Thai Commerce Minister Says Temasek-Shin Corp Deal
Likely Broke Law
Thai Commerce Minister Krikkrai Jirapaet said Singapore's Temasek
Holdings Pte Ltd. (TEMAH.YY) likely broke Thailand's foreign
ownership laws when it bought a stake in Shin Corp. (SHIN.TH) last
year, but it should ask Bangkok for permission to own a majority of
the Thai telecommunications company.
23 March 2007
SINGAPORE (Dow Jones) -- Thai Commerce Minister Krikkrai Jirapaet
said Singapore's Temasek Holdings Pte Ltd. (TEMAH.YY) likely broke
Thailand's foreign ownership laws when it bought a stake in Shin
Corp. (SHIN.TH) last year, but it should ask Bangkok for permission
to own a majority of the Thai telecommunications company.
"The preliminary investigation findings have shown that they
(Temasek) broke the law. The case is now in the hands of the police
and we will soon know whether it will go it court," Krikkrai told
Dow Jones Newswires in an interview on Thursday.
He is the second Thai cabinet member to suggest in recent weeks
that Temasek, a Singapore government-owned investment company,
broke the law in the Shin deal.
Information & Communications Technology Minister Sittichai
Pokaiudom, who is overseeing the case, told Dow Jones Newswires in
February that he was convinced Temasek broke Thailand's foreign
ownership laws and that Shin may soon return to Thai control.
But Krikkrai strikes a more conciliatory tone than Sittichai,
indicating a desire at the most senior levels of the Thai
government to ease tensions between the kingdom and the city-state
and to resolve the Shin row without further damaging Thailand's
reputation with foreign investors.
"If they did break the law, and this involves both the sellers and
the buyers, they will have to face the consequences. I believe that
involves jail sentences up to three years or fines ranging between
THB300,000 and THB1.5 million," he said.
But he added that the government should think twice before deciding
more radical measures like bringing back Shin Corp. under Thai
control as suggested by Sittichai.
"Shin is listed on the stock exchange and taking it back is a very
sensitive issue," Krikkrai said.
In January 2006, a consortium led by Temasek bought a controlling
stake in Shin Corp. for US$1.9 billion from the family of former
Thai prime minister Thaksin Shinawatra, a move that helped
precipitate a coup and his ouster in September.
Thailand's commerce ministry then began to investigate the
nationality of Kularb Kaew Co., a holding company allegedly used by
Temasek as a nominee shareholder of Shin Corp. to evade a 49% limit
on foreign ownership of telecommunications companies.
The ministry said initial indications showed that Kularb Kaew was
actually a Temasek nominee, which meant that the Singaporean
company exceeded the foreign ownership limit.
Krikkrai said the use of nominees is illegal and this will be
reiterated in a new foreign business act that the commerce ministry
is working on.
"The use of nominee companies allow foreign investors to circumvent
and abuse the law on foreign ownership limits," he said.
Temasek, which couldn't immediately be reached for comment, has
repeatedly said that it hasn't broken any laws in the deal.
"After the legal issues are dealt with, I think Temasek should
adjust. The should ask the Thai government for permission to own
more than 49% in Shin and the government should consider the
request," Krikkrai said.
According to Thai legislation a foreign investor may hold a
majority stake in a telecommunications company only if it gets
approval from the Thai cabinet.
Krikkrai said Sittichai will be the one who will propose how the
government should proceed.