The first graft case against the family of ousted premier Thaksin Shinawatra has reached the judicial review stage, with both the prosecution and the defence equally optimistic about winning a favourable verdict.

The case involves a complex web of tax and criminal issues and is expected to go through three tiers of courts. By the time the Supreme Court reaches a verdict in the next three years or so, public sentiment may have moved on to a new issue of the day.

Regardless of what the future holds for Thaksin and his family, the court battle is not about alleged corruption involving him or his government. If the prosecution can manage to win a conviction, the case will be a reminder of how unfit he was to enter public service.

Although public prosecutors have named Thaksin's wife, Khunying Pojaman, her brother Bhanapot Damapong, and her private secretary Kanchanapa Honghern as defendants, the ousted premier is also on trial by proxy.

Thaksin's decision to enter politics triggered a cascade of events that later proved to be his undoing. As a public office holder, he was forced to hurriedly offload his wealth, estimated at Bt20 billion.

His opponents cried foul on his wealth in 2000. Even though he won a favourable verdict in an assets concealment case in 2001, prosecution evidence became the basis for subsequent tax audits.

Doubts remained about his ethical standards and suitability for public office, as critics kept revealing his questionable movements of money, designed to avoid tax obligations.

As a telecom tycoon, Thaksin would probably have got away with manipulating and minimising his tax payments. But he faced a raised bar on what the public expected of him as a politician and leader.

One highly publicised case is the 1997 share transaction involving Pojaman and Bhanapot. It has haunted Thaksin and his family for years, and it now forms the core of the prosecution's case. Following the coup, the Assets Examination Committee (AEC) focused on the Pojaman-Bhanapot share transaction as a lesson to expose Thaksin's flawed leadership.

In the writ, filed at the Criminal Court on Monday, prosecutors contend that Pojaman, Bhanapot and Kanchanapa, conspired to evade income tax and also committed

perjury to avoid tax obligations.

Pojaman and Bhanapot each stand accused of two counts of criminal and tax violations relating to their 1997 share deals. The two counts comprise one for conspiracy on tax evasion and one for the conspiracy on perjury.

Kanchanapa faces one count of conspiracy in the alleged tax dodge.

According to the prosecution's writ, Pojaman issued an instruction on November 7, 1997 for her stockbroker to sell 4.5 million Shin Corp shares worth Bt738 million to Bhanapot. The company was then known as Shinawatra Computer and Communications.

Pojaman's shares were held by her maid, Duangta Wongpakdee, who acted as nominee. Kanchanapa organised the transaction on Pojaman's behalf.

Pojaman issued a cheque dated November 12 to pay for the shares on Bhanapot's behalf. And her stockbroker paid out Bt734 million on the same day to Duangta for the cost of shares minus brokerage fees and value added tax. Duangta's sales earnings were later deposited in Pojaman's bank account.

Prosecutors contend that the transaction was staged on the stock market in order to help Bhanapot dodge his income tax obligations that should have amounted to Bt273 million.

In 1997 Bhanapot filed an income tax return for Bt8.1 million after claiming exemption for his shares transaction done on the stock market.

In regard to the charges of perjury, Pojaman and Bhanapot testified in the 2001 tax audit that they were entitled to tax exemption because the shares were given by Pojaman to her brother as a family gift.

Pojaman claimed that she designated her shares as a gift for Bhanapot's first-born son and that she wanted to raise the social standing of her brother's family to match her own.

Prosecutors contend that the transaction was not a gift but an outright payment for Bhanapot's services rendered to the Shinawatra family.

They say the alleged perjury during the tax audit caused damage to the state amounting to Bt546 million computed from unpaid tax plus a Bt272 million fine.

The court has set a May 14 date for a hearing on admissible evidence before commencing trial.

The three defendants were released after posting Bt5 million bail each. As a condition for bail, they are obliged not to comment publicly on the case.

The gag order might have little bearing on the upcoming courtroom drama and the defence remains a step ahead after putting up a guarantee for liable tax at the Revenue Department. The guarantee is designed to show a lack of intent to dodge tax payments.

The defence plans to play up the role of an innocent, tax-abiding citizen being victimised via conflicting interpretations of the tax code, while the prosecution has the burden of proving motive and intent by demonstrating that the three defendants are not so naive in regard to tax matters.

Avudh Panananda

The Nation