 Asian financial crisis, and is expecting growth of as much as 7.5 percent this year. The city- state is grappling with growing competition from China and India, two of the world's most populous nations, where labor costs are less than a quarter of those in Singapore.

The Singapore government, which is ending a four-decade ban on casinos, plans to triple tourism revenue to $19 billion and double visitors to 17 million by 2015.

``To sustain its economy, Singapore is building casinos to attract corruption money from China,'' said Xie, who ranked No. 2 among regional economists in a 2003 Asiamoney magazine survey.

Genting Bhd., Asia's largest gaming operator by market value, Kerzner International Ltd. and Eighth Wonder yesterday submitted bids to build Singapore's second casino on its southern island of Sentosa.

To contact the reporter on this story: Netty Ismail in Singapore at nismail3@bloomberg.net.

Last Updated: October 12, 2006 10:01 EDT