The Royal Shaft: Singapore’s Temasek hires the wrong palace courtier

1 Nov 06

If your family has been in power for almost 50 years and you live in a very small country and can keep tabs on anyone of any significance, it can be difficult to understand the workings of power in more complex societies. Even royal families may be less tight-knit than your own.

So spare some sympathy for Singapore Prime Minister Lee Hsien Loong and his wife Ho Ching as they face another humiliation in Thailand as a result of Temasek, the giant state holding company run by Ho, buying control of local telecom giant Shin Corp from then-Prime Minister Thaksin Shinawatra’s family.

Shortly before the junior Lee was to meet interim Prime Minister Surayud Chulanont, a scandal erupted in Bangkok that linked Temasek to an aide to Crown Prince Maha Vajiralongkorn. On October 28 the royal household issued a statement accusing the aide, MR Tongnoi Tongyai, of making false claims about his status, representing himself as private secretary to the crown prince.

This followed just four days after Temasek announced that Tongnoi was to be chief advisor to the company’s Thai office. Temasek was evidently aiming to install someone with royal influence and an aristocratic title to try to smooth over the ruckus caused by the Shin Corp deal.

The Singaporeans were caught in a bind, trying to use one set of interests to undo the damage created by their earlier dealings with Thaksin. However, they evidently failed to understand the complexity of Thai politics, including those of the palace.

Whatever lies Tongnoi may or may not have told about his role and influence, there is plenty of reason to speculate on the role of the crown prince and his family at a time when the king’s close adviser General Prem Tinsulanonda has been such an influence in the events surrounding the coup.

It was bad enough to effectively spark off political turmoil in Thailand by using the state-owned enterprise Temasek to buy from Thaksin’s family. This may have been against Thai law forbidding foreign majority ownership of telecoms, a matter which the courts will decide. Worse, the tax free deal appeared to demonstrate Thaksin’s obsession with moneymaking at the expense of the nation. Although Thaksin had long faced criticism from liberals, anti-corruption activists and the palace, it was the Shin Corp deal that seemed to turn a wider public (at least in Bangkok) against him.

The rulers in undemocratic Singapore, so used not to being challenged by the local public or the media, seem never to have stopped to think that the acquisition might cause problems. Perhaps they were overly impressed by Thaksin’s attempts to impose the Lee Kuan Yew/Mahathir model of leadership on his people and his expectation that he, like they, would be in power for many years.

The legality of the Shin deal is currently being investigated by various Thai authorities. A suit has been filed with the Supreme Administrative Court over whether satellite and TV licenses held by Shin should be revoked.

Also under investigation is whether the use of various nominees and a pyramid ownership structure gave Temasek an effective holding and control that put it in breach of rules that are supposed to prevent foreigners owning more than 49% of companies engaged in telecom and TV businesses.

In any event, for the second time in a few months, Temasek was regarded as trying to do deals with supposedly influential people rather than deal with the realities in a country where the media is relatively free and the populace sensitized to corruption and under-the-table deals. The Nation newspaper accused the Singapore authorities of “tapping into Thaksin’s powers of patronage to cut corners.”

The Thai public now has expectations that Shin (and hence Temasek) will have to suffer. At the least Temasek is likely to have to sell down part of its holding at a huge loss — to be borne by the Singapore public who own Temasek. Shin may also lose some of its licenses.

The Thai government will seek to avoid a major row with Singapore over this, blaming Thaksin rather than Temasek. It is also evident that many foreign companies have similar deals to the one that Temasek did with Thaksin and the government will not want to see a foreign investor exodus.

But typical Singaporean lack of sensitivity failed to recognize that Temasek’s state ownership was always an issue. As for Thaksin, his prestige was already waning and Shin Corp’s situation was potentially precarious in the face of corruption allegations against Thaksin when Ho Ching leapt in to buy it.

Thais have learned the hard way how personal power can be abused. Is it now Singapore’s turn?