The deal involved the biggest political and business names in Thailand and Singapore. The buyer of Shin Corp was Ho Ching, the chief executive of Temasek Holdings. She is also the wife of Lee Hsien Loong, the prime minister of Singapore. The seller was Prime Minister Thaksin Shinawatra of Thailand. His family owned 49 per cent of Shin Corp.

Ho Ching presides over Temasek's investment portfolio of US$103 billion. Thaksin was serving Thailand as prime minister for a second term. Relations between Thailand and Singapore had been rather good, particularly with the Singapore-Thailand Enhanced Economic Relationship, although there may be a bit of rivalry between Thaksin and Lee over who has the higher profile in the region.

Temasek controls about 63 per cent of Singapore Telecommunication. SingTel, in turn, holds about 20 per cent of Advanced Info Service. AIS, which has a mobile-phone subscriber base of 19 million people, is the cash cow of Shin Corp. With the small local market of only 4 million people in Singapore, SingTel needed to look elsewhere to expand its business, such as Thailand and Australia.

It had long been looking to increase its stake in AIS or form a new partnership with TOT Plc after the state telecom enterprise's privatisation. The chairman of SingTel is Chumpol Na Lamlieng, the former president of Siam Cement Group. Chumpol is the only foreigner to serve as chairman of a large Singapore government-owned company.

Temasek brought in the US investment banking firm Goldman Sachs to advise it on the Bt150-billion takeover of Shin Corp. Goldman Sachs had earlier advised Telenor of Norway on its takeover of United Communication Industry, which operates the DTAC mobile network here.

In Thailand, Temasek got in touch with Peter Seah Lim Huat, a director of Siam Commercial Bank. Seah is a representative of the Development Bank of Singapore, one of SCB's biggest shareholders. Temasek in turn is a major shareholder of DBS. Seah approached Vichit Suraphongchai, the executive chairman of SCB, to take part in the deal. The major shareholder in SCB is CPB Capital Co, an investment arm of the Crown Property Bureau. Yos Euarchukiart heads CPB Capital.

Under the deal, Temasek would pay Bt73.3 billion to the Shinawatra and Damapong families for their 49 per cent of Shin Corp. Temasek would not use all of its own cash. It would borrow about Bt30 billion from the Thai market to finance the takeover. Chartsiri Sophonpanich of Bangkok Bank was also interested in getting a piece of the deal.

In the end, SCB would pitch in Bt15 billion in the form of a loan to Temasek, with a guarantee from the Development Bank of Singapore. Bangkok Bank would put up the other Bt15 billion. Lending to Temasek was considered risk free because its credit rating was higher than Thai sovereign debt. Temasek would bring in Bt43 billion to complete the deal with the Shinawatra and Damapong families.

Then Temasek would have to set aside another Bt79 billion to tender for the remaining 51 per cent of Shin Corp as part of the compulsory 100 per cent tender offer.

SCB Securities was also brought in to act as local financial advisor for Temasek. ML Chayothid Kridakarn played a key role in putting the deal together and ensuring that it conformed with Thai regulations. For its efforts, SCB Securities pocketed about Bt800 million from the advisory deal.

Temasek set up Cedar Holdings and Aspen Holdings in Thailand to help it acquire Shin Corp. Pong Sarasin, a former deputy premier and a noted businessman, and Suphadej Poonpipat were invited to join the deal so that it would not look like an entirely Singaporean deal. They would be shareholders of Kularb Kaew, which holds almost 41 per cent of Cedar Holdings. SCB would also hold 10 per cent of Cedar Holdings.

Suvarn Valaisathien was also brought in to advise the Shinawatra and Damapong families on the legal aspect of the transactions. Suvarn was one of the lawyers who helped Thaksin to defend himself against asset-concealment charges before the Constitution Court in 2001.

With this who's who of Thailand's business world involved, it is easy to understand why Temasek was certain about the Shin Corp takeover. Thaksin, for his part, hoped that selling off Shin Corp would end the criticism about his conflicts of interest.

But the deal struck on January 23 immediately created an uproar. Thaksin was accused of selling national assets to Singapore because Shin Corp, through its affiliates, controls a mobile phone concession, a satellite concession, a TV concession and aviation rights. To make matters worse, his family paid no tax on the deal.

His popularity sank fast, forcing him to dissolve Parliament and call a snap election for April 2. Rallies are underway to oust Thaksin and also to block the Shin Corp deal.

One of my friends, who is an investment analyst in Singapore, has expressed concern about the threat by activists attached to the People's Alliance for Democracy, which is rallying fiercely for the unconditional resignation of Thaksin, to boycott Shin Corp products.

My Singapore friend said: "The boycott of Shin products is worrying. I can't speak for Temasek, of course, but my strong feeling is that they will stay the course. They cannot be seen to be giving in so easily the minute there is some problem with a deal. I think their investment was based on a very positive long-term view of Thailand's economy going forward and they will probably be prepared to take the short-term pain.

"I would be very surprised if Temasek found other buyers and unwound the deal completely.

"I am also worried about the impact this might have on bilateral relations going forward. There is bound to be some bad taste left after the current turbulence settles down. Nevertheless, the two countries are drawn together by very fundamental common interests - we are natural allies in Asean, both committed to open economic policies and keen to see more economic integration. Both countries worry about terrorism and are allies in that fight. And so on. This natural friendliness and trust is seen in how SingTel wanted Khun Chumpol to be its chairman - the only foreigner to be chairman of a very large government-owned company. I hope that bilateral relations will withstand this unpleasant period."

Keep a close watch now on how the Shin Corp deal proceeds. It will be far from smooth.

Thanong Khanthong