Thailand's Sondhi Wants Assets Back From Singapore

Bloomberg New, February 16, 2007
By Anuchit Nguyen and Beth Jinks

Feb. 16 (Bloomberg) -- Thailand's military leader said he wants to take back control of 140 billion baht ($3.9 billion) of assets sold to Singapore's government, escalating a diplomatic spat between the Southeast Asian nations.

``Singapore is a very small country, but it is so rich that it can buy 140 billion baht of our national assets,'' said Sondhi Boonyarataklin, who led a September coup that toppled the government of Thaksin Shinawatra. ``I am thinking about whether we can take those assets back.''

Singapore's Temasek Holdings Pte last year bought control of Thaksin's mobile phone and satellite group, provoking an outcry against the sale of strategic companies to a foreign government. Sondhi last month accused Singapore of using those assets for spying, a charge the city-state has denied.

``I thought things had calmed down on the subject, but this does suggest that maybe things took a turn for the worse,'' said David Cohen, a Singapore-based economist at Action Economics. ``It is difficult to anticipate which direction the politics in Thailand would go right now.''

The sale of Shin Corp., the holding company founded by Thaksin, angered Thais because the billionaire businessman's family didn't pay tax on the proceeds. The deal exacerbated protests and a political stalemate in Thailand that led to Thaksin's ouster in the Sept. 19 coup.

Business Decision

Many Thais were also concerned at Singapore's involvement in the transaction, even though Temasek and its parent, the Ministry of Finance, said the 33-year-old company made the investment as a pure business decision and not at the direction of the city-state's government.

Temasek's Chief Executive Officer, Ho Ching, is the wife of Singapore Prime Minister Lee Hsien Loong.

``Singapore is surprised at what Council for National Security Chief Sonthi Boonyaratglin was reported to have said about getting back Thai national assets which have been sold to foreigners,'' the Singapore Foreign Affairs Ministry said in an e-mailed statement. ``We should wait for the Thai Government to clarify what those remarks meant.''

Temasek said in an e-mailed statement that it couldn't immediately comment on Sondhi's remarks. Rachadawan Sanitwong Na Ayuttaya, Shin Corp.'s spokeswoman, declined to comment.

``The current state of our relations with Thailand has its basis in the complex dynamics of Thai domestic politics since the coup,'' Singapore Foreign Affairs Minister George Yeo said in a speech in Parliament on Feb. 12. ``We have to take the current unpleasantness in our stride.''

Temasek gained control of Advanced Info Service Pcl, Thailand's biggest mobile phone company, and Shin Satellite Pcl, the country's only satellite operator, when it led a group of investors in acquiring more than 96 percent of Shin Corp.

Widening Rift

The diplomatic spat between the two nations intensified last month, when Thaksin visited Singapore and met Deputy Prime Minister S. Jayakumar in what the city-state said was a personal, rather than official, meeting.

Thailand summoned Singapore's ambassador to explain the meeting, and retracted an invitation to Singapore's Yeo to attend a civil service exchange program, saying it was ``dissatisfied'' with the response.

Thaksin, who was in New York for the United Nations General Assembly at the time of the coup, has been living abroad since September. He has been told by the junta not to return until after an elected government is in place and his diplomatic passport has been revoked.

National Pride

Sondhi's speech, which the army said was aimed at promoting national pride, was presented at the Royal Army Convention in Bangkok. The speech was broadcast today by army radio.

``I don't know how to get those assets back, but that's my wish,'' Sondhi said. ``As a soldier, I need to recoup those assets.''

Sansern Kaewkamnerd, spokesman for the National Security Council, the self-appointed group of junta leaders that oversees security in Thailand, confirmed Sondhi's comments.

``It has been his wish to bring back any assets that are key to national security,'' he said. ``Satellites are a very important asset.''

Thailand's commerce ministry asked police in October to investigate the takeover of Shin Corp., and watchdogs have been set up to probe suspected breaches of foreign ownership rules, including the practice of overseas partners funding local nominee companies in the kingdom.

The purchase of Shin Corp. was ``completely above board and can withstand any investigation,'' Singapore's Minister Mentor Lee Kuan Yew, who was the city-state's prime minister from 1959 to 1990, said on Nov. 3. ``Nobody doubts that, nobody within the system doubts that. People who man the system are completely, absolutely above board.''

Temasek's Role

Shin Satellite spokeswoman, Tanyapas Chuaychoo, said the satellite operator was ``a Thai company.''

``Temasek never takes part in our management, they never sit on our board and never work in our company,'' Tanyapas said. She said Thailand's government owns the company's four orbiters and Shin Satellite shares the revenue it gets from operating the satellites with the Thai government.

Shin Corp. also controls ITV Pcl, the nation's only television network operator not owned by the government or military, and CS Loxinfo Pcl, an Internet company.

Temasek directly owns 41.7 percent of Shin Corp., while a group of investors, including Temasek units, hold 54.6 percent, Jimmy Phoon, Temasek's chief investment officer, said Sept. 29.

Targeted Statement

Thaksin's family last year sold its entire 49.6 percent stake in Shin Corp. for $1.9 billion tax free to investors led by Temasek. The Temasek-led group increased its stake in the company to more than 96 percent through a tender offer.

Shin Corp. shares fell 0.75 baht, or 2.6 percent, to 28.25, their biggest one-day decline since Jan. 4. Shin Satellite dropped 0.10 baht, or 1.4 percent, to 7.05.

``This is a targeted statement for assets related to national security, not a general one for all assets,'' said V. Anantha-Nageswaran, the head of research for Asia and the Middle East at Julius Baer & Co. ``It should not have a big impact on the market.''

(Update4)