THAILAND: Surayud to Singapore amid Shin saga

Prime minister to visit Singapore during rising tensions over Temasek-Shin deal

Bangkok Post
Thursday, November 9, 2006

Thailand's military-appointed prime minister departed Thursday for a one-day visit to Brunei and Singapore, with the latter expected to be the tenser of the two whistle-stops.

Prime Minister Surayud Chulanont was scheduled to meet Thursday morning with Brunei's Sultan Hassanal Bolkiah before flying on to Singapore where he will meet with President SR Nathan, Prime Minister Lee Hsien Loong and Minister Mentor Lee Kuan Yew.

While the stopovers are in keeping with regional diplomatic etiquette -- newly appointed leaders of member countries in the Association of Southeast Asian Nations (Asean) try to prioritise state visits to the grouping -- Surayud's Singapore swing promises to be more than just a pleasantry.

It comes at a time of rising Thai-Singapore tensions over the January 23, 2006, purchase of Shin Corp -- the business conglomerate of the family of former Thai premier Thaksin Shinawatra -- by Temasek Holdings of Singapore.

The $1.9 billion sale raised serious questions about Thaksin's legitimacy as a national leader and accusations of "policy corruption," if not outright cheating on taxes.

Not only did Thaksin push through legislation three days before the sale that hiked the foreign ownership ceiling in Thai telecommunication companies from 20 to 49 per cent, his family also finessed the deal through the stock market in order to benefit from a waiver on capital gains tax, making the billion dollar sale a tax-free one for his already wealthy clan.

The sale also sparked claims that the prime minister had sold off sensitive national assets. The Shin Corp conglomerate included several government concessions including the country's largest mobile phone service, the national satellite network, a popular television station and shares in a no-frills airline.

It led to a rapid decline in Thaksin's popularity among Thailand's middle class and political elite that culminated in his overthrow by a military coup on September 19.

In the aftermath of Thaksin's fall, the Temasek-Shin Corp deal has remained a hot potato and the subject of numerous ongoing investigations in his family's dubious business dealings.

On Tuesday, the revenue department announced that Thaksin's son and daughter, Panthongtae and Pinthongsa, would be liable to pay taxes of an estimated 11 billion baht each on their purchase of Shin Corp shares from the offshore company Ample Rich days before reselling them to Temasek.

Another investigation is examining the legality of Temasek's appointment of two nominee companies to purchase an additional 47 per cent in Shin Corp after the initial 49 per cent purchase.

There are suspicions that the nominees, although Thai entities, are mere shell companies for Temasek Holdings.

If found guilty of abusing Thailand's nominee requirements, Temasek might be forced to sell 47 per cent of Shin Corp fast, and at a considerable loss, although Thai ministers have indicated that some leniency is in the cards.

Thailand is in the process of amending its legislation on nominee holdings.

"If they (Temasek) are found to be a bit incorrect they will have more time to correct it," Thai Finance Minister Pridiyathorn Devakula told a recent gathering of the Foreign Correspondents Club of Thailand (FCCT).

As for Thursday's Thai-Singaporoe meeting, Pridiyathorn added, "I don't think we will be embarrassed to talk to them (about Temasek), but they will be embarrassed to talk to us."

All Shin Corp share transfers 'will be traced'

By Surasak Glahan

The assets scrutiny committee will trace Shin Corp share transfers over the past 10 years to look for all possible cases of tax evasion, a source said yesterday.

The committee's move follows the Revenue Department's decision to collect income tax from the huge profits which the Shinawatra siblings earned from the sale of shares in Shin Corp to Temasek Holdings of Singapore via Ample Rich.

The source said the fresh probe is urgent because the statute of limitations on tax liabilities is waived after 10 years.

But tracking down all Shin Corp share transactions during the period was not easy for the panel because the way the company did business was complicated and tricky, the source admitted.

"We will investigate every share transfer to find out if they were made at reasonable prices. We will look into all cases, not just the one involving the alleged tax evasion by Panthongtae and Pinthongta," said the source.

A tax official said the panel could exercise the department's authority involving investigations of tax payment records dating back 10 years to launch the inquiry into the share transfers.

The department is authorised to make taxpayers who fail to fully declare taxable income to pay back-taxes for the last five years, the official said.

Panthongtae and Pinthongta Shinawatra, the children of ousted prime minister Thaksin, were notified by the department on Monday that they were liable to pay tax on the difference between buying 329.2 million shares from Ample Rich at one baht per share and selling them to Temasek at 49.25 baht per share.

Both could be forced to pay tax plus interest of more than 11 billion baht.

Viroj Laohaphan, chief of a sub-committee on tax, said the assets scrutiny panel will meet officials from the tax agency tomorrow. They could look at the department's U-turn from its previous decision not to collect tax from the transaction.

Ruangkrai Leekitwattana, an adviser to the attorney-general, questioned the department's decision to tax the siblings, saying the department might be trying to save its own skin.

He said the department cannot cite the half-year tax period ending Sept 30 to tax the pair because their earnings did not fall into categories required by law to file a tax payment for the period.

In actual fact, the siblings, considered to be directors of Ample Rich, are liable to pay tax on the difference between the market price and the price they paid for the shares, he said.

Finance Minister Pridiyathorn Devakula said he would launch a probe against a finance official who reportedly assured the Shinawatra siblings that they were not liable to income tax if they were to buy Shin Corp shares from Ample Rich through the stock exchange.

Date Posted: 11/9/2006