Contrasting reports: Did Temasek breach rules ?

In a most amazing U-turn, it was reported in the Thai daily, The Nation that a "top-level official" in Singapore has approached the new Thai Prime Minister to discuss the controversial Shin Corp deal in the hope of resolving ownership issues in an amicable matter.

Ever since the deal was first announced in March, Temasek had reiterated repeatedly that the deal was done in accordance to Thai law and regulations. The latest comment on the legitimacy of the deal come from Temasek's Senior Managing Director of Investments, Jimmy Phoon in an interview with Dow Jones Newswire and Newsweek that "he was confident the investigation will show Temasek had complied with all laws and regulations in Thailand." (reported in CNA 29 September 2006)

However, it was revealed in The Nation today that "The Commerce Ministry's Business Registration Department has found that Temasek relied on nominees to skirt a legal ban on foreign companies owning more than 50 per cent of a telecom business."

Till now, there are no reports from the Singapore media to verify the news from The Nation. Based on the obvious inconsistencies between the Singapore and Thai media, who shall we believe ?

The breach in Thai regulations regarding foreign ownership of sensitive state concessions like telecommunications firm has landed Temasek in a legal wrangle with the Thai authorities.

According to a Singapore investment banker, Temasek is willing to pay a fine or make other concessions in order to end the controversy rather than allow the issue to drag on. Does it imply that Temasek did break some regulations in the first place?

If Temasek reduced its holding in Shin Corp from 96 per cent to 49 per cent by selling some 1.5 billion shares, it would suffer a huge loss. It paid Bt49.25 a share, for a total of Bt140 billion-Bt150 billion, but now Shin Corp is trading on the stock market at Bt28.25 a share which translates to an estimated loss of Bt60 billion or S$2.6 billion based on an exchange rate of S$1 = Bt23.

Unlike the ruckus it created in Thailand which led months of political unrest and the eventual ouster of Prime Minister Thaksin Shinawatra, Temasek's foray into Thailand hardly generate a ripple in the island-state.

Though much can be attributed to the state media's "due diligence" in publishing "authentic reports" from Temasek, Singaporeans generally are not aware or interested in their nation's affairs.

Those few who are genuinely concerned are left to ventilate their frustrations on internet forums as the Parliament of which 82 out of 84 seats belong to the ruling party PAP will not commence till November. The compliant opposition in Singapore, not surprisingly, has elected to maintain a "noble silence" out of deference to the government.

Hence we are left with a weird scenario where anti-Singapore sentiments ran high amongst Thai citizens over Temasek's takeover of Shin Corp while Singaporeans continue flock to Thailand for shopping and leisure, blissfully unaware of the proceedings.

The questions we must ask are too many. Was the political risk assessed carefully before the purchase? Who is responsible for brokering the deal? Was Temasek aware of the Thai law on foreign ownership? Why were Thai nominees used to skirt the ban? Why did Temasek choose to "settle the matter amicably" only after Thaksin was ousted? What is the projected total loss made by Temasek? When will we recoup the loss? Most importantly, are tax-paying Singapore citizens allowed to ask these questions?

Without even a mention or discussion of the deal by the government, it is doubtful that a state inquiry hosted by independent observers will ever be conducted to investigate the Shin Corp deal. After all, Temasek is a "purely commercial firm" which uses state's reserves and yet remains "politically independent".

Nevertheless, as our government will like us to believe, Shin Corp will continue to be a "good investment" because of its "strong fundamentals" and the "long-term potential" of the Thai economy for sustained growth. Therefore, my dear fellow Singaporeans, there is no need for panic yet. We will expect Shin Corp shares to rebound in the "not too distant" future.

In the meantime, we shall continue to wait earnestly for the much anticipated press release from our beloved Straits Times and CNA on the latest development. Well, on second thoughts, better bookmark this site: http://www.nationmultimedia.com/ in case the reports are "delayed" for "unforeseen reasons".