Temasek did not directly refer to nominally Thai-registered Cedar Holdings and Aspen Holdings, through which it purchased most of the rest of the Shin shares after having bought 49 per cent of Shin from the Shinawatra and Damapong families. But it was understood the statement was aimed at cooling off the controversy surrounding the investment arm of the Singaporean government's buying into a Thai firm through the use of nominees. The statement said that "as a responsible investor, we also respect the views and are sensitive to the feelings of the Thai people". There could be no mistaking which views and feelings Temasek was talking about.

The views widely held by Thais can be summed up as follows: Temasek colluded with Thaksin to enable the former Thai leader to cash out, through shady transactions, on the telecom conglomerate he founded. This in turn allowed the Singaporean company to take control of businesses that operate concessions with national-security implications, in violation of foreign-ownership statutes.

Temasek has claimed it pursued good corporate-governance practises of the highest standard. But its Shin deal has shown otherwise.

The reason Temasek has shifted into damage-control mode may have something to do with the mounting public pressure for the Surayud government to investigate the Shinawatra and Damapong families' Shin deal and learn how Temasek entered into it.

Since Temasek's takeover of what is estimated to be more than 90 per cent of ownership, Shin shares have become illiquid in the stock market. If Temasek intends to reduce its shareholding in Shin while maintaining the company's listing on the bourse, it will have to start by complying with stock-exchange regulations. It can start by selling a substantial chunk of the company's shares back into the market, so that at least 15 per cent of all shares are free-floating.

Next, Temasek will have to find Thai strategic partners to sell the remaining shares to, so that its stake in Shin is reduced to the legal maximum of 49 per cent. Shin Corp is a holding company that controls businesses involving mobile phones, satellites, television broadcasting, a budget airline and others, most of them subjected to foreign-ownership limits of 49 per cent, because they are government concessions, or out of concern for national security.

The fact that Temasek has offered to pare down shareholding in compliance with legal limits "at the appropriate time" does not mean the Surayud government should find an excuse not to enforce the relevant laws in this particular case.

The next step for the interim government is to issue clear regulations in regard to foreign ownership. Any businesses that have cause for national-security concerns must be protected and the use of nominees barred. The rest should be liberalised, in order to allow full participation by foreign investors and create a level playing field on which to compete. If the new government introduces clear guidelines, then foreigners investing in Thailand in good faith will have no fear that their interests are not being protected.

There must be thousands of cases of inappropriate use of nominees in Thailand. So far, the Thai authorities have been reluctant to enforce foreign-ownership laws. The case against Shin erupted because it involved business transactions of the deposed prime minister's family and because the satellite and television companies controlled by Shin are considered sensitive to national security.

After coming up with clear guidelines on the use of nominees and an amended foreign-ownership law, the Thai authorities should give a time frame of, say, three years for compliance by foreign companies. Once the new law comes into effect, the authorities must enforce it strictly and consistently.