Thai junta under pressure to prove ousted Thaksin's graft

BANGKOK: With its legitimacy at stake, Thailand's ruling junta is under pressure to prove alleged corruption by deposed premier Thaksin Shinawatra that it cited to justify the coup, analysts said.   

But the generals will have to balance appeasing public opinion with jitters in the business community, which fears that action against Thaksin could have ripple effects for foreign companies in Thailand.   

Police are looking at possible violations of Thai laws when Thaksin's family sold its 49 per cent share in Shin Corp., the telecom giant he had founded, to Singapore's state-linked Temasek Holdings in January.   

The family pocketed 1.9 billion dollars under the tax-free deal, triggering months of street protests against the Thaksin government that culminated in the September 19 coup that ousted the billionaire-turned-premier.   

But two months later the junta is watching public patience wear thin at the probe into the deal, which the military said was a reason for the bloodless power-grab.   

"The junta is pushed against the wall to come up with concrete results to prove Thaksin's corruption," said political scientist Michael Nelson from Bangkok's Chulalongkorn University.   

"They need to come up with results to justify the coup, and the junta's credibility hangs on the Temasek-Shin Corp. investigation because this deal was really the heart of the protests" that led to the putsch, Nelson said.   

After the 49 per cent buyout, a Temasek-led group of investors increased its total stake in Shin Corp. to 96 per cent through a mandatory offer for the outstanding shares.   

Under Thai rules, foreign investors can own up to 49 per cent in telecom companies but the question is whether local companies acted on Temasek's behalf, enabling the Singaporean firm to skirt the foreign ownership limit.   

Similar arrangements have been used for years by foreign companies operating in Thailand, but they are becoming worried that a tougher interpretation of the rules for Temasek could also be applied to their own businesses.   

To ease those concerns, Thailand's army-installed government says it will "clarify" its ambiguous foreign ownership laws, but that has only created more confusion as foreign businesses here wait to see what the new rules will be.   

"Thailand does not have a consistent record of enforcing its regulations. Sometimes it pushes harder than other times, and it worries foreign investors," said Bob Broadfoot, managing director at Political and Economic Risk Consultancy in Hong Kong.   

But Broadfoot argued businesses should not worry because the junta's main focus was not on reviewing the foreign ownership laws but the Shin Corp.-Temasek investigation.   

"The junta doesn't want Thaksin to be able to have financial capabilities to make a comeback. So they are going to try very hard to prosecute him on some grounds of corruption," he said.   

Thaksin, a self-made billionaire, was Thailand's fourth-richest businessman before the coup and while in office his populist measures, including pouring money into rural economies, boosted his popularity among the poor.   

Broadfoot said the junta was trying to win over Thaksin's grassroots support "by making him a criminal".   

"The junta feels vulnerable because Thaksin has been so effective in mobilizing public support," he said.   

Panitan Wattanayagorn, professor of political science at Chulalongkorn University, said the ongoing investigation also succeeded in keeping Thaksin out of Thailand for fear of possible arrest.   

"As long as this case is being investigated, the return of Thaksin will be difficult and it will prevent Thaksin from mobilizing his supporters," Panitan said.   

Thaksin was in New York during the coup and spent a month living in London, where he has a home. He has since travelled around Asia, circling Thailand with visits to Beijing, Hong Kong and Bali.   

The post-coup government said Thaksin should not return home until a new government was in place following elections slated for next year. Panitan argued the junta should speed up the probe into Thaksin's alleged graft.   

"The legitimacy of the junta is diminishing as more and more people are questioning why they did the coup. So they need to deliver concrete results soon," Panitan said.