Kularb Kaew Co Ltd, Cypress Holdings Co Ltd and Aspen Holdings Co Ltd, which were involved in Temasek Holdings’ takeover of Shin Corp Plc, may have breached the country’s foreign-business laws, according to Kiat Sitthee-amorn, a Democrat party-list MP.

Kiat and party member Korn Chatikavanich yesterday presented a petition to the Securities and Exchange Commission, asking it to investigate all parties involved in the transaction and ask brokers if they had thoroughly checked the backgrounds of clients who had opened accounts for the big-lot transactions.

“Though they claim that they are Thai entities, the structures of their boards of directors, shareholders and authorised directors are all under Temasek’s control,” Kiat said.

Kiat said Cypress had been registered as a Thai company on November 23, 2005 with Bt100,000 in capital. The company fell under a shareholding restructuring on January 16 and identified itself as a foreign company, with three of its four directors listed as Singaporeans.

Aspen was set up on December 16, 2005 as a Thai company, owned 99.94 per cent by Anderton Investment and the rest by Thai individuals. On January 16, its shareholding structure also changed. Now identified as a foreign company, it has three Singaporean directors.

“After the shareholding restructuring, both companies identified themselves as foreign companies, but they did not abide by the Alien Business Act,” Kiat said.

The law stipulates that foreign entities must obtain business licences from the Commerce Ministry before making any investment in the Kingdom and must produce an investment plan to show how much they plan to invest in the next three years. After petitioning for a licence, they must bring in at least a quarter of the promised investment.

Kiat noted that neither Cypress nor Aspen had requested licences after their change in status. Any company or individual breaching Article 36 is subject to a maximum three-year jail term or Bt1 million in penalties or both. They can also be instructed by a Thai court to relinquish their shares in the companies involved.

“Remarkably, Aspen was registered with only Bt100,000 in capital but was able to invest all of Bt15 billion,” he said. “One has to wonder if its brokers checked the company’s background before opening a share-trading account for it. The SEC should investigate its brokers. Who will take responsibility if such a mishap occurs again?”

Cedar Holding, of which Cypress is a major shareholder, and Aspen paid the Shinawatra and Damapong families Bt73.3 billion for the 49.6-per-cent stake, and both have estimated that they will spend an additional Bt79 billion to tender for the remaining shares in Shin. They also need another Bt122 billion for the tender for Advanced Info Service Plc’s shares.

As for Kularb Kaew, it is 51 per cent owned by Thai shareholders, including Pong Sarasin, who is Shin’s chairman, but according to the company’s books, the Thai shareholders are entitled to only 3 per cent of profits and only 5.1 per cent of the voting rights. They are also barred from selling, pledging or transferring the shares without approval from its Singaporean directors. Meanwhile the foreign shareholder, Cedar, which owns the remaining 49 per cent, is under no restrictions.

“If they really invested 50 per cent in the company, why would they agree to the 3-per-cent profit sharing? Only insane investors would do that. It suggests that they hold the shares on behalf of Singaporean entities. Kularb Kaew needs about Bt20 billion in investments. Let me ask how much the Thai shareholders contributed and where the money came from. It could be a nominee with an account from Temasek.”

He noted that if foreign entities bought a stake in a Thai company the local firm would become a foreign entity. Shin falls into this category, as do its subsidiaries. He noted that this would pose problems because foreign companies are barred from entering some protected businesses.

Meanwhile Korn insisted that there were two firms named Ample Rich Investments, not one as the Shinawatra family’s legal counsel Suvarn Valaisathien had said on Thursday.

He also countered Suvarn’s assertion that Vickers Ballas was a share custodian for Ample Rich. “It is a securities company which cannot perform the services of a custodian,” he said.

UBS AG’s Singapore branch, which Suvarn referred to as another custodian, told the SEC it had acquired Shin shares from Ample Rich and that the number of Shin shares in UBS’s account had risen from 37.24 million on March 11, 2005 to 39.09 million on August 28, 2005.

“The SEC said that it would look into these issues,” Korn said.

Siriporn Chanjindamanee

 The Nation