New Kick In The Shin For Thaksin

[george]

New kick in the Shin for Thaksin

BANGKOK: -- Of the slew of actions now afoot over the sale of Thailand's Shin Corp to Temasek Holdings, the one that could most hurt the already bruised Singaporeans is an action initiated by a junior academic at Bangkok's Rangsit University.

The Central Administrative Court has agreed to try an action by Sattra Toa-on, a 28-year-old law lecturer, against state regulators over their alleged failure to enforce rules that would have prevented then prime minister Thaksin Shinawatra's family from selling control of the Shin Corp communications group for 73.2 billion baht ($2.6 billion) to the Singapore government investment company.

After initially buying 49.6 per cent of Thailand's biggest telecoms group from Thaksin's children and relatives in January, the Temasek-led consortium now owns 96 per cent of Shin Corp equity. Temasek itself claims an "economic interest" in 76 per cent of the group.

Thaksin is exiled in London, having been overthrown five weeks ago by a coup that culminated in a series of explosive events sparked by the initial Shin Corp purchase.

This deal was already turning into a stinker for the Singaporeans. They're currently down about Bt23 billion on the market value of the investment and, though they insist they behaved with perfect propriety, Singapore Inc's reputation for fastidiousness has hardly been burnished.

Sattra's legal action is further bad news because it calls into question the fundamental legality of the Shin Corp deal. It alleges the use of nominally Thai-owned but Singapore-controlled front companies to flout the country's 49 per cent limit on foreign ownership of strategic assets was clearly in breach of the law but that the state regulatory agencies refused even to investigate.

That's a bad thing by implication too for the 13,000 or so foreign investors in Thai corporations and property who use nominee structures to dodge foreign investment restrictions. Already 16 other large takeovers that employed apparent nominee companies have been singled out for retrospective investigation.

Sattra's suit makes more difficult Temasek's attempts to produce what might be described as an administrative resolution to the foreign ownership problems it created by grabbing for Shin Corp when Thaksin's family offered it on a plate.

The case will delay any attempt to dilute Temasek's stake below the legal foreign ownership ceiling before other adverse findings arise. (The alleged use of a suspected nominee company, Kularb Kaew, is under police investigation and a report is expected by the end of November.)

Several Thai investment funds have indicated tentative interest in helping Temasek lighten its holdings at "reasonable" prices - that is, considerably less than the unprecedented Bt49.25 per share Temasek's consortium paid Thaksin's kin in January (the shares are trading around Bt34 this week). But there's little apparent interest from the big corporate investors Temasek would need to bed down much of what, even at current depressed prices, would amount to almost Bt50 billion of stock.

In any case it's hard to envisage anyone taking a share placement large or small until Sattra's action is settled.

If he succeeded in proving to the court that the regulators, under Thaksin's thumb, refused even to investigate foreign ownership breaches, the state licences for Thailand's largest mobile phone, the iTV television network and the country's only commercial satellite operator, among other assets, would be at considerable risk.

Most foreign investors in Bangkok blame the system for the Shin Corp fiasco. It's certainly undeniable that for three decades, Thai governments and bureaucrats have winked at increasingly barefaced abuses of foreign ownership rules, arguing, when pressed, the country's need for imported capital.

Rather than address that need and confront the naive economic nationalism that still prevails in Thai public discussion, successive governments have allowed the use of nominee companies and other devices to create the legal fiction of Thai ownership of assets that have in fact passed into foreign control.

In doing so they have allowed a whole class of fixers and rent-seekers to line their pockets - among them some of the kingdom's wealthier people - because what better circumstantial evidence is there that you are not a foreign corporation's puppet if you have the means to own what you say you own? In the current case, the funding and ownership entitlements of the Thai partners in Temasek's consortium become a crucial issue.

No prime minister should have been more aware than Thaksin, a billionaire former businessman on intimate terms with international investment flows, of the distortions and corrupt possibilities in his country's defacto foreign investment regime. And no previous prime minister had Thaksin's opportunities to fix the problem - two clear terms in office during which he thoroughly dominated the government, the parliament and the bureaucracy.

Instead, Thaksin sat on his hands until, in what turned out to be his final months in office, his family and Temasek conspired to exploit the system's shortcomings in the most spectacular fashion. One consequence was that the Thaksin family was able to cash-out of Shin Corp at a price never seen before or since.

Now foreign business people in Bangkok, the law firms who facilitated exploitation of the current system and the Board of Trade, which mediates between foreign investors and the government, are quietly urging General Surayud Chulanont's interim administration to let Temasek off the hook, on condition it divests to below the 49 per cent ceiling.

Then let's start again with clear, realistic foreign ownership rules, say some, warning that the alternative is a permanent loss of confidence in Thailand as an investment destination.

Almost incredibly, however, others urge a cooling-off period, then a quiet return to the old "pragmatic" system. Prominent among them are property developers and lawyers who know the ways they've been marketing land titles to foreigners would not survive scrutiny even under more enlightened and transparent foreign ownership regimes.

In the meantime, however, Bangkok lawyers and corporate advisers are telling foreign investors they need to expect their investment structures to be carefully scrutinised by Thai regulators. Everyone now awaits developments in the Temasek case.

--The Australian 2006-10-24

[jdinasia]

Ouch! The kick hits Sg worse than Thaksin!

[Ijustwannateach]

It's good on the one hand that Thaksin doesn't get away with stuff, but on the other hand makes Thailand look bad if it reneges on its business deals when regimes change...

"Steven"

[britmaveric]

For better or worse I think the deal will stand.

[popshirt]

If Thailand expects to be a participant in the global economy, it must learn to enforce laws and play by the rules. Honesty and transparency are crucial in today's economy. Thaksin could expect to get away with such shenanigans in a banana republic but not in a modern democracy.

[jdinasia]

For better or worse I think the deal will stand.

I see them being forced to get down to the 49% mark by their own accounting. This is gonna cost them<Sg> quite a bit! (

[sriracha john]

"kick in the shin for thaksin".....

those Aussies are always lookin' for rhymes....

Edited October 24, 2006 by sriracha john

[englishoak]

They knew the deal was dodgy in the first place. If you deal with sh!t you gotta expect to get covered in it occasionaly.

[cclub75]

For me, the key sentence of this article (interesting and very clear by the way) is :

Rather than address that need and confront the naive economic nationalism that still prevails in Thai public discussion, successive governments have allowed the use of nominee companies and other devices to create the legal fiction of Thai ownership of assets that have in fact passed into foreign control.

Naive nationalism + legal fiction = the easy way, the way to avoid conflit and losse of face.

Edited October 24, 2006 by cclub75

[Jersey_UK]

The question is........has he cashed the cheque yet!

Actually I suspect not (well, not for all of it) as it would not be unusual in a deal of this size and complexity that their would be various "safeguards" that relate to performance / ensure that buyer actually got "what it said on the tin" - quite possibly strecthing several years into the future - may well explain why Taksin kept hanging on and on, he knew very well that any successor would have him over a barrel.

So it may well be that the foreigners in this case have not been as green as they are cabbage looking?? and do have something to bargain with??

Of course it also wouldn't surprise me if some tw#t had written out a cheque in full. Dumber things have happened, no matter wot the numbers are!

[John K]

Just another example of what happens when you dance with the devil. With luck this will make people think twice or perhaps thrice before making any deals with Thaksin.

[yuyi]

... Rather than address that need and confront the naive economic nationalism that still prevails in Thai public discussion, ...

Yeah, well said: "naive economic nationalism" ! That's the real problem to fix. Do not talk about if these "naive economic nationalism" laws had been applied but throw them out completely and get some modern ones instead. Wake up, Thailand, there is so much to do!

[VanZam]

This deal was already turning into a stinker for the Singaporeans. They're currently down about Bt23 billion on the market value of the investment...

23 BILLION down.... ouch

[Thaising]

What kinds of transparency and messages the governments of Singapore linked companies are trying to convey, when they are actually breaking the Thai laws by setting up Nominee Company by illegally acquiring Thai’s asset and stocks. It is justified that these unethical companies ought to have their own downfall.

With 23 billion baht vanished on papers, any multi-national corporation CEO would has already resign their high paying job. The CEO of Temasek still clinging on her job without answering to the board but instead relying on her PM husband to fence off her acquisition loss.

Som Nam Na

[Losangels]

If Thailand expects to be a participant in the global economy, it must learn to enforce laws and play by the rules.

Agree, double standards on enforcing the law if and when enforced. Easy to get away if you have the right contacts and a promeneit individual. Few play by the rules especially if one knows that they can get away with it. Just ask any teacher the amount of cheating in any public or private school. Sad to see that it is very unlikely to see the rule of the law applied here, at least in this generation

[womble]

She is never going to get in trouble because the buying of Shin without any due dilligence was ordered by none other than Lee Kuan Yew!!!!!

He trusted Thaksin and thought he could never be removed from power.

Oops!!!!

[jackspratt]

She is never going to get in trouble because the buying of Shin without any due dilligence was ordered by none other than Lee Kuan Yew!!!!!

He trusted Thaksin and thought he could never be removed from power.

Oops!!!!

Evidence please

[Jomtien]

She is never going to get in trouble because the buying of Shin without any due dilligence was ordered by none other than Lee Kuan Yew!!!!!

He trusted Thaksin and thought he could never be removed from power.

Oops!!!!

Evidence please

http://singaporeelection.blogspot.com/2006...-corp-deal.html

[Old Man River]

If Thailand expects to be a participant in the global economy, it must learn to enforce laws and play by the rules.

Agree, double standards on enforcing the law if and when enforced. Easy to get away if you have the right contacts and a promeneit individual. Few play by the rules especially if one knows that they can get away with it. Just ask any teacher the amount of cheating in any public or private school. Sad to see that it is very unlikely to see the rule of the law applied here, at least in this generation

You are correct that is normally the way here, but in this case, it isn't what happened. I know it looks that way, but this time contacts and prominent individuals are not the reason there are so many nominee based structures in Thailand. Instead it is based on what the country needed to have to attract foreign direct investment (long term investment). Instead of going through the process to change the laws, the Thai authorities found it easier to do nothing once smart attorneys came up with loopholes.

This has been going on for many years (has nothing to do with the TRT). I don't know how many there are in Thailand (nobody does), but for some reason the figure being used these days is 13,000. In any event, it is a lot and is not a number that simply came into being in the last 5 years. Nominee structures have been around in Thailand for a lot longer than that.

[womble]

She is never going to get in trouble because the buying of Shin without any due dilligence was ordered by none other than Lee Kuan Yew!!!!!

He trusted Thaksin and thought he could never be removed from power.

Oops!!!!

Evidence please

http://singaporeelection.blogspot.com/2006...-corp-deal.html

Thanks.........

[jumbo]

The question is........has he cashed the cheque yet!

Actually I suspect not (well, not for all of it) as it would not be unusual in a deal of this size and complexity that their would be various "safeguards" that relate to performance / ensure that buyer actually got "what it said on the tin" - quite possibly strecthing several years into the future - may well explain why Taksin kept hanging on and on, he knew very well that any successor would have him over a barrel.

So it may well be that the foreigners in this case have not been as green as they are cabbage looking?? and do have something to bargain with??

Of course it also wouldn't surprise me if some tw#t had written out a cheque in full. Dumber things have happened, no matter wot the numbers are!

I think he has cashed because the deal went through the stockexchange (in order to keep it tax free) In my opinion there are little safeguards in place when deals are done like that..

J

[Bottlerocket]

If it's such a strategic national asset, why doesn't the government tell Temasek "NO. YOU CAN"T HAVE IT." Then apologise and reimburse them for their investment in an obvious scam concocted by their very own prime minister. THEN turn around and seize Taksin's assets, subtract, the value of the debt, and leave him and his families as_ses high and dry.

[Rinrada]

For better or worse I think the deal will stand.

I see them being forced to get down to the 49% mark by their own accounting. This is gonna cost them<Sg> quite a bit! (

Dosh in the happy bank accout already so he wont have to borrow from his missus who incidently is worth MORE anyway....

[jackspratt]

She is never going to get in trouble because the buying of Shin without any due dilligence was ordered by none other than Lee Kuan Yew!!!!!

He trusted Thaksin and thought he could never be removed from power.

Oops!!!!

Evidence please

http://singaporeelection.blogspot.com/2006...-corp-deal.html

Thanks.........

A blog! Hardly evidence where I come from.

I'm not saying it ain't true, but I would need something more convincing before I believe it as fact.

jack

[Old Man River]

She is never going to get in trouble because the buying of Shin without any due dilligence was ordered by none other than Lee Kuan Yew!!!!!

He trusted Thaksin and thought he could never be removed from power.

Oops!!!!

Evidence please

http://singaporeelection.blogspot.com/2006...-corp-deal.html

Thanks.........

A blog! Hardly evidence where I come from.

I'm not saying it ain't true, but I would need something more convincing before I believe it as fact.

jack

The blog was picking up an article by Khun Thanong, Managing Editor of The Nation. While all newspapers have made mistakes in the past, Khun Thanong is very well respected in Thailand. Short of Lee Kuan Yew sending a message to us directly, this is convincing.

[maxx]

--take Shin back 51/49, Thai share holder own and control Shin--

--on the other hand sieze Thaksin asset for corruption, take all his money, well he claim he got only 12bil baht, i guess the rest belong to Thailand if no one claim it--

hey kill 2 bird with one stone, Thailand wins all.

[jackspratt]

She is never going to get in trouble because the buying of Shin without any due dilligence was ordered by none other than Lee Kuan Yew!!!!!

He trusted Thaksin and thought he could never be removed from power.

Oops!!!!

Evidence please

http://singaporeelection.blogspot.com/2006...-corp-deal.html

Thanks.........

A blog! Hardly evidence where I come from.

I'm not saying it ain't true, but I would need something more convincing before I believe it as fact.

jack

The blog was picking up an article by Khun Thanong, Managing Editor of The Nation. While all newspapers have made mistakes in the past, Khun Thanong is very well respected in Thailand. Short of Lee Kuan Yew sending a message to us directly, this is convincing.

That's more convincing.

Thanks

jack

[lukamar]

From an interview in the Nation today and apparently directly from the horses mouth.

Nation: Will there be any investigation of Thaksin's financial accounts?

Sonthi: We cannot impound the money he made with accountable legal evidence but can only look for some possible hidden one with questionable background.