DJ Meatmachine (pigpog) wrote,
DJ Meatmachine


the singapore blogosphere seems abuzz with comment on the libel/defamation (unclear which one the lees want) suit the lees are bringing against the far eastern economic review. but it appears the more terrifying, if you were singaporean, case is the shincorp/temasek deal, which is on the verge of going terribly sour.

one good thing about this deal is that at least one of the companies is from a country with a free press. the nation, which is the more outspoken english paper, carries an article about the deal.

it says temasek has lost usd800mm in book value because of its shincorp acquisitions. temasek paid about usd3.74bb for 96 percent of shincorp, and about half of that was paid to thaksin and other shareholders in cash. the problems start with the 96 percent figure. one of shincorp's companies is a mobile phone operator. thai law allows foreigners to hold a maximum stake of less than 50 percent in such a company. the temasek deal brought foreign ownership in the company, advanced info service, to 91.1 percent. the main objection to this was that telecom licenses, a significant part of national wealth, were being 'given' to foreigners. another objection to the deal arose from the fact that the shincorp sellers, thaksin and family, did not pay any tax for on the almost usd2bb they received for their 49 percent stake. taken together, a case can be made that thaksin had leveraged a national resource to enrich himself and his family, and then avoided repaying the country. there are other aspects of the deal that thaksin's opponents made hay of. these factors culminated in a successful coup.

according to the nation, the premise of the deal was that the singaporeans believed thaksin's grip on power was solid, and that therefore, this added up to a solid investment for temasek. since thaksin was removed from power, temasek's shin stake has become a poisoned chalice. presumably they will want to sell their share before the investigation concludes, which may find them guilty or not, but they would have to sell it to a thai company, and there are very few buyers with sufficient capital or desire. even if they did sell, it would be at a potential loss of usd0.5bb.

this would already be of concern to a singaporean, but it is compounded by the fact that temasek is the singapore government's main investment vehicle. singaporean tax dollars and central provident fund money continue to bankroll the increasingly spectacular folly of the island's ruling bureaucrats.

NB: the nation's journalists do a good job of explaining the big, muddled mess of figures and events this has turned into. wonder if the straits times or star would be up to a similar task.
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