Did Temasek breach rules in Shin Corp takeover?
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Critical news analysis from the Singapore Media Watch:
http://mediawatchsg.blogspot.com/
Contrasting reports: Did Temasek breach rules ?
In a most amazing U-turn, it was reported in the Thai daily, The Nation that a "top-level official" in Singapore has approached the new Thai Prime Minister to discuss the controversial Shin Corp deal in the hope of resolving ownership issues in an amicable matter.
Ever since the deal was first announced in March, Temasek had reiterated repeatedly that the deal was done in accordance to Thai law and regulations. The latest comment on the legitimacy of the deal come from Temasek's Senior Managing Director of Investments, Jimmy Phoon in an interview with Dow Jones Newswire and Newsweek that "he was confident the investigation will show Temasek had complied with all laws and regulations in Thailand." (reported in CNA 29 September 2006)
However, it was revealed in The Nation today that "The Commerce Ministry's Business Registration Department has found that Temasek relied on nominees to skirt a legal ban on foreign companies owning more than 50 per cent of a telecom business."
Till now, there are no reports from the Singapore media to verify the news from The Nation. Based on the obvious inconsistencies between the Singapore and Thai media, who shall we believe ?
The breach in Thai regulations regarding foreign ownership of sensitive state concessions like telecommunications firm has landed Temasek in a legal wrangle with the Thai authorities.
According to a Singapore investment banker, Temasek is willing to pay a fine or make other concessions in order to end the controversy rather than allow the issue to drag on. Does it imply that Temasek did break some regulations in the first place?
If Temasek reduced its holding in Shin Corp from 96 per cent to 49 per cent by selling some 1.5 billion shares, it would suffer a huge loss. It paid Bt49.25 a share, for a total of Bt140 billion-Bt150 billion, but now Shin Corp is trading on the stock market at Bt28.25 a share which translates to an estimated loss of Bt60 billion or S$2.6 billion based on an exchange rate of S$1 = Bt23.
Unlike the ruckus it created in Thailand which led months of political unrest and the eventual ouster of Prime Minister Thaksin Shinawatra, Temasek's foray into Thailand hardly generate a ripple in the island-state.
Though much can be attributed to the state media's "due diligence" in publishing "authentic reports" from Temasek, Singaporeans generally are not aware or interested in their nation's affairs.
Those few who are genuinely concerned are left to ventilate their frustrations on internet forums as the Parliament of which 82 out of 84 seats belong to the ruling party PAP will not commence till November. The compliant opposition in Singapore, not surprisingly, has elected to maintain a "noble silence" out of deference to the government.
Hence we are left with a weird scenario where anti-Singapore sentiments ran high amongst Thai citizens over Temasek's takeover of Shin Corp while Singaporeans continue flock to Thailand for shopping and leisure, blissfully unaware of the proceedings.
The questions we must ask are too many. Was the political risk assessed carefully before the purchase? Who is responsible for brokering the deal? Was Temasek aware of the Thai law on foreign ownership? Why were Thai nominees used to skirt the ban? Why did Temasek choose to "settle the matter amicably" only after Thaksin was ousted? What is the projected total loss made by Temasek? When will we recoup the loss? Most importantly, are tax-paying Singapore citizens allowed to ask these questions?
Without even a mention or discussion of the deal by the government, it is doubtful that a state inquiry hosted by independent observers will ever be conducted to investigate the Shin Corp deal. After all, Temasek is a "purely commercial firm" which uses state's reserves and yet remains "politically independent".
Nevertheless, as our government will like us to believe, Shin Corp will continue to be a "good investment" because of its "strong fundamentals" and the "long-term potential" of the Thai economy for sustained growth. Therefore, my dear fellow Singaporeans, there is no need for panic yet. We will expect Shin Corp shares to rebound in the "not too distant" future.
In the meantime, we shall continue to wait earnestly for the much anticipated press release from our beloved Straits Times and CNA on the latest development. Well, on second thoughts, better bookmark this site: http://www.nationmultimedia.com/ in case the reports are "delayed" for "unforeseen reasons". -
What kind of "ripples" can we expect to occur in Singapore - from Singaporeans, when we have been been made to witness too many sinister political moves by the POWER OF ONE that demonstrate quite vividly how all attempts at challenging their political position will be ruthless beaten ?
Will Singapore wake up from their deep sleep that allow the POWER OF ONE to be so frivolous in the management of the Singapore Reserves ?
The POWER OF ONE has consistently shown contemptuous attitude towards the intelligence of Singaporeans, and has brow beaten Singaporeans with clever reasons and excuses; and where this fail, strong arm actions are displayed.
It is clear that the POWER OF ONE has allowed a strong willed woman too much liberty to push Temasek in its heady drive overseas to divest itself from being over-dependent on the limited Singapore economic potential; and without supervision on her management style, nor any oversight to her projects requiring billions from the Singapore Reserves.
Why will the Singapore Media controlled by the POWER OF ONE publish any of the deals by Temasek in the same deep critical manner as those foreign papers that are independent of government control ?
The following was first published in The Nation on 10 March 2006, and was reprinted in the thread 'Temasek being investigated by Thai Police !'.
See below for the full print that was quoted. -
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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
It is now seven months since the above was published on 10 March 2006, and it seems that events that were already being critically evaluated are bearing itself out, even though the Thai military was not considered then.
The deep friction caused by Thaksin's atrocious political attitude that borders on contempt towards the Thai Political Process, had deeply affected the stability of Thai society.
In the Singapore context, are we not seeing the same familiar contempt from the leadership towards those whom they are supposed to lead ? -
Well, they can lie to the apathetic public in general, but they know they cannot lie to US and to themselves.
Telling lies takes a lot of effort, because it takes more lies to cover up previous ones.
How long can everything be covered up with lies? -
Hey lets hope that SHE did not breach the rules for the takeover, else HE will announce GOV not making money and no tips this year
Then raise the min CPF withdrawal age to 70
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Nah-beh... tell them go and die ah...!Originally posted by justcooler:Hey lets hope that SHE did not breach the rules for the takeover, else HE will announce GOV not making money and no tips this year
Then raise the min CPF withdrawal age to 70 
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we wouldn't get to read this in our 140th.
Shin - A Thai perspective
Was it a professional and proper transaction, as Singaporean leaders claim? By Korn Chatikavanij, deputy secretary general of the Democrat Party.
The Nation.
Oct 12, 2006
I think it is fair to say that there are many questions that need to be answered before we can conclude, as Singapore's Prime Minister Lee Hsien Loong did on Friday, that the Shin Corp transaction was "professional and proper".
Indeed, I would be surprised if, in spite of his rhetoric, Lee would be genuinely satisfied that the deal's due diligence process was of the quality that he has the right to expect from Temasek, a lead investor for Singapore Inc.
If we were to accept statements by Khun Boonklee Plangsiri, Shin's chairman at the time of the deal, then the management of the underlying companies was not involved in due diligence.
Khun Boonklee declared right up to the announcement of the transaction that management was not aware of any discussions taking place regarding a sale.
Either way, Temasek is at fault. Conducting due diligence on the senior management of a target firm is usually the top priority in a friendly takeover deal, as it is the easiest and least costly way of finding out how a company is being run and what its prospects are. This is a no-brainer in any M&A practitioner rulebook.
Assuming Khun Boonklee was telling the truth about the lack of due diligence involving Shin and its subsidiaries, the implications for Temasek's investment procedures must surely be a cause for concern for Lee.
The Singaporean public, whose money has been entrusted to Temasek to manage, must also be worried. This can only mean that Temasek went into this deal with no idea about the internal affairs or the financial health of Shin and its subsidiaries.
Temasek may not even be aware of the legal case pending in the Administrative Court regarding ITV's concession payments. Simple, legal due diligence would surely have led to potential liabilities at least being shared with the prospective sellers.
Information that is publicly available could be inaccurate and out-of-date. Temasek also completely missed the Thai Air Asia ownership requirement.
Those are issues that call into question claims that the deal was "professionally" handled. But there are even bigger questions relating to whether the deal was "proper".
The word "proper" can mean "correct according to procedures" or, more commonly, it is taken to mean "decent or ethical". This definition raises some issues:
1 Lee has himself acknowledged that in the months leading up to the share purchase, Thaksin's dirty laundry was already being hung out for all to see.
Temasek should therefore have been aware that many people would perceive the deal as the acquisition of "tainted goods". Singaporeans should certainly be asking Temasek whether it is proper for their national reserves to be used in that way.
2 In setting up convoluted structures to buy shares, Temasek would have been fully aware that they were relying on legal advice to take advantage of what at best were loopholes in the Thai Alien Business Law and in the Thai definition of "foreign". Again, would Lee confirm that taking advantage of loopholes that are clearly against the spirit of the law in Temasek's modus operandi?
3 Having made the purchases, Temasek was obliged by Thai law - which is not dissimilar to Singapore law in any respect - to treat minority shareholders fairly by buying shares from them at the same price Temasek paid to the major holders in what is known as the General Tender Offer.
Again Temasek failed to do that. Temasek asked Thailand's SEC for a waiver against having to tender for shares from minority holders of two of Shin's listed subsidiaries, Shinsat and ITV. Temasek's reason was that these companies were not the "real" targets of the acquisition.
Subsequent to that, Temasek made an offer to minority holders of AIS - the declared target - that was a full 30 per cent below the market price of AIS's share on the day of the original transaction.
That Thailand's SEC allowed Temasek to do this is a separate issue that I hope will soon be dealt with. The fact that Temasek clearly offered a price far below the implied price paid to the Shinawatra family clearly cannot be considered "proper".
Indeed, when JP Morgan was asked to give independent advice to minority shareholders in AIS, it said Temasek's offer was "unfair".
Moreover, it should be pointed out that though Shinsat and ITV were not the "real" targets, control has nevertheless changed hands and minority shareholders were deprived of their right to exit.
The new owners have been entirely silent as to their intentions towards the companies they "unintentionally" acquired. It has been more than nine months, and ITV has lost more than 70 per cent of its market value since the beginning of the year. Many minority shareholders who were cheated by the process are still waiting for an answer.
4 Last but not least, Temasek is aware that neither Thaksin Shinawatra nor his wife Pojaman had any right to act on behalf of Shin as decision makers. We are led to believe by Thaksin that all decisions and negotiations were made by his children - something that is entirely unbelievable.
Thaksin's eldest son has gone on record to say that the decision to sell Shin was made by his "elders". If Thaksin or his wife were those "elders", then there will be serious repercussions. It is a serious crime for the prime minister and his spouse to engage in undeclared private business.
The premier's role is to uphold the interest of the general public, not the interest of his purse. It cannot by any stretch be considered proper for Temasek to have knowingly negotiated a transaction in a way that was unconstitutional.
More importantly, such a deal would be improper, if not illegal, given the controversy surrounding the deal, for Temasek to remain silent on the issue.
In my perhaps naive opinion, I think the best course of action for Temasek would be to come clean on all issues relating to the deal and the true nature of its Thai "partners".
This would be the start of a more transparent relationship between our two countries. In Thailand, our willingness to forgive and compromise knows no bounds.
One reason why the situation has gone from bad to worse for Temasek is the company's reluctance to be up-front. Coming clean would be the most "professional" response to mistakes made, and certainly the most "proper" one under such circumstances.
It would also help ameliorate any misunderstanding arising from the Shin deal, and serve as a gesture of goodwill between the two countries. After all, Singapore and Thailand have been and will continue to be major partners in the world economy.
B Korn Chatikavanij
http://nationmultimedia.com/2006/10/11/opinion/opinion_30015856.php -
Did anyone manage to keep tab of how much money Temasek has actually lost under the helm of Ho Ching?
I wonder if people still believe in what LKY said many years ago when Ho Ching was appointed to Temasek. He said there is no other talent and no one better to hold the position. They spun such a good story that everyone almost believed the Lee family was God's gift to Singapore; specially made with Midas touch. -
Totally agree, let's hope that this 2nd generation of god's gift will really do some good to singapore !! Pray hardOriginally posted by anonymouscoward:Did anyone manage to keep tab of how much money Temasek has actually lost under the helm of Ho Ching?
I wonder if people still believe in what LKY said many years ago when Ho Ching was appointed to Temasek. He said there is no other talent and no one better to hold the position. They spun such a good story that everyone almost believed the Lee family was God's gift to Singapore; specially made with Midas touch. -
somebody said USD2 Billion loss in Shin Corp and USD1.8 Billion loss in CSM & STATS & Micropolis.Originally posted by anonymouscoward:Did anyone manage to keep tab of how much money Temasek has actually lost under the helm of Ho Ching?
I wonder if people still believe in what LKY said many years ago when Ho Ching was appointed to Temasek. He said there is no other talent and no one better to hold the position. They spun such a good story that everyone almost believed the Lee family was God's gift to Singapore; specially made with Midas touch.