Temasek Breached 49% Ownership Rules In Shin Deal

[george]

Temasek likely breached ownership rules in Shin deal

BANGKOK: -- Singapore's Temasek Holdings has likely violated Thailand's foreign ownership rules in its purchase of telecom giant Shin Corp, a senior commerce ministry official said Friday.

The ministry's examination of the case, which police say they will begin reviewing next week, found that a holding firm called Kularb Kaew that was set up during the deal potentially holds Shin Corp shares on behalf of Temasek, the official said.

"The summary that we sent to the police clearly stated that it holds a stake on behalf of foreign investors," Sakon Hansutthivarin, secretary to the commerce minister told AFP.

However, the commerce ministry did not say whether Temasek actually violated the rules that limit foreign companies to owning 49 per cent of Thai telecoms.

That determination will be made by Thai police, who have set up a special panel set to begin examining the case next week.

Shin Corp was founded by deposed prime minister Thaksin Shinawatra, who was ousted in a bloodless coup on September 19.

His family sold their 49-per cent stake in the company to Temasek for 1.9 billion dollars in a tax-free deal that sparked months of street protests and political turmoil that led to the military takeover.

After the buyout of Shin, a Temasek-led group of investors increased its total stake to 96 per cent through a mandatory offer for the outstanding shares.

Many foreign companies use similar structures to get around the foreign ownership limits, in a practice that has been widely accepted in Thailand for decades.

--AFP 2006-11-17

[cclub75]

A very misleading title.

"has likely violated"

"potentially holds"

"did not say whether Temasek actually violated the rules"

But hopefully, the police is going to set a "pecial panel" to investigate ! Another one !

Ah ah ah ah The circus continues.

[ratcatcher]

Temasek likely breached ownership rules in Shin deal

BANGKOK: -- Singapore's Temasek Holdings has likely violated Thailand's foreign ownership rules in its purchase of telecom giant Shin Corp, a senior commerce ministry official said Friday.

The ministry's examination of the case, which police say they will begin reviewing next week, found that a holding firm called Kularb Kaew that was set up during the deal potentially holds Shin Corp shares on behalf of Temasek, the official said.

"The summary that we sent to the police clearly stated that it holds a stake on behalf of foreign investors," Sakon Hansutthivarin, secretary to the commerce minister told AFP.

However, the commerce ministry did not say whether Temasek actually violated the rules that limit foreign companies to owning 49 per cent of Thai telecoms.

That determination will be made by Thai police, who have set up a special panel set to begin examining the case next week.

Shin Corp was founded by deposed prime minister Thaksin Shinawatra, who was ousted in a bloodless coup on September 19.

His family sold their 49-per cent stake in the company to Temasek for 1.9 billion dollars in a tax-free deal that sparked months of street protests and political turmoil that led to the military takeover.

After the buyout of Shin, a Temasek-led group of investors increased its total stake to 96 per cent through a mandatory offer for the outstanding shares.

Many foreign companies use similar structures to get around the foreign ownership limits, in a practice that has been widely accepted in Thailand for decades.

--AFP 2006-11-17

There's a distinct possibility that, maybe, depending on circumstances,a potential problem exists in this tentative examination of a rather fluid transaction where actual reality has been clouded by a rather mysterious set of nebulous circumstances. However we will most definitely probably be hearing about a flexible solution to this problem in the not too distant future when our porcine friends have developed the ability to soar.

Edited November 17, 2006 by ratcatcher

[cclub75]

A complete different view, from Bangkok Post.

http://www.bangkokpost.com/Business/18Nov2006_biz60.php

-The ministry noted that Kularb Kaew was in violation of Article 36 of Foreign Business Act, which bans Thai investors from acting as nominees for foreigners to breach the 49% shareholding limit for telecom operators.

-This conclusion was given on 28 september to the police

-there are reports -denied- that the police had declined to accept a complaint lodged by the ministry's Business Development Department in the case.

[otherstuff1957]

I wouldn't be surprised if they did declice to accept the case. If you were a Thai policeman would you want to be known as the one who started the next Thai financial crisis?

This thing is a real can of worms. If they follow the letter of the law, many, if not most, of Thailand's largest Corporations will be in trouble! The Thai solution has been to simply not enforce the foreign ownership laws as written, but I really question whether foreign investors will continue to go along with the 'wink & nudge' approach.

[Diablo Bob]

Maybe I am reading this incorrectly, but the Shin Deal was for Taksin's 49% ownership which is legal. The problem seems to be the subsequent purchase of shares which then breached the 49%. Is this correct?

If this is correct, then Taksin is sitting pretty and the other shareholders have a problem.......

[Jai Dee]

THAILAND: Police probe Temasek's Shin Corp buy

Singapore's Temasek Holdings may have violated rules limiting foreign companies from holding over 49 percent stake in Thai telecoms, but Temasek insists the purchase was legal

Bangkok --- Thai police will begin looking at possible violations of foreign ownership laws in the purchase of Thai telecom Shin Corp by Temasek Holdings.

Starting next week, a new police panel will examine a Commerce Ministry review of the purchase, which found that Temasek may have violated rules that limit foreign companies from holding more than 49 per cent stake in Thai telecoms firms.

"The team will...see what information we have received and who was involved in the case," said police Major-General Vichien Singpreecha, who heads the panel.

"Our officials are looking at the details of the allegations without any (political) pressure," he said.

The case could force Temasek to shed some of its stake in company, and is loaded with political and economic consequences for Thailand.

Shin Corp was founded by deposed prime minister Thaksin Shinawatra, who was ousted in a coup on Sept 19.

His family sold their 49 per cent stake in the company to Temasek for US$1.9 billion (S$3 billion) in a tax-free deal that sparked months of street protests and political turmoil that led to the military takeover.

After the buyout of Shin, a Temasek-led group of investors increased its total stake to 96 per cent through a mandatory offer for the outstanding shares.

Under Thai laws, foreigners are not allowed to own more than 49 per cent of telecommunications companies.

Thailand's post-coup government has vowed to investigate the deal, which both Temasek and Singapore officials have said complied with the law.

Last month, Temasek said in a statement that it would cut its stake in Shin "at the appropriate time and in an appropriate manner to maintain an orderly market."

But the Bangkok Post newspaper said Temasek would postpone its plan to dilute shares in Shin Corp until the military-backed government clarifies its interpretation of the foreign ownership rules.

"They have to put the plan on hold because potential buyers, who are still interested in buying Shin shares, want to see a clear picture on the investigation," the daily quoted a fund management source as saying.

But Temasek's representatives in Bangkok denied the report.

"What we can say is that there has been no progress so far regarding Temasek's sales of Shin Corp shares," a spokesman for Temasek's Bangkok office told AFP.

Source: Straits Times - November 18, 2006

[John K]

The news wants to say something to sell papers. More than likely the words they used are a type of disclaimer that their information is not official but probably accurate.

[billzant]

Dear Forum,

Whatever the can of worms I would like to note this quote in the AFP article

Many foreign companies use similar structures to get around the foreign ownership limits, in a practice that has been widely accepted in Thailand for decades.

This maybe so but Thaksin was Prime Minister, this makes it unacceptable. how long will the west keep supporting this man>

Hope you are keeping well,

All the Best

Bill Z