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.

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