Wednesday, September 27, 2006

Lessons for corrupt politicians back home

Thaksin Shinawatra lost his power in a recent coup detat. But what has really triggered his downfall in disgrace?

It's greed and corruption.

Thaksin was already a telecommunication business tycoon before he becomes the numero uno of Thailand.

He should not (and need not) have used his power and position to enrich himself any further.

But he did. And he has done it to a level which the interest of the entire country was at stake.

That has angered the people of Thailand.

The opposition parties capitalised on these sentiments. They have joined forces to boycott Thaksin.

Thaksin might have won the elections but he has lost the faith of many more Thais.

And the King was not happy at all.

There is a need to save Thailand from going to the dogs.

The General must have felt that a coup is what Thailand needed at the moment.

And the General's action seems to go down well with the Thais in general.

Even the rest of the world watched the coup in cool.

The action was, of course, undemocratic.

Because it was not through the ballot box.

We only hope that the soldiers would withdraw as soon as possible and return the power to a new democratically elected government.

There is a nice article in The Nation today. Readers may find some similarities 'terribly similar' between Bangkok and Putrajaya.

I hope our PM and his Cabinet members would also read the article and learn a lesson or two from Thaksin. Happy reading!

Thaksin's Family network

Chulalongkorn professor lectured last year on how he used his power to build up Shin Corp and other family businesses. The Nation.Sep 27, 2006

An extensive study by a Chulalongkorn University economy lecturer gave what could be a complete picture of the extensive business empire of the Shinawatra family.

Phasuk Pongphaichit, the lecturer, gave this lecture on money politics in a seminar held by Economic Politics Centre of Chulalongkorn late last year - before the recent military coup that ousted him.

The new government is investigating into possible corruption and, if found, confiscation of the Thaksin assets.

Her study has found that Mr. Thaksin Shinawatra had created wealth for himself, his relatives and his political affiliates during the past five years by practicing corruption in the policy level.
It includes granting business privileges, reducing taxes and concession fees for his affiliates and getting rid of business rivals as well as trading national interest with their groups' business interest.

They also set up firms to bid and win state projects and use the stock market as tools to increase the values of their firms.

Excerpts of her lecture:

Since Thaksin took office as prime minister in 2001, his government issued several economic policies, which directly benefited listed firms with close connections to the prime minister and Cabinet members.

The policies also benefited and protected businesses of the politicians and their affiliations. Such policies included tax privileges, deduction of concession fees, blocking new business rivals to enter market, and delaying policies, which could affect businesses of the Thaksin network.

Businesses, which are taking part in the operation to eat up the country in all possible means, include businesses belonging to Shinawatra family and relatives, Mahakijsiri family, Jungrungreangkit family, Maleenon family, Chearavanon family, and Asavabhokin family. All of the families are on the top list of richest families in Thailand.

Shin Corp receives a lot of benefits

During the past over five years, the Thaksin government issued several policies and measures to benefit and protect telecom businesses of Shin Corp in several cases:

First, the issuance of excise decree on telecom businesses was a tool to protect the businesses of Advanced Info Services and other firms in the same type of businesses from competitions. That is, the decree requires new operators to pay the excise taxes in full while current telecom operators can deduct their concession fees from the amount of excise taxes they have to pay. The question is which law the government invoked to exempt the current telecom operators from having to pay excise taxes in full.

Second, the government allowed AIS to deduce the expenses of roaming services before sharing its revenue with the state. This allowed AIS to share less revenue with the state. AIS was also benefited from the amendment of its contract with the TOT Plc by allowing AIS to pay only 20 per cent of its revenue from prepaid phone services instead of 25 per cent to TOT. All of these caused the state to lose its revenue by over Bt1.6 billion. AIS also benefited from the reduction of import tariff on mobile phones from 10 per cent to 0 per cent. The government cited regulations of the World Trade Organisation to provide the tax reduction. Moreover, the government amended its regulations to allow permanent officials from C8 to C11 to reimburse their phone expenses up to Bt4,000 a month, compared with Bt1,000 in the past. There are about 40,000 officials who enjoy the benefit.

Third, the exemption of Shin Satellite from paying taxes on its revenue worth Bt16.349 billion generated from its foreign customers of its IP Star satellite was unjustifiable. This is because the exemption did not lead to any investment in Thailand and Thai people did not receive any benefit. Only the foreign customers and shareholders of Shin Satellite received the benefits.

Fourth, the government transferred the business risks of Shin Satellite from the firm to the Finance Ministry by having the Export-Import Bank of Thailand grant a 12-year-term soft loan of Bt4 billion to the Burmese government. The loan was used by the Burmese Post and Telecom Ministry of Burma to buy telecom equipment to link with IP Star to use the satellite's services to provide mobile phone and broadband Internet services. The government had the Finance Ministry guarantee the loan of the Ex-im Bank, instead of Shin Satellite.

Fifth, the Thaksin government tried to protect its telecom businesses by not opening up the telecom industry in the country. Instead, it opened up other sectors in exchange for liberalization of services which would benefit businesses of government politicians. An example could be seen in the free trade agreement between Thailand and Australia. The Thaksin government opened up the cattle indusry in Thailand in exchange for telecom and auto spare parts industries in Australia. This allowed Shin Satellite and businesses of the Jungrungreangkit family to benefit at the harship of Thai cattle farmers.IP Star will also benefit from FTA agreements with India and China. Analysts of the Stock Exchange of Thailand said Shin Satellite's revenues would tremendously increase once India and China use transponders of IP Star. It was expected that IP Star's service fees from the two countries would be worth about Bt15 billion.

Sixth, the government helped Tele Info Media, which changed name from Shinawatra Directories, to increase its business chances from phone number inquiry services by exempting from contract's requirement to print White Pages phone books.

Seventh, the Thaksin government helped AIS and Shin Satellite by failing to enact a competition act to prevent monopoly and regulate merger.

Eighth, after Shin Corp held stakes in iTV, the television was allowed to pay much less concession fee or only Bt150 million per year for 20 years. This caused the sate to lose its revenue for Bt17.43 billion. The government also allowed iTV to change its programme content to have more entertainment programmes than news and documentary programmes, and thus allowing it to have more income from commercial advertisement.

Ninth, the government's open sky policy allowed Shin Corp to invest in Air Asia, which is a low-cost airline. The government allowed Air Asia to open new domestic and international routes in overlapping of the routes o Thai Airways International. This allowed Air Asia to see income growth worth Bt3 billion at the end of 2005, compared with the shrinking income of THAI. THAI reduced its domestic and international flights and cancelled some of its route although the routes were profitable for the airline, amid allegations that it was forced by the government to make way for Air Asia.

Tenth, the government launched real estate development projects to benefit daughter companies of Shin Corp. For example, the Bangkok Boulevard project of SC Assets Plc on Ram Intra-Ring Road-Navamin roads benefited from the a Cabinet resolution on July 4 2003 to cut a new road from Ratchadapisek to Ram Intra at the kilometre marker No 4.5 The new road immediately increased the value of the plot of SC Assets, turning it from a plot with no access to a golden plot.--

It is known that Pojaman Shinawatra, the wife of Thaksin, likes to buy up land. Moreover, she managed to buy land at cheap prices. For example, she bought a 33-rai plot opposite from the Korean embassy near Thailand's Cultural Centre from the Thai Assets Management Corporation at the price 50 cheaper than its market price.

This caused the state to lose Bt715 million from what it should have received for the land price. The plot was sold at the price Bt700 million lower than the price offered in the first round of bidding and the government did not received land transfer fee worth Bt15 million.

She also owns Alpine Golf Course worth Bt747million, which Thaksin bought at very low price amid allegations that he cheated a temple out of the plot.

Moreover, Shin Corp also expanded its business to personal finance business by setting the Capital OK and providing personal loans. The firm uses customer database of AIS and obtains fund from DBS Singapore.

Thaksin's son, Panthongtae Shinawatra, also set up an advertisement agency to take up a Bt90 million-worth concession in the compound of subway system.

Members of Shinawatra-Wongsawat families expand businesses to take all

Thaksin's close relative, who became rich overnight, included his sister, Yaowapha Wongsawat. She set up M Link or M Link Asian Corporation Plc, which is a main business of her family. The firm generated annual revenue worth several billions of baht for the Wongsawat family.

M Link has expanded its businesses by buying stakes in several firms, and thus allowing the Wongsawat family to expand its business empire to other businesses on top of mobile phone selling business. Key firms, whose major shares had been bought by the Wongsawat family, are companies which compete for government projects.

Cut for brevity. For full report visit:


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