Asia Times: Shawn Crispin Deconstructs the Thai Junta's Systematic Dismantling of Shin Group

ASIA HAND

Dismantling Thailand's Shin Corp

By Shawn W Crispin

BANGKOK - With this week's takeover of iTV, Thailand's new military rulers have made their first move toward dismantling the telecommunication and media empires that once provided the behind-the-scenes financial firepower for ousted prime minister Thaksin Shinawatra's once powerful, now diminished, political juggernaut.


iTV represented a small part of the Shin Corp's corporate expanse, which currently includes major holdings in telecoms, satellites, aviation, property development, consumer finance and the Internet. Its mobile telecoms subsidiary, Advanced Info Services (AIS), provides the lion's share of the conglomerate's profits and catapulted Thaksin to billionaire status before he divested his shares to family members when he took up the premiership in 2001.

The company's profits soared during Thaksin's political tenure, padded by his government's policies aimed at pumping up domestic consumption through aggressive state-bank lending and assorted cheap-credit schemes. With Shin Corp's share price near a record high, and popular political pressure mounting against Thaksin, in January 2006 his family sold the company to Singapore's state-run Temasek Holdings in a controversial US$1.9 billion transaction.

The company has been under political assault ever since the military seized power from Thaksin in a bloodless putsch last September. A Thai court last year ruled that iTV had breached the terms of its original 1995 build-transfer-operate concession with the Prime Minister's Office and imposed more than $2.2 billion in fines, fees and owed interest payments. The station failed to meet a recent payment deadline and the military junta rescinded its operating concession and is in the process of determining which assets it can legally repossess.

To some market watchers, the highly anticipated move represents a form of forced nationalization of a foreign-held asset. Shin Corp's shares fell 2.6% the day after iTV's closure and so far Temasek has remained mum about the losses it will incur because of the station's demise. In part, that's because iTV was the only perennial loss-maker among the Shin Corp's otherwise profitable stable of companies.

But iTV's nationalization likely represents the first of a series of controversial moves to dismantle and then redistribute to politically preferred players the Shin Corp's various communications assets operated under state concessions. Coup leader General Sonthi Boonyaratklin has in recent weeks stated the junta's intention for national-security interests to seize three communications satellites that Temasek now majority-owns through Shin Corp subsidiary Shin Satellite.

The potentially bigger blow will come if and when the junta follows through on its apparent plans to rescind AIS's operating concession. Pridiyathorn Devakula, the interim military government's finance minister and deputy prime minister for economic affairs until last week, in January told a private meeting of foreign analysts gathered to discuss amendments to the Foreign Business Act that it was "only a matter of time" before they rescinded AIS's build-operate-transfer concession, according to an analyst who was in attendance and who spoke to Asia Times Online on condition of anonymity.

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I feel vindicated. Mr. Crispin actually supports my conspiracy theory concerning the punishment of Singapore and the nationalization of the Shin Group companies.

But why do foreigners keep pumping billions into the Thai economy when there is no rule of law and the state can capriciously confiscate their assets?

This is not the old days when the British or French could send a warship up the Chao Phaya to protect their assets when Thais started to play their petty political games.

And once iTV and the rest of Shin Corp has been taken over by the state, into whose hands will these assets go? I'm sure there will be a few generals and their civilian backers who will become very rich.

I agree with mostly everything in this report.

I have a feeling, however, that even with all the information that is out there the Thais will get away with this scam.

In other words, nobody is going to get punished except Singapore and the Thais will have the last laugh at the expense of the dopey foreigners who trusted them.