Thailand moves on telecom conflicts of interest

03 May 2011

Almost five years have passed since Thailand had a military coup which threw out Prime Minister cum Telecoms tycoon Thaksin Shinawatra and it has taken that long and a succession of ICT Ministers to finally sort out the mess of conflicts of interest and alleged corruption that was left during his reign.

Nary a week after CAT, DTAC and True got tangled in a series of lawsuits, the ICT Ministry will be initiating legal action against Singapore-owned AIS and Shin Satellite, if leaked reports in the Nation’s Thai-language Bangkok Biz News prove reliable.

ICT Minister Chuti Krairiksh will present the penultimate Meeting of the Cabinet of Ministers with a report and to order the further investigation and prosecution of politicians, official, individuals and of course Shin Satellite and AIS.

On 25 February, the MICT set up an internal committee headed by a Counter Corruption Commissioner Ampol Wongsiri focusing on six areas: the Cabinet resolution allowing telcos to subtract excise tax from the revenue share calculations; reduction of prepaid revenue share to 20 percent (instead of increasing gradually to 30 percent along with postpaid); amendments to contract that allow for roaming profit rather than revenue to be calculated in revenue share; investment promotion for the ThaiCom satellites (export promotion privileges for a project that was supposed to be focused on the domestic market); reduction of shareholding of Shin Corporation in Thaicom to 40% (the contract said it was to be maintained at no less than 51%); and the direct payment of $6.7 million insurance to Shinsat (rather than to the concession holder as per the contract) for the failure of ThaiCom 3.

A long number of politicians, civil servants, CAT and TOT board members and officials were individually singled out for their actions in the cases. However, only AIS and Shin Satellite were named in the private sector.

Some have said that all the telcos, DTAC and TrueMove included, benefited from the changes to the tax system. While this may be true, DTAC has publicly stated that the key difference is that they are innocent third parties to a change in government policy. AIS cannot make that claim as a the time, they were owned by the wife, children (as well as cook and driver) of the person who approved the changes, Thaksin Shinawatra and it seems that the ICT Ministry committee agrees.

Damages are expected to be in the tens of billions of Baht, up to 83.5 billion ($2.8 billion) according to early reports from TOT.

The situation for Shin Satellite is typical for Thai concessions. The bid is for one low value project and once approved, it morphs into another higher value one through back door deals.

The original project was for a pair of satellites focused on the domestic market. How that became five satellites with an international footprint is one issue. How the Board of Investment approved a subsidised loan through the Exim Bank (Export Import Bank of Thailand) for ShinSat for Myanmar is another. Then there is the rather more blatant issue of insurance money which should have been paid to CAT, but a request to have it paid directly to Shin Satellite was approved by politicians.

It is said that the worst form of regulation is a failed system when the courts have to get involved. Once lawsuits are filed, the process will drag on for years and years and usually organs of regulation and government will wait for a court decision. If, as many polls predict, a Thaksin-sympathetic government gets elected later this year, will these investigations get bogged down or even thrown out? Then, will they be resurrected once the Democrats come to power again? Will this madness ever end? Perhaps more importantly, will any of these lawsuits be completed before the concessions run out, True being the most pressing with just two years left.

Don Sambandaraksa is a former reporter with the Bangkok Post. He now writes for the tech blog Amitiae

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