A question of misjudgement

Editorial, The Nation
30 Oct 06

Temasek’s attempt to try and peddle influence in Thailand by hiring a former royal employee has backfired

The scandal involving former royal aide MR Tongnoi Tongyai, accused by HRH Prince Maha Vajiralongkorn’s Personal Affairs Office of making false claims about his employment status to pursue his own business interests, is worrisome. The idea that Tongnoi had the temerity to misrepresent himself as a former deputy principal private secretary to His Majesty the King and adviser to the Crown Prince to peddle influence has caused a damaging misunderstanding and public confusion.

On Saturday, the Prince’s Personal Affairs Office issued a statement attacking Tongnoi and clarifying that he was no longer in the employ of the Royal Household. The statement described Tongnoi as “a cunning man and personally immoral”. Last Tuesday, Temasek Holdings of Singapore, which faces possible investigation for alleged improper use of nominees in a complex deal to take over Shin Corp from deposed prime minister Thaksin Shinawatra’s family, announced that Tongnoi was to be appointed as chief adviser of the company’s planned Thai office. It was obvious Temasek had been seeking a connection with Tongnoi, believing his high standing and prestigious connections might be able to provide some sort of protection from current investigation by the Thai authorities. A suit has been filed with the Supreme Administrative Court over whether the Information and Communications Ministry and the PM’s Office should revoke the satellite and TV licence held by subsidiaries of Shin Corp as Temasek had breached the 49 per cent foreign ownership limit.

The other regulatory bodies looking into the controversial Shin Corp deal will also determine what to do with Temasek, which holds well over 90 per cent of Shin Corp – which in turn holds the majority shareholding in a number of subsidiaries that are engaged in protected businesses such as mobile phone services, satellite communications and television stations – well in excess of the foreign ownership limit. But just two days after it announced its deal with Tongnoi, Temasek withdrew the appointment without providing any reason. But the damage had been done. Apparently, Temasek Holdings has not learned from the painful lesson from its past association with the corruption-prone Thaksin Shinawatra. Instead of accepting the reality of its position, Temasek seems to have chosen to seek a solution to its precarious position by tapping into Thaksin’s power of patronage to cut corners.

Since the coup, public pressure has mounted for the authorities to take legal action over the Shin Corp deal, as Temasek is an investment arm of the Singapore government and therefore should be above reproach. In addition to huge losses it may have to bear from the sharp drop in the value of the market capitalisation of Shin Corp stocks and its subsidiaries, Temasek faces the prospect of being forced to reduce its shareholding in those of its companies that pose a national security concern to within the legal limit of 49 per cent. If it does not, it may have the concessions to operate those companies revoked altogether.

At home, Singaporeans are looking at the development of the Shin Corp deal with a lot of interest. What will happen to Ho Ching, the CEO of Temasek, if the Shin Corp deal ends up with ugly red marks scrawled across Temasek’s balance sheets? In Thailand, Temasek is pretty much hamstrung. It is not certain when the Supreme Administrative Court will act on Shin Corp’s satellite and TV licences In addition, the Thai police are making slow progress in the investigation into whether Temasek has relied on nominees to circumvent Thailand’s foreign ownership law. But the Thai justice process rests on the involvement of the police, the prosecutors and the court to complete the case, which might take years. Caught between a rock and a hard place, Temasek does not appear to know which way to turn. But it has already signalled it is ready to reduce its shareholding in Shin Corp.

The scandal involving Tongnoi is its latest stumble and it could prove costly to its attempts at damage control and the restoring of its corporate image. What appears to have occurred here would give the lie to Temasek’s supposed world-class standards of governance and business ethics.

We can only hope this is the last such stumble for Temasek. It must remove any cloud of uncertainty surrounding the Shin Corp deal. If it tries to think that it can manipulate persons supposedly occupying positions of influence in Thailand in order to find a quick-fix to its embarrassing situation, then it is a bad miscalculation.

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