The good old days

The good old days
Published on November 30, 2005

Thaksin Shinawatra and Sondhi Limthongkul were once considered the best of pals. The second part of our special series touches on the time before things started to turn sour.

Whenever Sondhi Limthong-kul talks about Thaksin Shinawatra, he cannot fail to be reminded of the IEC episode in 1992 that marked the first rift between the two equally daring and visionary personalities.

In his book, “One must know how to lose before knowing how to win”, Sondhi wrote that before taking his telecom company IEC public in 1992, he allotted a 17.5 per cent stake in the company to Thaksin, then a rising star in the telecom industry.

Thaksin bought the stake at Bt10 per share.
After the listing, IEC’s share price shot up to Bt250 apiece and Thaksin did not hesitate to take a huge profit by selling his stake.

Sondhi said Thaksin made between Bt600 million to Bt700 million from the IEC float. He got the feeling that Thaksin was a free rider and did not want to do business with him.

Sondhi felt he had contributed greatly to Thaksin’s rise as a telecom tycoon. And following the IEC episode, Sondhi always believed he didn’t owe Thaksin anything.

Sondhi entered the telecom business over a decade ago by buying Siam Cement group’s non-core handset retailer and IT firms. He also ran a thriving publishing house through the Manager Group.

Among the companies he purchased were the IT firms SCT and Micronetic, and the handset retailer IEC.

IEC was the exclusive handset retailer for Nokia phones and its major customers were the two rival mobile-phone groups Advanced Info Service, which belonged to the premier’s family, and Total Access Communication (DTAC).

During the economic boom in 1995, Sondhi also got into the satellite business, following in the footsteps of Thaksin. Thaksin founded the satellite operator Shin Satellite Plc, which in December 1993 successfully launched its first conventional broadcasting satellite Thaicom 1 into orbit.

The Manager Group-led Asia Broadcasting and Communications Network (ABCN) set up its satellite project, Lao Star Co – which was worth about Bt9 billion – as a joint venture with the Lao government in 1995. Lao Star appointed Space System/Loral to build two L-Star satellites and L-Star 1 was set to officially launch to provide digital direct-to-home TV programmes in 1998. L-Star 2 was to be put into orbit in 1999.

The project was planned to serve around 2 billion people in the Asia Pacific region, including India and China. Later ABCN enlisted DTAC’s parent, United Communication Industry Plc (Ucom), to back its business.

EC also provided a bulk of the mobile-phone airtime to DTAC before purchasing the 1800-MHz frequency from DTAC to develop its own mobile-phone operator Wireless Communication Service (WCS). WCS offered the service under the brand Digital 01.

Then came the economic crash in 1997. Sondhi’s satellite and publishing businesses faced a meltdown. His WCS was sold to the CP Group before it was renamed TA Orange. His name was completely ruined.

In 1996, Fortune magazine had put Sondhi’s assets at US$600 million (or Bt12 billion at the exchange-rate of Bt25 to a US dollar). A year later, after the crash, M Group was saddled with Bt20 billion in debt. M Group’s holding company alone had liabilities of Bt6 billion. And Manager Media had Bt4.7 billion in debt.

Sondhi ended up declaring himself bankrupt for three years. But Thaksin and his Shin empire emerged unscathed from the crisis. Indeed he ended up the country’s wealthiest man.

Yet through Somkid Jatusripitak, now commerce minister, and later on Pansak Vinyaratan, the prime minister’s chief policy adviser, Sondhi began to re-establish ties with Thaksin. Somkid wrote a column for Manager, while Pansak was editor of the now defunct Asia Times, owned by Sondhi.

The Manager Group furiously attacked the Democrat-led government over its management of the economic crisis during its time in office from late 1997 to 2000. Thaksin founded the Thai Rak Thai party in 1998, which pushed itself as a saviour for the Thai economy under the slogan “think new, act new”. Thaksin’s team found that Manager an important ally.

Sondhi was still licking his wounds. Creditors were after him and he was filed as bankrupt.

Yet “his people” marched into the Thaksin government in grand style. Somkid became finance minister. Pansak got direct access to the ears of the prime minister, acting as his chief policy adviser. And Chai-anan Samudvanija, who chaired IEC, won prominent jobs at the Krung Thai Bank and Thai Airways International. Kanok Abhiradee, the head of one of Sondhi’s companies, became president of Thai Airways and Viroj Nualkhair, who helped Sondhi with financing advice, became president of Krung Thai Bank.

Manager newspaper lauded Thaksin’s leadership, calling him Thailand’s best prime minister ever. Sondhi finally got his TV show, ‘Thailand Weekly’. He also invested in two TV channels, 11/1 and 11/2 – a split from Channel 11. And the debt that M Group owed to Krung Thai Bank was reduced from Bt1.8 billion to Bt200 million.

The start of the serious decline in Sondhi and Thaksin’s relationship was probably when the PM failed to protect Viroj last year. MR Pridiyathorn Devakula, the Bank of Thailand governor, threatened to sack Viroj if he did not resign after Krung Thai Bank was forced to reclassify some Bt40 billion as problem loans. The politicians were seen as having a nice party at Krung Thai Bank.

Manager furiously attacked Pridiyathorn, confident that Viroj would keep his presidency and Pridiyathorn would be brushed off. It was no surprise that Somkid, then finance minister, also backed Viroj staunchly – he had invited Viroj to take over as president of the state-owned bank.

Somkid would also have liked to see the BOT chief sacked.

But Pridiyathorn went to see Thaksin at Government House and showed him important documents. After the meeting the PM tried to distance himself from the conflict between Somkid and Pridiyathorn, and Viroj eventually became the scapegoat, losing his KTB post.

Sondhi had also invested several hundred million in the TV business, which Thaksin later took away from him. The PM also removed Sondhi’s ‘Thailand Weekly’ programme, which Sondhi co-hosted with Sarocha Pornudomsak. This made it unlikely Sondhi would ever forgive Thaksin.

Sondhi has continued his ‘Thailand Weekly’ talk-show, holding it at Thammasat University Auditorium and in the open-air at Lumpini Park, and launched a kind of militant journalism, attacking the prime minister’s record and aiming to remove him from office altogether. This has heightened political tension. And heaven only knows how this episode will end, as the two friends-turned-foes look unlikely to make up.

Political Desk
The Nation

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