Shin Corp deal in jeopardy

Lower court ordered to hear case on licences for AIS, ShinSat and iTV in interest of 'national security and consumers'

The Supreme Adminis-trative Court released an appeal decision yesterday ordering its lower court to review an administrative case that could see Shin Corp lose its licences for communication satellites, mobile phone services and television broadcasting.

"The judicial review against Shin Corp is warranted because the licences in question involved com-munication services which can impact on the public, national security and consumers," the senior court said in its verdict.

The ruling follows a decision by the Central Administrative Court in March not to hear the case because complainant Sastra Toaon, a law lecturer, had no contractual link to the Shin takeover.

Sastra launched the litigation after the family of ousted premier Thaksin Shinawatra sold the tele-com giant to Singapore's Temasek Holdings in January.

He said the sale violated the foreign ownership law after Temasek increased its equity stakes in Shin from 49 per cent to 96 per cent.

The new ownership structure had allowed an alien business to gain control over the operations of Shin Satellite Plc, Advance Info Service (AIS) Plc and iTV Plc, all of which are subsidiaries of Shin, he said.

Sastra petitioned for a court order instructing three concerned agencies - the Information and Communications Technology Ministry, state-run TOT Plc and Prime Minister's Office, to revoke concession agreements signed with Shin Corp.

The Supreme Administrative Court ruled for the judicial review to commence - and ordered Sastra to refrain from speculating on the judicial proceedings of the case.

After the decision, Sastra also asked the court for a provisional order to prevent Temasek earning any benefits from the three companies' licences.

Under administrative judicial procedures, the three agencies will have to present their respective defence arguments in 30 days out-lining why they continue to enforce the concession agreements despite the ownership changes.

Somchai Thean-Anant, acting president of TOT Plc, which grants the mobile-phone concession to AIS, said the state agency already had legal experts prepared to cope with a court hearing on the case and possible legal impacts.

Earlier, TOT said its concession contract did not specify that the concessionaire must be majority owned by Thais. It just required the concessionaire to be a juristic body.

Kraisorn Pornsutee, permanent secretary at the ICT Ministry, which owns Shinsat's satellite concession, said he would call all relevant parties to discuss the matter and prepare information for the court.

After the court's decision to proceed, AIS president Wichian Mektrakarn said the case was a matter for Shin Corp shareholders. He said AIS had not broken any law.

The legal proceedings cover AIS, Shin Satellite, and iTV. AIS is now Shin's flagship business, contributing nearly 90 per cent of the holding company's revenue. If stripped off the licences, AIS would be a skeleton company, given that nearly all its revenue comes from mobile-phone services. In the second quarter, its booked service income of Bt18.42 billion, and Bt4.13 billion in net profit.

Temasek's take-over of Shin Corp has led to claims that AIS, Shinsat and iTV are now Singaporean firms. Currently, Cedar Holdings and Aspen Holdings, which are both linked to Temasek, own 54.53 per cent and 41.76 per cent, respectively, of Shin.

The court case adds to the pressure on Temasek, which also faces a police probe into whether Kularb Kaew, Cedar, Aspen and Cypress Holdings are nominees for a foreign entity and thus breach the Alien Business Law.

Shin now owns 41.34 per cent of ShinSat, which has four satellites - Thaicom 1, 2, 5 and iPSTAR. ShinSat won a 30-year-concession from the Transport Ministry in Sept 1991.

Shin, which purchased 17 per cent of iTV in May 2000, now owns 52.93 per cent of the free-TV operator.

Shin also owns 42.8 per cent of AIS, which has over 17.5 million subscribers. AIS won a 20-year-concession from TOT in March 1990.

Thai AirAsia, which also operates with a local licence, narrowly escaped being part of the case after Shin unloaded its 25 per cent in the airline to Asia Aviation Co Ltd. Asia Aviation was a joint venture between Shin and a logistics businessman.

Kesinee Taengkhieo

The Nation

DAMAGE CONTROL

S'pore urges talks to save Shin buyout

Worried Temasek ready to pay fine and reduce holding in telecom firm to 49%

A top-level official in Singapore has approached Prime Minister Surayud Chulanont to discuss the controversial Shin Corp deal in the hope of resolving ownership issues in an amicable manner, a government source said yesterday.

Surayud is likely to assign his deputy MR Pridiyathorn Devakula, who is also the finance minister, to look into the matter, the source said.

"One likely recommendation from the Thai government is that Temasek Holdings of Singapore should comply with the Thai foreign ownership law by quickly reducing its stake in Shin Corp, which is estimated at 96 per cent, to below 49 per cent," he said.

Temasek got itself into hot water with its Bt140-billion takeover of Shin Corp, which was owned by the Shinawatra and Damapong families.

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.

A Singapore investment banker said he had overheard that Madame Ho Ching, the CEO of Temasek, had been following political developments in Thailand very closely and had expressed her willingness to seek a compromise.

"Temasek, from what I have heard, is willing to pay a fine or make other concessions in order to end the controversy rather than allow the issue to drag on," he said.

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.

The Thaksin Shinawatra government and Temasek had been sitting on the nominee investigation, hoping the issue would go away after Thaksin staged a comeback with an election victory. But the September 19 military coup has sent Thaksin into exile in London.

With a fresh government installed, the probe into the Shin-Temasek scandal has taken on a new life.

Besides, Singapore faces public outrage here over its perceived attempt to dominate Thailand's businesses involving national security.

"The Thai government is expected to tell the Singapore government and Temasek that current anti-Singapore sentiment needs to be dealt with quickly," the source said.

"There is a lot at stake for Singapore and Thailand relations, depending on a compromise on the Shin deal."

Of particular concern are Shin Satellite and iTV, both listed subsidiaries of Shin Corp. They are considered politically sensitive state concessions while the cellular service business of Advanced Info Service, Shin Corp's flagship unit, is in a more liberalised industry.

It is widely believed that under close scrutiny many foreign-invested Thai companies would fall afoul of the foreign ownership law, which has been criticised as vague and subject to abuse.

Noted economist Ammar Siamwalla said the Thai government must enforce the rule of law in all the nominee cases by doing away with all the violations.

The government could offer clemency to all foreign companies, giving them three years to cure the ownership or nominee structure to comply with the regulations, he said.

Within 10 years, Thailand should be in a position to enforce the law strictly regarding foreign ownership.

"But we need to state clearly which businesses we would like to protect for national security reasons and which businesses we would like to free up. I don't care if they want to liberalise all businesses. But we have to spell it out and stick to the enforcement," Ammar said.

"The government must uphold the spirit of the law, instead of interpreting it in the srithanonchai [tricky] way," he added.

The Nation