The Kingdom and it’s Shin

It has been more than a month since the Sept 19 Thai coup which had ousted former Thai PM Thaksin from power while he was in New York for a United Nations General Assembly. In the aftermath of the coup, which had extended the furore of Temasek’s newest acqusition of Shin Corp from the former Thai PM.

Shin Corp was founded by Thaksin in 1983, which had grown and developed into one of the largest conglomerates in Thailand. The company is linked by stock control to companies including Shin Satellite and Advance Info Service, the largest mobile phone network in the country. It also holds stakes in Thai AirAsia, a consumer finance company and ITV, a local television station. Therefore the conglomerate had been regarded by many Thais as their country’s strategic asset. The resulting tax free sale of the company on Jan 23, 2006, to Temasek Holdings in a US$1.88 billion deal, with Temasek acquiring 96 percent stake through nominee companies to bypass Thailand’s laws to limit foreign ownership had caused much anger to the Thai citizenry, loudly denouncing their former PM for selling an asset of national importance to a foreign entity, and hence selling out his nation.

With the controversy of the sale granted impetus to the already planned anti-Thaksin rallies throughout the country. Which in the process, drawing Madame Ho Ching, CEO of Temasek into the foray of political outroar in Thailand – burning her effigies on the streets of Bangkok. While Temasek’s spokesman for the Shin Corp deal, Jimmy Phoon, Temasek managing director for strategic development had denied any wrongdoing in the acquisition, from Temasek’s point of view, economically, Shin Corp had been an extremely good bargain for its portfolio as the leading player in Thailand’s telecommunications industry.

Yet, as it is, apart from the fact that Shin Corp had been a good buy economically, the risks involved in acquiring a key Thai national asset owned by Thaksin amidst the political upheaval against him, had been for all to see in the build up to the coup. In Thaksin’s claims for more transparency and conflict of interests, his decision to sell off Shin Corp had been a politically correct move, yet, its the choice of buyer that had been his ultimate death toll, had the buyer not been Temasek (Singapore’s investment arm) but another Thai company; perhaps the military coup against Thaksin might not trigger without that fatal catalyst.

 In the aftermath of the coup and the sale of Shin Corp brought up into scrutiny for its alleged breach of Thai laws and its issues of transparency in the deal. There had been several official statements from our PM Lee Hsien Loong in the bid to defend Temasek’s dealings in Thailand and lambasting the military coup which he describes as a setback for the Kingdom and its democracy. Such was the imperiousness in the claim to legitimacy of the business deal which Temasek supposedly claimed which had been shared by our government. While our PM had continued to claim legality and business high ground in the deal as mutually enriching. It was the lack of consideration for the political risks with the common Thai citizenry and Thaksin’s political rivals towards the deal that had triggered such an enormous backlash. With our government describing the Shin Corp purchase by Temasek to a Thai Senator months before the coup as solely a commercial deal, our government could not say they’ve not been warned of the possible repercussions. It could only have been in Temasek’s failings to see the risks that were already laid out for it to see.

 As for our government’s stand on the acquisition of Shin Corp by Temasek as solely a business deal. It was from the strangest of position that our PM took in his official capacity to defend the deal. With the sole executive powers of Temasek in the hands of Madame Ho Ching, with no prior influence to the conduct of the deal, it makes his defense of the Shin Corp deal from a position of a shareholder of Temasek extremely tenuous, if not lacking in credibility; provoking such strong and continual response from our Prime Minister, which would only serve to strengthen the belief in the Thai citizenry that there were political motivations involved to control majority stakes in strategic Thai assets.

With regards to the lack of commentary by our mainstream media, it was only understandable due to the only plausible derivations from such a failure in Temasek. With the political ties accrued from Madame Ho as our PM’s spouse, with additional reporting on the blundered deal, would only lead to negative responses from the public towards the management of our government’s investment arm; which would conspicuously point fingers towards our supposed Madame Ho’s infallible judgement. Such is the kind of political fallout and repercussions which our local editors would prefer to avoid within the local populace in the name of nation building, though of course, one would ask, what kind of nation building would one attain by the suppression of a balanced coverage from its citizenry?

From a commercial perspective, had Temasek Holdings been any other major corporation elsewhere without its political ties to our government, would Madame Ho have survived the implication of making a possible S$3 billion paper loss in 6 months without any recriminations? (Should the Thai Supreme Court finds any wrongdoing on Temasek’s part in the Shin deal, or the Thai government nationalises Shin Corp in the process.)

In all, our government’s drive towards further economic gains had undoubtedly affected our judgement to commit to the Shin Corp deal with former Thai PM Thaksin without giving due political considerations. While Thailand’s interim PM had stated that this deal would not affect bilateral relations of both states, belying such a response, was the fact that the Thai government would not intervene in the investigations of any possible trial in the Thai Supreme Court, should there be any Temasek misgivings in the Shin Corp deal. Such was the lack of approbation by the Thai PM towards our government’s continued response, which served only to further incite misgivings in the Thai people of our state. Perhaps we’ll see if bilateral relations had truly been affected in the long run, yet, the economic goodwill which we had built up during Thaksin’s administration in the past few years had probably been exhausted by our economic arrogance, displayed by our goverment in this Shin Corp debacle.

 Kicked in the face by a ‘Shin’ from the north.

Addendum: In addition to what had transpired from the Shin Corp deal, there was apparent moves taken by Temasek in the background to link Thai royal counsellor Tongnoi Tongyai as Temasek’s corporate adviser to legitimise the deal with Thai royal family’s endorsement. Yet, in an about turn, the Thai Crown Prince office had issued a statement which had criticised the character of Tongnoi, which further embarrassed Temasek’s dealings in Thailand. This is further expanded by Alex in his Yawning Bread blog here.

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~ by azmodeus on October 31, 2006.

3 Responses to “The Kingdom and it’s Shin”

  1. To be fair to Temasek, at the point of purchase, it was not known that Thaksin was going to be removed by a coup or a Bangkok mob (and neither did it seem likely). Perhaps we don’t understand Thai politics well enough, but Thaksin did have (and still has) the strongest grassroot support for any PM in years….

    In Temasek’s shoes, the KTM would probably have gone in to try to buy Shin Corp anyway. People have any idea how hard it is for us to persuade people to sell us stuff?? 😛 Many critics of the Shin Corp deal fail to see the world from our perspective. With hindsight, talk is cheap.

  2. Perhaps, though you would have to understand that this is every Singaporean’s money for that matter. True, everyone could be a critic after a screwup. Yet, my point here is, there are signs of political trouble brewing, why couldn’t our investment arm perform a more thorough check on something which they are going to buy in. And as in any investment into key assets of another country, such sensitivities have to be considered.


    A trader in the market, hawking his apples at half the market price, yet no one local dares to buy it from him.

    An out of town villager, upon seeing the bright red apples, seizing the chance to top up his stores for his family, with apples for the coming winter, bought the entire basket of apples from the trader.

    The passing townsfolk will shake their heads upon passing by. While the villager would shrug off their disapproving glances, thinking them to be jealous of his basket of cheap fresh apples.

    When the villager got home, his children crowded around him, each picking a ripe apple from the basket and take huge bites into them. Before they know it, a child while munching into the juicy apple, realised a half bitten wiggling worm in the apple core. And realised that almost all the apples have worms in them.

    The villager rushed back to the town, and realised that the trader was gone. Returning home sad and forlorn, the villager’s father told him not to worry, winter is still some weeks away.

    We could sell the apples in another town at half the price.

  3. Kway Teow Man is well-said, until you realize the deal is illegal one.

    Kway Teow Man must have been in army before. He must have heard: “You can do anything here as long as you don’t get caught”.
    The fact is Temasek get caught while doing “things illegal but commonly done”. Don’t give shit such as “forge ignorance, don’t know about it , and craps such as this”

    Kway Teow Man, Azmodeus, if a gov-run org with Lee’s the highest respect family can say that , why do u think that they will not say this to us ????

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