Tuesday, February 07, 2006

Thaksin - Give Me Enough Rope

Year of The Dog Does Not Bode Well For Thaksin - Mai Me Wella Sam Lap Khoon!!

The wonderful anthem of the 70s/80s from The Clash (Give Em' Enough Rope) ... what a wonderful video clip it would be, to capture Thaksin and his family getting embroiled in the latest business calamity, and with the song blaring in the background. ("Give Em' Enough Rope... so that they could hang themselves... I told you it was a protest song!!). When the family of Thai Prime Minister Thaksin Shinawatra sold off their stake in giant telecommunications company Shin Corp for 73.3 billion baht (US$1.85 billion), one of the reasons cited was to take the political heat out of accusations leveled at the premier of conflict of interest. Well, the intention was good, but the result was giving ammunition to Thaksin's detractors and opposers to vent their frustration at Thaksin.

Funny thing is, the "apolitical investment juggernaut" of Singapore, Temasek, found itself embroiled as the buyer in what the Singapore investing arm thought was an opportunity to spread its tentacles to control even more Asian infrastructure assets. The last thing Temasek wanted was to be involved in a political firestorm. Following the mantra espoused by Mentor Lee, Temasek would not want to get tangled up in any political sensitivities around the region. Boy, there will be a lot of "damage control meetings" in many Singapore government offices this week.

The deal wasn't that bad in the first place. However, when you have so many enemies, even an innocent move like that could be turned against you. One can influence the press to put a lid on the issue and hope that it dies down or crawl away. However, the movement against Thaksin is gathering momentum as more voices have been calling for Thaksin to resign. In the first major public indication of dissatisfaction within Thaksin's ruling Thai Rak Thai party, Minister of Culture Uraiwan Thienthong resigned last Friday. "The political situation is not good at the moment, and as the minister of culture I have to uphold the ethics of good governance," Uraiwan said.

Thaksin may find the going tough as among his detractors, they have a very found a powerful leader of sorts - Sondhi Limthongkul, a media baron who is one of Thaksin's most outspoken critics. Sondhi often accused Thaksin's government of corruption and abusing its powers. Last Thursday the Central Administrative Court ordered state-run CAT Telecom to stop blocking the signal used to broadcast Sondhi's satellite talk show, which has become the focal point of his campaign against Thaksin. Sondhi's star is rising.

More than 200 academics from nine universities have signed an open letter condemning Thaksin's leadership and criticizing his exploitation of legal loopholes that allowed his family to sell Shin Corp's shares tax-free. If Thaksin does not resign soon, we could see the endgame being played out with Sondhi filing a royal petition with His Majesty King Bhumibol Adulyadej through General Prem Tinsulanonda, chief of the privy councilors and statesman. The petition will ask His Majesty to replace Thaksin with a "respected and qualified figure".

On January 21, Temasek Holdings paid US$1.85 billion to buy a 49.6% stake in Shin Corp from Thaksin's children and other family members. Some complained of foreigners getting their hands on the country's assets and posing a security risk. Initially the bone of contention was that the deal was tax-free. Then allegations of insider trading and even breaking the law were leveled. On January 20, Ample Rich, a holding vehicle established by Thaksin and registered in the British Virgin Islands, sold 164.6 million shares in Shin Corp to two Shinawatra siblings for at-par value of 1 baht per share. The next day, Panthongtae and Pinthongta Shinawatra both sold these Shin shares to Temasek Holdings for 49.25 baht each as part of the buyout of the 49.6% stake in Shin from the Shinawatra and Damapong families. The sale to Temasek was tax-free under a waiver on capital gains for transactions on the Stock Exchange of Thailand (SET), but it is not clear whether the Ample Rich transactions should have been exempt from taxes. The Shinawatra children have also been accused of insider trading and disclosure violations related to their Shin shareholdings.

Thaksin has done some good stuff to the Thai economy, but more and more people have become disenchanted with the premier's style, which to many borders on arrogance. What disturbs people the most is the way Thaksin has gone about doing the deal. It was the way he was almost gloating and the double standards. Why did Temasek get waivers to avoid making a mandatory tender for two of Shin Corp's subsidiaries? The glaring trampling of minority rights just gave Thaksin's detractors a lot more ammunition, ... and Thaksin's bullet proof vest is getting mighty thin!!! Too much of an ego is not a good thing, sometimes our heads will get wedge in by the door when we are trying to get out. The year of the dog does not bode well for Thaksin - who let the dogs out? Thaksin - Mai Me Wella Sam Lap Khoon!!

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