Singapore's Temasek is rich, powerful and on the prowl. But it didn't count on the latest backlash from Thailand, Eric Ellis reports.
IF IT looks, walks and quacks like a duck, then it's a duck, as goes the old axiom.
And as effigies of Singapore's leaders burning in the streets of Bangkok suggest, millions of grumpy Thais haven't needed a zoology degree to work out that Singapore's Temasek Holdings is a government-owned duck.
Temasek's $3 billion deal to buy Thai Prime Minister Thaksin Shinawatra out of his family business, Shin Corp, has precipitated Thailand's most serious political crisis in more than a decade.
Thais have poured into the streets demanding "Asia's Berlusconi" resign his five-year rule and pay taxes from the deal on his way out. Thailand's baht wobbles - its collapse prompted Asia's 1997 financial crisis - and worries economists, while deals are put off. The twitchy Thai military stays in the barracks, for now, while Thaksin toughs out this high-stakes game of brinkmanship versus the people.
But what of Temasek, Singapore's self-styled paragon of transparency whose opaque deal making has precipitated South-East Asia's latest economic crisis?
One of the world's most powerful investors, boasting an $US80 billion ($110 billion) portfolio, its Thai adventure is looking increasingly like a spectacular misjudgement for its boss, Madame Ho Ching. She's the wife of Singapore's Prime Minister, Lee Hsien Loong, whose family's authoritarian 50-year rule of Singapore inspired the inner autocrat in Thaksin that could now prove his undoing.
Temasek's tactic is to effect an air of "Crisis? What crisis?" and deny it has anything to do with Official Singapore. Indeed, its descent to duckdom is never more absurdly displayed as when its army of immaculately groomed spinners demand the world's press and market analysts stop referring to it as "Singapore government-owned" and call it instead an "Asian investment company".
But Thais simply join the dots: Temasek is 100 per cent owned by Singapore's Ministry of Finance. Singapore's Finance Minister is its Prime Minister, Mr Lee, and his wife is Temasek's chief executive.
Thais would probably be furious with whoever did such a backroom deal with Thaksin. But every insistence by either Singapore side that they have nothing to do with the other simply further ignites the Thai touchpaper.
"Come on," says Professor Thitinan Pongsudhirak of Bangkok's Chulalongkorn University. "We Thais aren't idiots."
Indeed, as Asia moves to wind back government involvement in the private sector, Thais view with alarm what they see as Thaksin's sell-out to the Singapore Government of their economy: hotels, banks, airlines, property and, now, the main telephone company, a strategic communications satellite and a popular television station. Notes one columnist in the Thailand's The Nation newspaper, "Singapore might change Bangkok's Sathorn Road into Orchard Road and declare it a bubble-gum-free zone".
Sometimes Temasek is its own worst enemy. As Thais raged, a placatory Temasek presented its "managing director, investments," Mr S Iswaran, as the go-to guy to explain the Shin deal.
As a veteran Singapore civil servant, Iswaran was once responsible for Singapore's negotiations at the World Trade Organisation and APEC. He is also the Parliament's deputy speaker and a loyal lieutenant of the Lee family-led People's Action Party. A more faithful flack of the ruling clique would be hard to find.
Singaporeans aren't Thais but they know a good deal when they see one, and many would like to see Temasek out of Singapore's economy too, where government companies control as much as 60 per cent of the action.
They privately question what in fact it was that Ho brought to Temasek in 2001, apart from a powerful husband they already knew. She was hired in 2001 to enliven Temasek's sluggish returns but, in Bangkok at least, the value she purchased for Singapore disappears by the day as protesters vote with their pockets by cancelling subscriptions to Shin's main asset, Thailand's leading mobile phone company, AIS.
Shin shares have fallen 25 per cent since Ho's deal. Her stewardship of Temasek since she became CEO - an appointment her spinners insisted was on merit - has been unremarkable, with some big misses offsetting a handful of medium successes.
Many of Temasek's deals have a strong whiff of national interest about them and Temasek's forays abroad come as Singapore's political leaders worry their developed but tiny economy is maturing, exhorting its business community to secure the city-state's future offshore.
In Jakarta, influential politicians want the Singapore Government to exit its two-year-old investment in one of Ho's better deals, the communications giant Indosat, particularly as another Temasek company, Singapore Telecom - owner of Australia's Optus - already has half of Indosat's competitor Telkomsel. That's too much strategic telecommunications in Singapore hands for their taste and Jakarta has offered Temasek $1.2 billion to buy back the Indosat stake.
But as dissent simmers with the threat of political sanction hanging over it, Temasek has so far refused to sell.
In Beijing too, bureaucrats are questioning last year's wisdom of allowing Temasek a $2.5 billion stake in the Bank of China, believing it might have got it too cheap while wondering what Singapore brings to the table apart from cash.
In New Delhi, the Indian Government recently denied Temasek approval to buy into mobile operator Idea Cellular, India's fifth largest, because SingTel already part-owns another, Bharti, the largest.
Temasek struggles too in the US. It paid $US250 million in 2003 for 62 per cent of ailing cable operator Global Crossing, believing it got a bargain for a fibre optic network that cost $15 billion to build. But the company has since been dogged by one disaster after another and Global Crossing lost $US600 million in 2004-05.
There have also been setbacks in Australia, where Canberra recently denied Temasek's 57 per cent owned Singapore Airlines access to the lucrative route between Sydney and Los Angeles.
Surgery is needed at home too. Temasek-controlled DBS Bank recently took an unexpected $700 million charge on its Hong Kong operation, the former Dao Heng Bank.
Its wafer business, Chartered Semiconductor, has been a headache on Ho's watch, accumulating losses of more than $1 billion, while its share price has fallen 90 per cent since 1999.
Temasek's own figures described shareholder returns of just 1 per cent over the five years to March 31, as against the gain in Singapore's Straits Times index of 2.7 per cent over the same period.
Still, at least Singaporeans now know what's happening to their money. Notoriously secretive, Temasek only first publicly revealed its accounts in 2004.
Says Thai academic Pongsudhirak: "This is the last straw. Temasek has underestimated the political fallout here. This deal has not been transparent, everything has not been fully accounted for. Whether they like it or not, Temasek has made itself a player in Thai politics and that puts its investment at risk."
Meanwhile, Asia looks on with a bemused combination of mild concern that Thailand's worries could again spill outside its borders as in the late 1990s but more Schadenfreude at Singapore Inc's discomfort. As many in the region tactfully like to say, wealthy Singapore is admired by its neighbours if not necessarily always loved.
Eric Ellis is Fortune magazine's South-East Asian correspondent.