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Thai PM's Family Sells Company in Conflict of Interest Controversy

  • Scott Bobb

The family of Thailand's prime minister has sold its share of the company he founded in the largest corporate take-over in Thai history. Prime Minister Thaksin Shinawatra says the sale was in response to accusations of conflict of interest, but analysts say it is likely to generate its own controversies.

Thai Prime Minister Thaksin Shinawatra's family has sold its nearly 50 percent stake in Shin Corporation to Singapore's government-owned investment firm, Temasek.

The deal, valued at nearly $2 billion, is the largest in Thai corporate history.

Mr. Thaksin founded the company 25 years ago and built it into one of Thailand's largest conglomerates, with interests in telecommunications, media, and aviation. He and his wife gave their shares to family members before he became prime minister five years ago to comply with Thai law.

Shin Corporation's shares have tripled in value since Mr. Thaksin's election.

Mr. Thaksin told reporters that his children decided to sell to deflect public criticism that his position as head of government created a potential conflict of interest.

He says they believe that selling the company to the Singapore firm will keep it strong.

Temasek, valued at $63 billion, owns a two-thirds share of Singapore's telephone company, a 57 percent share of Singapore Airlines and a 100 percent of broadcaster Media Corporation. During the past few years, the company has invested heavily in businesses around Asia.

The acquisition of Shin Corporation gives it sizeable interests in Thailand's largest mobile phone company (AIS), one of its major television networks (iTV) and one of its rising budget airlines, Thai Air Asia.

Temasek's managing director of investments, S. Iswaran, sought to reassure nervous Thai investors and staff.

"We will work closely with the management team, the board, the staff and all other stakeholders to grow the business and continue its contribution to the Thai economy and its service to the Thai people," said Iswaran.

He denied reports that Temasak planned to sell some of Shin Corporation's subsidiaries. A statement said the Singaporean firm would seek to buy more shares.

An analyst with Hong Kong's Political and Economic Risk Consultancy, Bob Broadfoot, says that Temasek's aggressive buying of companies across Asia is causing some concern.

"When you have a Temasek which is entering into so many deals so fast, you clearly see that it has the capability of identifying foreign targets and of executing some takeovers," he said. "But it has not demonstrated yet that once it makes those purchases it can run the companies."

Temasek bought Shin Corporation through two Thai subsidiaries, apparently because Thai law forbids foreign companies from owning a majority share of media and aviation companies in the country.

The takeover of Shin Corporation also raises questions about whether the sale will be taxed and what the Thaksin family will do with its profit. A family spokesman said a portion of the proceeds will be donated to social programs in Thailand.

The deal values Shin shares at $1.26 each. The Stock Exchange of Thailand index rose 2.6 points to end the day up at 750.

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