ANALYSIS: Thaksin too clever by half?

Published on January 29, 2006

The premier’s denial of Ample Rich Investments in his asset-concealment case in 2001 seems to have the potential of coming back to bite him where it really hurts.

Ample Rich Investments Ltd could very well turn out to be a case of self-entrapment for Prime Minister Thaksin Shinawatra, who looks like he is going to have a very difficult time explaining just who really owns this nominee company incorporated in the tax haven British Virgin Islands.

Let’s look first at how the Bt73.2 billion Shin Corp takeover deal was structured. Thaksin wanted to sell his and the Damapong family’s entire stake in Shin to Temasek of Singapore in order to realise the full profits. We may assume that in the memorandum of understanding signed with Temasek, Thaksin indicated his group was the beneficial owner of a total of 49.6 per cent, or about 1.4 billion shares, in Shin.

The Shinawatra-Dama-pong alliance would sell their entire stake to Temasek for Bt49.25 a share, realising a profit of Bt73.2 billion. Temasek dug deep into its pocket and came up with US$1.8 billion. On January 23, it would pay this amount to the Shinawatra-Damapong group in exchange for the 49.6 per cent stake in Shin.


The group’s responsibility was to gather all of the 1.4 billion shares of Shin Corp for delivery on the day of the transaction on the Thai stock exchange. But before January 20, the group had only 38-39 per cent of Shin Corp’s stocks under its name. The remaining 10.7 per cent, or 329,200,000 shares, were held by Ample Rich, which has its headquarters in Singapore.

By having counted in the Shin shares held by Ample Rich, it means that somebody in the Shinawatra or Damapong families must own this nominee company. Thaksin can hardly distance himself from Ample Rich, a monster of his own creation. On June 11, 1999, he set up Ample Rich and transferred 329,200,000 shares of Shin Corp to this company in a big-lot transaction through the Thai stock exchange. This resulted in a reduction of his holding from 23.75 per cent to 11.88 per cent. On that same day, Boonklee Plangsiri, Shin’s chief executive, clarified that the transaction would not have any significant bearing on the ownership or management structure of the conglomerate, since Thaksin was the 100 per cent owner of Ample Rich.

Shortly after taking over as prime minister in 2001,Thaksin did not properly declare his assets as required by the Constitution. He defended his asset concealment case in front of the Constitution Court because his household servants had been found to have held the shares on the Shinawatras’ behalf. Thaksin said he had transferred his 100 per cent share ownership in Ample Rich to another party. He did not identify the name of the person or entity who took delivery of Ample Rich on November 30, 2000. This happened slightly more than a month before the January 6, 2001 general election was held.

His declaration to the National Counter Corruption Commission did not put Ample Rich on the list of his assets. The Securities and Exchange Commission, which probed the Ample Rich affair, gave Thaksin the benefit of the doubt for his failure to report his share transfer of Ample Rich to another party. The Constitution Court ruled in favour of Thaksin, finding him not guilty of alleged asset concealment. Thaksin then admitted to have committed an “honest mistake”.

Still, all these years, it appears that Ample Rich has been under the control of the Shinawatra-Damapong families, otherwise its 10.7 per cent stake in Shin Corp would not have been counted by the group in the first place. Many people are still wondering why Ample Rich resurfaced this time to catch all the attention, given the fact that the Shin takeover deal would be subject to scrutiny by the Thai public. Why didn’t Ample Rich sell off its stake to Temasek in an offshore deal to benefit from tax exemptions and avoid the glaring eyes of the Thai public?

Probably, the Shinawatra-Damapong group wanted to have cash in baht all at once inside the country for further investment. Anyway, it would be almost impossible for the Shinawatra-Damapong group to distance itself from Ample Rich because it had made clear its intention to Temasek to sell off the Shin stake of 49.6 per cent in the first place, which would make it necessary to also count Ample Rich as part of the group. Now we can clearly see how the deal is so complicated because it involves the ownership of Ample Rich, which the Shinawatra-Damapong group would like to disown and which was designed to pay no tax or as little tax as possible.

If on January 23, 2005, Ample Rich were to sell its 10.7 per cent stake to Temasek in the same big lot transaction along with the stake of the Shinawatra-Damapong group, people would question why Ample had known about the takeover deal if it were not actually part of the founding shareholders’ group. Besides, it would have to pay tax from the transaction because as a corporate it would be subject to capital gains tax. (It is not clear whether as a company incorporated in the British Virgin Islands it would have to pay tax at all in this case).

To avoid this scenario, the take-over deal was structured so that Ample Rich would sell 164,600,000 shares of Shin Corp each to the two children of Thaksin – Pinthongta and Panthongthae – for Bt1 a share. It is clear that the Shin stake held by Ample Rich had not changed hands throughout the years. The transaction took place on January 20, three days before the takeover deal was to be publicly announced.

It would be crazy for Ample Rich to sell the Shin stocks for Bt1 apiece when the stocks were trading at Bt47-Bt49 on the stock exchange if the Shinawatra-Damapong group did not have control over it. By selling for Bt1 apiece, Ample Rich would certainly make a loss, making it unnecessary to pay capital gains tax. But Pinthongta and Panthongtae were inadvertently driven into a trap of the Shinawatra-Damapong’s own making.

By buying the Shin stocks for Bt1 on Friday only to sell it for Bt49.25 on Monday to make a profit of Bt15.88 billion, the two could be suspected of violating the securities law involving insider information. For they must have known that the deal would take place on Monday, so they hurriedly bought the stocks at a low price on Friday to sell them at a much higher price.

To complicate the matter further, Karnjanapha Honghern, a secretary of Khunying Pojamarn Shinawatra, wife of the prime minister, informed the SEC that Ample Rich had sold the Shin stocks through the stock exchange to Pinthongta and Panthongtae at Bt1 a share. By doing so, she was acting on behalf of Ample Rich. She also informed the SEC that Pinthongta and Panthongtae were the buyers of the Shin stocks. By doing so, Karnjanapha was also acting on behalf of Pinthongta and Panthongtae. How come Karnjanapha was acting on behalf of both the seller and buyers?

There was no evidence that there was any big lot transaction between Ample Rich and Pinthongta and Panthongtae on the stock exchange. This could only mean that the transactions took place in the over-the-counter market. Later on Kittiratt Na Ranong, the president of the stock exchange, came out to verify this, saying that it was a mistake on the part of Karnjanapha when she filled in the form.

Going forward, Thaksin will have a difficult time explaining the ownership of Ample Rich. Since he had disowned it before, how come Ample Rich was clearly part of the sellers of Shin shares this time. Many people are anxiously waiting to see whether we are going to witness episode two of the asset concealment case looming on the political horizon.

Create Date : 29 มกราคม 2549 Last Update : 29 มกราคม 2549 13:54:25 น. Counter : 1527 Pageviews.		2 comments
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