The Department of Special Investigation and public prosecutors want to question Amaret Sila-On, former chairman of the Financial Sector Restructuring Authority (FRA), before deciding whether or not to file charges against him for alleged irregularities in the FRA's sale of assets from 56 defunct finance companies.

"We want him to clear up some issues," DSI director-general Sunai Manomai-udom said yesterday.

 The investigation committee would like to hear Amaret's side next week, but he has yet to reply to the DSI's request.

Lehman Brothers Holding, one of the key players in the case, was scheduled to hear charges against it today at 10am. The investigation has uncovered evidence that some FRA board members might have assisted the company in breaking the law.

The DSI is ready to interrogate the company's witnesses at today's hearing, if requested. Then, the DSI will decide whether to indict the company.

The authorities are probing the alleged irregularities in the FRA's auctions of the assets of 56 finance companies that went bust when the financial bubble of 1997 burst.

The FRA was set up under the Bank of Thailand to help the Financial Institutions Development Fund recoup some of its losses from bailing out the financial system.

The DSI earlier summoned former FRA secretary-general Vicharat Vichitvadakan over a charge of assisting Lehman Brothers to evade tax on assets it purchased at auction. In August 1998, Lehman Brothers won bids for Bt11.52 billion out of a total of Bt24.62 billion worth of corporate loans, with property as collateral, put up for auction by the FRA. It then transferred the rights to the Global Thai Property Fund.

A DSI source said the issues that led to the charges against Lehman Brothers consist of several points.

First, Lehman Brothers acted as an adviser to the FRA for seven auctions of assets totalling Bt600 billion. However, Lehman Brothers didn't separate good assets from bad. Besides, the fund was too large to allow an alleged attempt to block non-Thai investors from joining the bidding.

Evidence suggested that the first FRA board, under Thawatchai Yongkittikul, inspected the assets and appraised their sales potential at Bt252 billion-Bt408 billion, or 46-68 per cent of the total outstanding asset value of Bt600 billion, the source said.

Lehman Brothers took advantage of its position as an adviser to join the bidding for the residential projects, the source said. This implied a conflict of interest. It might also have colluded to evade taxes. Lehman Brothers set up a fund named the Global Thai Property Fund, allegedly to avoid the taxes it would have been liable for had it taken possession of the properties itself.

If this was the case, the state might have suffered Bt10 billion in damages, the source said.

Lehman Brothers has insisted that it had complied strictly with all legal and regulatory requirements related to the auction.

"The closure of the FRA transaction of August 1998 into Global Thai Property Fund, a fund established by Lehman Brothers, was totally legal and in full compliance with laws established by the Securities and Exchange Commission in May 1998," it said.

The investigation committee consists of DSI deputy director-general Tawee Sodsong and four representatives from the Attorney General's Office. The four are Wit Jirapeat, director-general of the legal counsel department; Kemchai Chutiwong, director-general of the bankruptcy litigation department; Nanthasak Pulsuk, deputy director-general of the special litigation department; and Watcharin Panurath, a provincial prosecutor.

US-based Lehman Brothers was one of several foreign investors, including hedge funds, that scooped up distressed assets at fire-sale prices after 56 finance companies collapsed following the 1997 economic crisis. Other American financial powerhouses were GE and Goldman Sachs.

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