Another Billion Dollar Blunder by Ho Ching?
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TV unit of Temasek's Shin Corp faces $3b fines
But Thai broadcaster may not have to pay fines in full for unlicensed programming changes
By SIOW LI SEN
(SINGAPORE) Temasek Holdings' purchase of Shin Corp in January from the family of Thai Prime Minister Thaksin Shinawatra has thrown up another problem - Shin's ITV unit faces a massive fine that could potentially wipe out all its assets.
The Thai government said yesterday the broadcaster must pay a fine that could be as high as 76 billion baht - a staggering S$3.19 billion - in a dispute over programming and retroactive fees.
Analysts, however, believe ITV will not have to pay such a huge sum, which is roughly 20 times the station's total assets.
Shin Corp, 96 per cent owned by Temasek, has a 53 per cent stake in ITV, which operates under a 30-year concession that ends in 2025. Temasek paid $3.8 billion for Shin Corp.
'We have no comment,' a Temasek spokeswoman said yesterday in response to a BT query on whether the Singapore investment company was aware of ITV's potential liability and whether it had made adequate provisions.
The dispute began in 2004 when ITV adjusted its programming without permission from Thailand's Prime Minister's Office (PMO). The matter was public knowledge and was mentioned in ITV's 2005 annual report under 'risk factors'.
According to reports yesterday, Rongpol Charoenphanthu, permanent secretary of the PMO, said after a meeting at the PMO that ITV must pay royalty fees plus penalties for programming changes that allowed the company to earn more from advertising revenue.
The PMO owns the concession licensed to ITV.
Thailand's Administrative Court last month revoked a decision by an arbitration panel two years ago that granted ITV a discount on concession fees.
The court also overturned the panel's decision to allow the network to replace some news and educational programming with entertainment.
Mr Rongpol was reported to have said that at yesterday's meeting it was decided that ITV will have to pay the fine, based on penalties contained in its original contract for a 30-year licence, as well as 1.7 billion baht in retroactive licence fees and interest on them.
ITV has filed an appeal with the Thai Supreme Administrative Court. A verdict is not expected before the end of the year.
ITV director Niwattumrong Boonsongpaisan has said the company will not take any action until after a ruling on its appeal against the Administrative Court's decision.
Seamico Securities assistant vice-president Pornsawat Jirajarus told BT he expects ITV will have to pay 1.7 billion baht in retroactive licence fees and interest plus 240 million baht for the programming dispute, but will not be hit for the full 76 billion baht.
'ITV has claimed the fine should be only 100 million baht a year, so the fine may be 240 million baht,' he said, referring to the period in which ITV adjusted its programmes, from April 2004, without permission from the PMO.
'I think it will still survive though it may affect the liquidity of the station,'' he said.
In the worst-case scenario of having to pay the full 76 billion baht fine and fee, the PMO might close the station, Mr Pornsawat said.
'We don't believe ITV will be able to pay such a high amount, which may lead the PMO to terminate the concession or restructure the penalty by converting it into equity, which would mean the state would become the majority shareholder,' he said.
This could mean ITV becoming an independent station, which was the intention when guidelines for the station's establishment were set during the tenure of former prime minister Anand Panyarachun, Mr Pornsawat said.
Shares in ITV, which operates Thailand's third most popular television channel, fell to a year's low of 2.8 baht yesterday and are now down 74.6 per cent since January.
Last month ITV reported a 36 per cent drop in net profit for first-quarter 2006 on weaker advertising revenues.
Shin Corp, Thailand's biggest telecommunications conglomerate, posted a 10 per cent drop for first-quarter net profit to 2.2 billion baht versus 2.5 billion baht previously. -
Well, I guess no progress packages and upgrading for PP and HG for the next 2 elections.
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Curious why Temasek didnt know about this when they purchase Shin Corp?Originally posted by ditzy:Well, I guess no progress packages and upgrading for PP and HG for the next 2 elections.
Temasek should bring Thaksin to court, I am sure the thais will be very supportive about it -
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Because they too smart lah... know everything mah..Originally posted by Gazelle:Curious why Temasek didnt know about this when they purchase Shin Corp?
Temasek should bring Thaksin to court, I am sure the thais will be very supportive about it
One day, they will get their hands burnt really bad - and guess who will suffer for it?? -
Kinda laughing to myself this morning when I saw. Poor due diligence.
It was stated - The matter was public knowledge and was mentioned in ITV's 2005 annual report under 'risk factors'.
So GG Temasek.
But seriously, I hope that the fines would not be huge. At the end of the day it is our money ><
I think Thaksin is patting himself on the back for the done deal. -
if thats the case, Temasek might have already taken this into consideration in the price. But then again, now that TS is no longer in power, things might have changed.Originally posted by pwnz0r:Kinda laughing to myself this morning when I saw. Poor due diligence.
It was stated - The matter was public knowledge and was mentioned in ITV's 2005 annual report under 'risk factors'.
So GG Temasek.
But seriously, I hope that the fines would not be huge. At the end of the day it is our money ><
I think Thaksin is patting himself on the back for the done deal.
Jialat. -
do not. i repeat do not question the wisdom of the empress dowager ye filthy peaseant.
lou fou ye wan shui wan wan shui!!!!! -
All these seemingly sloppiness in the Thai takeover is due very much to the lack of due-dligence being exercised by the management of Temasek.
From an Asia Times report, this atrocious sloppiness does not begin and end with the Shin Corp takeover, but is typical and characteristic of the arrogance in Temasek's "economic imperialist" behaviour in the use of Singapore Reserves in the takeover of foreign companies that contravene local laws.
With Thai forums discussing about the existence of "front companies" used to hold assets of Shin Corp, how much is the Singapore Public kept in the dark by State controlled Singapore media - that seems to be more busy blowing up favorite escapades of Singaporeans in Batam then with the failures of Temasek in the use of Singapore Reserves. -
When you run an multi-faceted organization like Temasek with power without any accountability, this is what will happen - kaput and disasters.
People have already spoken and asked for accountability but apart from all the look-good pretentions has Temasek really once listened to such advice and suggestions. It looks like they consider themselves above every body and know best at all times.
Read into past postings of forumers asking Temasek to stop such powerplay acquisitions in foreign assets and put the monies where the mouth is - local job creations and local prosperity.
If Temasek has listened it would have saved citizens at least $10 billions in losses since. It could have given out five times the Progress package to ease unemployment and suffering of its own needy citizens. -
x2Originally posted by robertteh:When you run an multi-faceted organization like Temasek with power without any accountability, this is what will happen - kaput and disasters.
People have already spoken and asked for accountability but apart from all the look-good pretentions has Temasek really once listened to such advice and suggestions. It looks like they consider themselves above every body and know best at all times.
Read into past postings of forumers asking Temasek to stop such powerplay acquisitions in foreign assets and put the monies where the mouth is - local job creations and local prosperity.
If Temasek has listened it would have saved citizens at least $10 billions in losses since. It could have given out five times the Progress package to ease unemployment and suffering of its own needy citizens. -
just another couple of thousand peanuts onlyOriginally posted by robertteh:When you run an multi-faceted organization like Temasek with power without any accountability, this is what will happen - kaput and disasters.
People have already spoken and asked for accountability but apart from all the look-good pretentions has Temasek really once listened to such advice and suggestions. It looks like they consider themselves above every body and know best at all times.
Read into past postings of forumers asking Temasek to stop such powerplay acquisitions in foreign assets and put the monies where the mouth is - local job creations and local prosperity.
If Temasek has listened it would have saved citizens at least $10 billions in losses since. It could have given out five times the Progress package to ease unemployment and suffering of its own needy citizens.
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Here are more:
Temasek's Undue Diligence
Always diligent, Singapore state investment arm has been less than careful. Laurence Lau. Asia Times
Jun 17, 2006
Kuala Lumpur - Temasek Holdings, Singapore's hugely successful state-owned investment vehicle, has been characterized as brusque in its business acquisitions, but seldom sloppy.
Several recent investments, however, raise hard questions about whether the secretive Temasek is conducting enough due diligence before entering politically sensitive blockbuster deals across the region.
To offset its lack of natural resources and a land-limited local economy, Singapore Inc has gone on a regional investment spree in recent years, acquiring significant stakes in ports, telecommunications and banking assets through state-owned investment vehicles.
Temasek, which was first established to raise capital for government-linked companies, and whose current executive director, Ho Ching, is the wife of Prime Minister Lee Hsien Loong, has on nearly all counts had a successful investment record - apart, perhaps, from its botched attempts to launch an airline in the 1990s.
But a number of recent apparent lapses have raised hard new questions about the management of the Singaporean government's domestic investment arm.
This year Temasek took an 11.55% stake for about US$4 billion in Standard Chartered Bank, which has substantial Asian operations, making it the largest single shareholder in the UK-based bank.
Temasek has demonstrated a seemingly insatiable appetite for regional bank shares. In the past three years, the investment company has taken controlling or substantial stakes in Indonesia's Bank Danamon and Bank Indonesia International, India's ICIC Bank, Pakistan's NDLC-IFIC, China's Minsheng Bank, the China Construction Bank, the Bank of China, and Malaysia's Alliance Bank.
A little too aggressive?
But in its acquisitive rush, Temasek has overlooked important legal and political considerations that threaten to scupper certain deals as well as invigorate nationalistic opposition to its aggressive regional investment strategy, known in Singapore as the "Look East" investment campaign.
That seems particularly true in Malaysia, where Temasek is known to have numerous holdings in everything from plantations to shopping malls to banks, but is also viewed suspiciously by nationalistic groups and politicians.
Temasek is currently a major shareholder in Malaysia Plantations Bhd, which is the sole owner of Alliance Bank, Malaysia's ninth-largest financial institution.
Last November, Temasek hurriedly sold about 40 million shares in Southern Bank Bhd, Malaysia's second-smallest in terms of assets, after accumulating 16.9 million shares the previous month, which had pushed its total stake in the financial institution to 7.58%.
The rushed sale was apparently a belated attempt to comply with Bank Negara regulations, part of the 1989 Banking and Financial Institutions Act, which require that foreign buyers receive central-bank approval when taking a stake greater than 5% in a financial institution licensed in Malaysia.
Temasek also held stakes of more than 5% in two different financial institutions licensed in Malaysia without prior central-bank approval.
After the local press highlighted the apparent discrepancy, Temasek quickly sold off its shares without Bank Negara sanction of what could have been a costly managerial mistake.
The Standard Chartered deal has also complicated Temasek's standing in Malaysia, because of the UK-based institution's presence in Malaysia as a licensed financial institution.
Temasek still controls Alliance Bank through its 15% holding in Malaysian Plantations, and central-bank regulations bar holding stakes of more than 5% in two different financial institutions.
But it is far from clear in Standard Chartered's case whether the central bank's 5% regulation applies to its licensed Malaysian operations, ie, whether they are considered "local".
Neither Bank Negara nor Temasek have so far attempted to clear up the confusion, more than four months after the deal was concluded, and it's unclear whether Temasek has yet submitted a proposal to sell down its Malaysian Plantations stake over a specified time period.
A series of bilateral Singapore-Malaysia spats, ranging from sand supplies to airspace rights to a contested half-built bridge linking the two countries, is likely to aggravate Temasek's Malaysian troubles, which come on top of Bank Negara statements that it will take stern action against any party that breaches the rules on foreign investment in banks and financial institutions.
"Economic imperialism"
This is not the first time that Temasek managers have made mistakes that in-depth due diligence and a modicum of investment-banking knowledge seemingly could have avoided.
Temasek's decision to buy a majority stake in Thailand's Shin Corp from members of Prime Minister Thaksin Shinawatra's family unleashed a political firestorm that eventually contributed to Thaksin's decision to step down from power temporarily.
The US$1.9B deal was widely criticised in Bangkok not only for the tax-free nature of the transaction but, more significant to Temasek, for the sale of strategic telecommunications concerns to a Singaporean government-linked entity.
Political protesters cast Temasek's purchase as "economic imperialism", and a consumer boycott of Shin's mobile-telephone arm has dented revenues and profits in recent months.
Temasek officials at the time explained that it is not a government-directed policy agency, and that Temasek makes investment decisions on strictly commercial grounds.
Until then Singapore Inc had been able to skirt nationalistic criticism in Thailand, despite making substantial positions in many formerly Thai-owned banks in the aftermath of the 1997-98 Asian financial crisis.
More significant were the apparent legal blind spots in the Shin Corp deal, which some analysts now contend would have been less controversial if it had been broken up in two or three phases.
Temasek was forced hurriedly to divest Shin's stake in budget airline Thai AirAsia because of Thai laws restricting foreign ownership that they apparently overlooked.
There are still lingering legal questions about the waivers Temasek received to avoid making a mandatory tender offer for two Shin subsidiaries, and whether foreign concerns are allowed to own a majority stake in telecommunications concerns that operate under government concession.
Temasek's lack of transparency and its general aversion to press interviews have only added fuel to the fire of the nationalistic backlash its aggressive investment strategies are starting to cause across the region.
Citing the above examples, some investment analysts contend that during Temasek's drive to acquire big stakes in regional strategic industries, particularly in banks and telecommunications, the investment company is not effectively gauging through its due-diligence procedures the possible political and even social ramifications of its investments.
And that in turn raises important new questions about the quality of Temasek's previously highly regarded management team. - Asia Times
(Laurence Lau has more than 18 years of experience in business and finance. Born in Malaysia, he has worked in Sydney, Singapore, Hong Kong and Kuala Lumpur. He was head of research for two securities firms and a portfolio manager for a UK firm.)
http://atimes.com/atimes/Southeast_Asia/HF17Ae03.html -
3 billion divided by 600,000 gives you 5000 peanuts.Originally posted by LinYu:just another couple of thousand peanuts only
Oh well, I guess we're all monkeys trapped in a cage without seeing any of those peanuts.
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both of temasek's recent purchase (standard chartered and shin corps) have resulted in paper loss of $2 billion.
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No big deal, the cut in employer cpf contribution should make up for it.Originally posted by dragg:both of temasek's recent purchase (standard chartered and shin corps) have resulted in paper loss of $2 billion.
Also, PP and HG have already pledged $180million from their upgrading fund to offset the losses. No big deal, no big deal at all. -
It reminds us of what ex-PM once said : "it is peanut to pay minister the million-dollar salary as it is equal to less than one plate of Cha Kway Teow per citizen pa."
What is $2 billion on Global Crossing? It is only 1.5% of total reserve. No big deal really. -
Aunties and uncles who dig the rubbish bins for waste cans prolly cant afford one plate of char kway teow
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if u are interested to know who will suffer for it:Originally posted by ShutterBug:Because they too smart lah... know everything mah..
One day, they will get their hands burnt really bad - and guess who will suffer for it??
http://www.temasekholdings.com.sg/news_room/press_speeches/25_06_2004.htm -
All Speeches and talk is cheap I believe.. only time and outcome speaks the truth.Originally posted by UTT100:if u are interested to know who will suffer for it:
http://www.temasekholdings.com.sg/news_room/press_speeches/25_06_2004.htm -
And whom to blame for all the Temasek failures?
Ho Ching? PAP? Minister of Finance? Chairman of GIC?
of course not. The only people to blame are the media for daring to highlight the issue and cause disunity and disharmony among Singaporeans.
And yoo people. For daring to criticise the empress dowager.
Not forgeting the opposition.
All these groups of people are to be blamed for Temasek's failures for without them there is no failure! It was an honest mistake. -
All business come with risk. but to me this is not business risk. Its a billion dollars oversightOriginally posted by casino_king:And whom to blame for all the Temasek failures?
Ho Ching? PAP? Minister of Finance? Chairman of GIC?
of course not. The only people to blame are the media for daring to highlight the issue and cause disunity and disharmony among Singaporeans.
And yoo people. For daring to criticise the empress dowager.
Not forgeting the opposition.
All these groups of people are to be blamed for Temasek's failures for without them there is no failure! It was an honest mistake. -
LKY will probably just dismiss it as another "learning experience" for his dear son...I mean, daughter in law.
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Do you know that if you go to Suzhou, you must never say that you are a Singaporean? There, they will think that you are a natural born sucker and try to fleece you. Looks like when in Thailand, Singaporeans must claim to be Japs after the Shin Corp fiasco.Originally posted by Gazelle:All business come with risk. but to me this is not business risk. Its a billion dollars oversight
I think they should employ street smart ITE students in Temasek Holdings for it to work. -
What so big deal of losing S$3 billion? I made S$5.2 billion from elsewhere, you know?
We have to explore and invest where & when ever there is an opportunity....if we don't try...how are we going to know?
I have no regret in investing sssss..h..i..t..corp....S$3 billion lost? No sweat!!! If I can buy over the whole Thailand...I would do so!!!!!!!