25 Sep 2006

The fallout from the Thai coup is yet to hit Singapore's Madame Ho

The fallout from the Thai coup is yet to hit Singapore's Madame Ho, writes Eric Ellis.
THAILAND'S military junta has gone out of its way to assure that it's business as usual in Bangkok.

The baht has wobbled, likewise the stock exchange, but neither with symptoms to have neighbours sniffling with the contagion they caught here during the late 1990s financial crisis. The coup has been smooth as silk, as Thais like to say.

But there is one woman in Singapore who desperately hopes the generals are as good as their word, the person whose dealmaking with Thailand's ousted Prime Minister, Thaksin Shinawatra, precipitated the coup.

Her name is Ho Ching. She is chief executive of the Singapore Government-owned Temasek Holdings, which controls a $100 billion-plus portfolio, including Optus.

She bought Thaksin out of his family businesses, Shin Corp, in March in a highly questionable $4.5 billion transaction that outraged Thais.

The Singapore company bought the Thai leader's controlling half share in Shin Corp and then quickly snapped up most of the rest on the stockmarket. Temasek now controls 96 per cent.

As Thaksin banked Temasek's tax-free cash, Thais burnt Madame Ho's effigy on Bangkok streets, traducing the reputation created for her by Singaporean spin doctors as a safe pair of hands. It was, at best, a spectacular misjudgement.

Far from being the great buy Temasek claimed, the deal ignited six months of political turmoil, culminating in the coup. Thais stopped using the television, airline, finance and technology businesses Temasek bought.

Now Shin buyers wear a $US2 billion ($2.6 billion) paper loss on the deal after less than six months.

As Thai regulators deepen their probe into the transaction and Thaksin's "rampant corruption", Temasek and its partners reportedly face fines of up to $US2 billion if it's proved, as many suspect, that Thai licensing laws have been breached. Or have the deal declared illegal, the assets nationalised.

Coups d'etat tend to arouse shrill demonstrations of nationalism; Temasek is the convenient foreign villain, its predicament entirely self-inflicted.

In these post-Enron days where blameless corporate governance is paramount, if the chief executive blows $2 billion in six months, the bloodletting in the boardroom would be swift and brutal. But even if her Thai adventure worsens, that seems unlikely to happen to Ho, who is the wife of Singapore's Prime Minister, Lee Hsien Loong; the daughter-in-law of the nation's long-time strongman, Lee Kuan Yew.

At 54, Ho is no Singapore Girl. Dour and grim, with a penchant for unflattering grey business suits, she's been Temasek's unsmiling CEO since 2001, presenting as an untouchable corporate dominatrix protected by the formidable Lee family edifice.

The Lees, as compliant Singaporeans famously know, don't make mistakes. Any questioning of their methods - as bankrupted opposition politicians and the foreign press have frequently discovered - hazard libel suits heard in Singapore's courts, where the Lees' history of success is unparalleled.

Not that the Singaporean media does much questioning either. The day's newspapers after the coup did not report Temasek's obvious dilemma, odd given that ultimately it is Singapore taxpayers' money Ho has hazarded.

It was left to a sole letter writer, presciently published a week before the coup, who suggested that an alliance with the much-hated Thaksin might not be a wise risk for the national nest egg. "Hitching our investment bandwagon to the first family is a double-edged sword," wrote Danny Chua in Today.

"We can go higher with their rising star but when they fall, we can fall too. Our investment must stand up to scrutiny in the eyes of the law. There must be compliance with corporate governance and transparency. We must be able to sleep peacefully, knowing that we have done the right thing."

Singapore loves to control and, when it can't, to quietly work its power relationships behind the scenes. Temasek claims to be independent of government but often seems to follow government policy in its investment portfolio, spending to boost neighbours.

And in Thaksin, Singapore found an autocrat after its own heart, rare in a region where mostly-Chinese Singapore isn't much liked, derided though grudgingly admired as rich and arrogant.

Thaksin was a big fan of the Lee's long-ruling People's Action Party and its compliant "Singapore System". Thaksin and Lee were allies in pushing EU-style ASEAN integration and there was resentment in Jakarta and Kuala Lumpur of a supposed Singapore-Bangkok axis within the group. Not any more.

Serious questions abound for a Singapore that likes to lecture the world about "best practices" of corporate governance it supposedly employs.

Temasek is suspected of funding Thai partners in the Thaksin deal, the implication being to avoid breaching foreign investment laws.

And where did Temasek pay Thaksin? Thailand's central bank limits personal cash transfers to $US1 million a year - thus it would take about 2000 years to transfer Thaksin's pile - and needs special permission from the central bank to go higher.

But Thailand's central bank governor is seen as a cleanskin, and a contender to be appointed caretaker prime minister by the generals.

Thaksin presumably knew that so it raises questions whether Temasek paid some of the funds offshore, in a foreign tax haven perhaps, avoiding Thai rules altogether.

And then there's impact beyond Bangkok. Economic contagion seems to have been contained but the bloodless ease in which Thaksin has been removed, the popularity of the coup, has been noticed in Jakarta and Manila, both struggling to secure their own democracies.

Temasek is in serious trouble in Thailand. It's suddenly friendless, losing its main political ally in Bangkok and his cronies, and runs the risk of having its assets seized as the Thaksin probe deepens. The deal itself is a fait accompli; Thaksin banked his $US2 billion months ago and, now in gilded exile in London, is unlikely to offer to return Temasek's cash.

If Temasek and Thaksin fall out, the legal implications are fascinating. For the moment however, the silence from Temasek has been deafening. It simply says it is "monitoring events". With $4 billion of other peoples' money in the balance, it might've added "anxiously".

Eric Ellis is South-East Asia Correspondent for Fortune magazine.


Anonymous said...

temasek is not like a mutual fund, afraid of bad news causing unit holders to liquidate; the "anxiously" part overstates it; it has made major losses in the past without causing heads to roll

however, it likes to maintain a smart operator image, and thailand has dented it

Pro Reunification said...
This comment has been removed by a blog administrator.
Pro Reunification said...

Ho Ching has already cost the Lees $2b. Undeniably our PM's most expensive piece-of-ass ever.

Matilah_Singapura said...

What a great article.

Anonymous said...

Why Ho Ching is afraid ???
No she doesn't , and none of MP probably won't.
With no transparency in gov and no accountability to republic of singapore, mispending money seem normal and nothing to bah about. Afterall, it is our tax money not their money that get burn. You have to wonder how much money is down in drain but never get report.

When they make money, they celebrate and put into newspaper headline, and bah, and bah that they are perceived successful and good investment hindsight.
But so many failure in projects that eat up so much money never get publicised, and just cover up, and never get mention.

Is that hypercite or what ???? I don't know. It seek like that they like to say that all this cannot be reveal under pretext that it affected the security and stability of the country.

This is just utter bullshit.

We trust you the money, and should make accountable , not when we reach old age, you gov start telling us to change policy to prevent us from taking money out.

The gov need control not from themselves but third-party.

Mathair is right. Our Singapore leader has no right to critise their country when our country can't even set a good example of been critised, so is our old-man really get old and forget that principle ????

The gov under our current PM has already make a mockery of our country's legal system that I'm ashame to tell the world I'm a Singaporean.

Why ? Because their mouth say one thing, but their action do otherwise.
shame on them.

and now it seem now Mr Brown is getting obedient nowsaday, perhaps we lose another voice.

Anonymous said...

Temasek's iTV hit by $2.7bn fine
Amy Kazmin, Bangkok
June 21, 2006
A MEDIA company formerly owned by the family of Thai Prime Minister Thaksin Shinawatra has been ordered to pay fees and penalties of up to $US1.98 billion ($2.7 billion) after a court ruled that a 2004 licence fee reduction was illegal.
The heavy fine could be a crushing financial blow for television broadcaster iTV, now owned by Singapore's Temasek Holdings, which acquired it as part of its takeover of Shin Corp, the Shinawatra family's telecoms empire.

"Looks like they are in deep trouble," Kitti Nathisuwan, head of research for Macquarie Securities, said of iTV. "If they have to come up with that kind of money, or resume paying concession fees, which are very heavy, it will be really tough."

ITV shares, which have fallen 70 per cent since Temasek's January acquisition of Shin Corp, fell another 9 per cent on news of the possible fine.

Thailand's Administrative Court ruled last month that a local arbitration panel had exceeded its authority in 2004 when it slashed iTV's hefty licence fees from 25 billion baht ($880 million) over 30 years to just 230 million baht a year.


jOlage said...

mayb we should keep a Shin-temasek Watch. :D

lee hsien tau said...

Thaksin 58 plus 57 luggage cases contain what might have been our next progress package?

Anonymous said...

These Thai gov are having revenge on Singapore by trying to get money from Singapore.

Let wait and see if our GST will increase to 7% by next year.
Our PM has no shame in implementing these policies.
Their policy is implemented first, and "if anyone has problem , can give us a call and we help you."
and hoo hooo hooo.... PM will give us progress package before that. Give you $1 will get back 100 times more. what a fuck ....

PM know our weakness just to accept thing and not create inconvenience for ourselves.

God bless us as we have to live under this incompetent PM for next few decades. LKY is much better leader though rigid and forceful. His son ??? Weak leadership and full of BS.
Cannot solve issue and yet taking up two post as PM and Finance minister.

Instead of helping public, will probably create carrot to get more money later.

We need a better leadership for that amount of money they received as wages.

Matilah_Singapura said...

If you are going to have a government, there is going to be corruption.

If you are going to have a church and state together, you will have massive corruption and oppression.

Similarly, if you have govt and big businesses together — and those big businesses are owned by people connected to the government, it is STUPID to believe that there won't be any "conflict of interest" i.e. corruption.

I don't blame Mdm Ho or Thugsin. I blame the bloody fool voters who go to the ballot and make their bad choices.

Before you holier-than-thou folks start casting stones, ask yourself this: "How would I behave and operate if I had all that power and money?" See, it isn't about the character of individuals, it is the system the majority of voters support which allows events like this to take place.

Voting for representational government (aka "demcracy") has never been a good idea to begin with.

Thugsin was already a billionaire when he entered politics. Hi party, Thai Rak Thai came in by a landslide victory, and for many years he was the toast of the nation. "Populist" democracy — keep the tyrant in power because he delivers the "goodies". Sound familiar?

Keeping the "seperation of powers arguments" in the S'pore context: How can You (The) People give your tacit approval to the fact that the wife of the Prime Minister is CEO of the govts largest corporation.

Are you fuckers mad, or asleep or both?

Anonymous said...

Only 33.3 knew what the fuck was happening.

Anonymous said...

Yes... FUCK and SCREW ourselves for us chicken who doesn't vote against PAP and now start complaining that gov is misusing and misspending, and corrupt our legal system.

We knew that it is wrong to vote against incompetencies, and yet we still do it...

Later we gonna get fuck and end up moneyless when we get old and pass the debt to our grandson, and we have ourselves to blame.

It is very amazing that after thailand relationship goes sour, today strait time highlight how the good relationship in Vietnam will bring us wealth and relationship. Mr PM is trying to use the media to distract us from having to question what happened to billion dollars spent. Instead of acccounting to us what should be done, the newspaper start mentioning good things with Vietnam relationship on front page to cover up or smokescreen the issue.

Is that what PAP is just capable of doing ??? Is that what you called leadership ????

PAP has to start clean and stop treating us citizen as a fool. We are not educated idot, but well-breed thinker and smart person who knows what happening but just pretend nothing happens.

lee hsien tau said...

There is a reason why foreign top military leaders come to Singapore and are decorated with medals.

If a coup de'tat happens, Temasek Hldgs and GIC investments will not be too badly affected?

Anonymous said...

Why is everybody getting so uptight
here? Its only another honest mistake for them, right?

Anonymous said...

For the 66.6, all is forgotten and forgiven when some pre-election goodies are thrown their way. Like farmers throwing some veggies to the goats. The goats are happy, but fail to realise with their lowly animal IQ that the farmer is just fattening them up for the eventual slaughter.

Nothing is more apt an analogy than this.