Temasek being investigaed by Thai Police!
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Monday October 2, 8:22 PM
Thai probe turns up heat on Temasek's Shin deal
By Khettiya Jittapong
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BANGKOK, Oct 2 (Reuters) - A Thai Commerce Ministry probe has found that Singapore state investment arm Temasek's [TEM.UL] purchase of Thailand's biggest telecoms firm might have broken foreign ownership laws, and the case was now in the hands of the police, an official said on Monday.
The investigation centred on Kularb Kaew, a holding company set up as part of Temasek's $3.8 billion purchase of Shin Corp from the family of now-deposed Thai Prime Minister Thaksin Shinawatra in January.
Non-Thais have in the past been able to control Thai affiliates through chains of holding companies, but the tax-free nature of the Shin sale -- and then the coup against Thaksin -- forced unprecedented scrutiny of the deal.
At the heart of the matter lies the question of whether Kularb Kaew, which is controlled by a Malaysia-based Thai who was a partner in the Shin deal, is a Thai company or a Temasek proxy.
"We have found some evidence, especially the way Kularb Kaew transferred money to buy Shin Corp, which might go against Clause 36 of the Alien Business Law," Dusit Uchupong, deputy director general at the ministry's Business Development Department, told reporters.
Given that the Commerce Ministry has no legal jurisdiction, the panel's findings have been forwarded to the police, he added.
"The ball is in hands of the police. Our department has no authority to decide whether the laws were violated or not," he said.
A spokesperson for Kularb Kaew said it had not received formal notification of the Ministry's review.
"We've complied fully with all the laws and regulations in Thailand and will continue to cooperate fully with the Thai authorities, as we have been doing," the spokesperson said.
COMPLEX DEAL
Thai nationals are prohibited from "holding shares for" or assisting foreign nationals in ways that would enable foreign nationals to circumvent the laws.
Under Thai law, proxies of foreign firms face a three-year jail term and/or a fine of up to 1 million baht ($27,000) if found guilty of owning more than 49 percent of a Thai company.
A preliminary Commerce Ministry inquest has already ruled Kularb Kaew a non-Thai firm.
Shin Corp, which has major interests in Advanced Info Services , Thailand's largest mobile phone firm, was acquired through several affiliates of Temasek.
Under the complicated structure of the deal, Shin is 96.29 percent owned by two registered Thai firms, Cedar Holdings, with 54.53 percent, and Aspen Holdings, with 41.76 percent.
Aspen is owned directly by a Temasek subsidiary. Cedar is 49 percent-owned by Cypress Holdings, another Temasek subsidiary.
Unlisted Kularb Kaew owns 45.2 percent of Cedar, and Siam Commercial Bank PCL has 5.8 percent.
Surin Upatkul, the Malaysia-based Thai businessman who owns 68 percent of Kularb Kaew and who is now a Shin Corp director, has denied acting on behalf of Temasek.
Thai officials have not yet said what they would do if Kularb Kaew is found to be a Temasek proxy, though chief telecoms regulator Choochart Promphrasid said in August AIS would face legal action. ($1 = 37.59 Baht)
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I guess we can kiss our Billion $ investment goodbye. Who in Temasek is going to be fired here exactly?
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In any other country, the CEO would have to take the blame.
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Originally posted by gill_hfc:
U think Ho Ch**g will be fired? Never ever. PM's wife will never step down. That is akin to admitting one's mistake and LHL will never allow that to blight his reign.
I guess we can kiss our Billion $ investment goodbye. Who in Temasek is going to be fired here exactly? [/b]
Watch for limited press releases here. -
that is what's wrong with this system.Originally posted by Rock^Star:U think Ho Ch**g will be fired? Never ever. PM's wife will never step down. That is akin to admitting one's mistake and LHL will never allow that to blight his reign.
Watch for limited press releases here. -
this was inevitable
oh well, 6b of taxpayers money gone -
Nice. Very nice. My parents' money how? Who pay?
The other people's money leh? How on earth are they going to explain this?
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All the money in Shin Corp gone?
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If they find it illegal, it's likely Shin Corp be nationalised
There goes our taxpayers money Last time there was Micropolis -
Under the Alien Business Law, Thai regulators and the MinCommerce can simply revoke Temasek's license to operate.
That will be karma for the way we treat foreign newspapers.
Someone better answer if this happens. I want accountability from the very top. -
and you wonder why there is no resignation from the very top.Originally posted by sbst275:If they find it illegal, it's likely Shin Corp be nationalised
There goes our taxpayers money Last time there was Micropolis -
Unlikely that LHL will come out and clarify things. Most likely someone representing Ho Ching or Temasek will come out and give a reply. No way will the both of them come out.Originally posted by LazerLordz:Under the Alien Business Law, Thai regulators and the MinCommerce can simply revoke Temasek's license to operate.
That will be karma for the way we treat foreign newspapers.
Someone better answer if this happens. I want accountability from the very top. -
that is highly unlikely to happen, we are all members of asean, with much vested interest in each other, and how the junta handles this will have an impact on foreign investments in the country, and the Thais are also deeply consious of this, my worst scenario is that the transaction would simply be reversed, we'll get our money back in return for our stake
so the chaps who're preparing to gloat over this can hold their fire now ... -
Even they dun do anything, end of the day, we are still accountable for ourselvesOriginally posted by LazerLordz:and you wonder why there is no resignation from the very top. -
I hope this Sonthi guy knows his stuff. Because if he does a kebla-kang pu-sing, ASEAN integration will get another blow.Originally posted by Fatum:that is highly unlikely to happen, we are all members of asean, with much vested interest in each other, and how the junta handles this will have an impact on foreign investments in the country, and the Thais are also deeply consious of this, my worst scenario is that the transaction would simply be reversed, we'll get our money back in return for our stake
so the chaps who're preparing to gloat over this can hold their fire now ... -
There goes my CPF, my gst, everything gone......
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Chulanot was a good friend of Singapore and the SAF before he retired, and the Thais are more consious of "face" than we are ... you think they'll just take back shin corp and keep the money like some banana republic vs uncle sam ? ...Originally posted by LazerLordz:I hope this Sonthi guy knows his stuff. Because if he does a kebla-kang pu-sing, ASEAN integration will get another blow.
this thread is for some to gloat, nothing more ....
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I'm keeping my skepto-meter on till he has proven himself. I never take anything at face value.Originally posted by Fatum:Chulanot was a good friend of Singapore and the SAF before he retired, and the Thais are more consious of "face" than we are ... you think they'll just take back shin corp and keep the money like some banana republic vs uncle sam ? ...
this thread is for some to gloat, nothing more .... -
From the archives of Thailand's newspaper - The Nation dated 10 March 2006.
Some little known issues were left unpublished in Singapore, and with the upcoming investigations by the Thai police, it will be interesting to see how Temasek had recently claimed that the Shin Corp transaction was above board.:
Shin Corp sale involved a who's who of Thailand, S'pore
Temasek Holdings, the Singapore investment agency, probably never had second thoughts about the Shin Corp takeover. It believed it had the deal, or so it seemed.
The deal involved the biggest political and business names in Thailand and Singapore. The buyer of Shin Corp was Ho Ching, the chief executive of Temasek Holdings. She is also the wife of Lee Hsien Loong, the prime minister of Singapore. The seller was Prime Minister Thaksin Shinawatra of Thailand. His family owned 49 per cent of Shin Corp.
Ho Ching presides over Temasek's investment portfolio of US$103 billion. Thaksin was serving Thailand as prime minister for a second term. Relations between Thailand and Singapore had been rather good, particularly with the Singapore-Thailand Enhanced Economic Relationship, although there may be a bit of rivalry between Thaksin and Lee over who has the higher profile in the region.
Temasek controls about 63 per cent of Singapore Telecommunication. SingTel, in turn, holds about 20 per cent of Advanced Info Service. AIS, which has a mobile-phone subscriber base of 19 million people, is the cash cow of Shin Corp. With the small local market of only 4 million people in Singapore, SingTel needed to look elsewhere to expand its business, such as Thailand and Australia.
It had long been looking to increase its stake in AIS or form a new partnership with TOT Plc after the state telecom enterprise's privatisation. The chairman of SingTel is Chumpol Na Lamlieng, the former president of Siam Cement Group. Chumpol is the only foreigner to serve as chairman of a large Singapore government-owned company.
Temasek brought in the US investment banking firm Goldman Sachs to advise it on the Bt150-billion takeover of Shin Corp. Goldman Sachs had earlier advised Telenor of Norway on its takeover of United Communication Industry, which operates the DTAC mobile network here.
In Thailand, Temasek got in touch with Peter Seah Lim Huat, a director of Siam Commercial Bank. Seah is a representative of the Development Bank of Singapore, one of SCB's biggest shareholders. Temasek in turn is a major shareholder of DBS. Seah approached Vichit Suraphongchai, the executive chairman of SCB, to take part in the deal. The major shareholder in SCB is CPB Capital Co, an investment arm of the Crown Property Bureau. Yos Euarchukiart heads CPB Capital.
Under the deal, Temasek would pay Bt73.3 billion to the Shinawatra and Damapong families for their 49 per cent of Shin Corp. Temasek would not use all of its own cash. It would borrow about Bt30 billion from the Thai market to finance the takeover. Chartsiri Sophonpanich of Bangkok Bank was also interested in getting a piece of the deal.
In the end, SCB would pitch in Bt15 billion in the form of a loan to Temasek, with a guarantee from the Development Bank of Singapore. Bangkok Bank would put up the other Bt15 billion. Lending to Temasek was considered risk free because its credit rating was higher than Thai sovereign debt. Temasek would bring in Bt43 billion to complete the deal with the Shinawatra and Damapong families.
Then Temasek would have to set aside another Bt79 billion to tender for the remaining 51 per cent of Shin Corp as part of the compulsory 100 per cent tender offer.
SCB Securities was also brought in to act as local financial advisor for Temasek. ML Chayothid Kridakarn played a key role in putting the deal together and ensuring that it conformed with Thai regulations. For its efforts, SCB Securities pocketed about Bt800 million from the advisory deal.
Temasek set up Cedar Holdings and Aspen Holdings in Thailand to help it acquire Shin Corp. Pong Sarasin, a former deputy premier and a noted businessman, and Suphadej Poonpipat were invited to join the deal so that it would not look like an entirely Singaporean deal. They would be shareholders of Kularb Kaew, which holds almost 41 per cent of Cedar Holdings. SCB would also hold 10 per cent of Cedar Holdings.
Suvarn Valaisathien was also brought in to advise the Shinawatra and Damapong families on the legal aspect of the transactions. Suvarn was one of the lawyers who helped Thaksin to defend himself against asset-concealment charges before the Constitution Court in 2001.
With this who's who of Thailand's business world involved, it is easy to understand why Temasek was certain about the Shin Corp takeover. Thaksin, for his part, hoped that selling off Shin Corp would end the criticism about his conflicts of interest.
But the deal struck on January 23 immediately created an uproar. Thaksin was accused of selling national assets to Singapore because Shin Corp, through its affiliates, controls a mobile phone concession, a satellite concession, a TV concession and aviation rights. To make matters worse, his family paid no tax on the deal.
His popularity sank fast, forcing him to dissolve Parliament and call a snap election for April 2. Rallies are underway to oust Thaksin and also to block the Shin Corp deal.
One of my friends, who is an investment analyst in Singapore, has expressed concern about the threat by activists attached to the People's Alliance for Democracy, which is rallying fiercely for the unconditional resignation of Thaksin, to boycott Shin Corp products.
My Singapore friend said: "The boycott of Shin products is worrying. I can't speak for Temasek, of course, but my strong feeling is that they will stay the course. They cannot be seen to be giving in so easily the minute there is some problem with a deal. I think their investment was based on a very positive long-term view of Thailand's economy going forward and they will probably be prepared to take the short-term pain.
"I would be very surprised if Temasek found other buyers and unwound the deal completely.
"I am also worried about the impact this might have on bilateral relations going forward. There is bound to be some bad taste left after the current turbulence settles down. Nevertheless, the two countries are drawn together by very fundamental common interests - we are natural allies in Asean, both committed to open economic policies and keen to see more economic integration. Both countries worry about terrorism and are allies in that fight. And so on. This natural friendliness and trust is seen in how SingTel wanted Khun Chumpol to be its chairman - the only foreigner to be chairman of a very large government-owned company. I hope that bilateral relations will withstand this unpleasant period."
Keep a close watch now on how the Shin Corp deal proceeds. It will be far from smooth.
Thanong Khanthong -
honestly speakly, you really think our money is always spent wisely?
i still heartpain the $600m for esplanade.. our bloody arts investment -
hahahahaha... i guess they have to come up with more idea to "legally" take your money to cover this hole lor...
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I dun expect ST to cover this.
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dun expect any coverage on the late night news as well..Originally posted by CoolMyth:I dun expect ST to cover this. -
More taxes to pay is one likely consequence. Watch next year Budget. It might be implemented if things don't go smoothly.Originally posted by I-like-flings(m):hahahahaha... i guess they have to come up with more idea to "legally" take your money to cover this hole lor... -
Amazing....
all the scholastic brains and know-how end up with such a face-losing mess?? -
http://www.channelnewsasia.com/stories/corporatenews/view/233636/1/.html
Thailand's Commerce Ministry sends Shin probe results to police
Posted: 02 October 2006 2348 hrs
Thailand's Ministry of Commerce has completed its investigations into the sale of Shin Corp to Singapore's Temasek Holdings.
A senior ministry official says it has submitted the results of its probe to the police.
The reports quoted a ministry official as saying that the investigation found sufficient evidence to show that Temasek might have overstepped foreign ownership laws.
The probe was focused on whether Kularb Keaw - a partner in the deal - is a Thai company or a Temasek proxy.
In response to a query from Channel NewsAsia, Kularb Keaw says it has not received any formal notification from the ministry regarding its probe.
But it stressed that it had complied fully with all the laws and regulations in Thailand.
Temasek declined to comment, saying it had yet to receive a copy of the findings of the probe. - CNA/ch