Shares in property company SC Asset plunged 6.84 per cent yesterday, following the indictment by the Department of Special Investigation (DSI) against deposed prime minister Thaksin Shinawatra, whose family holds a majority stake in the firm.

While stock analysts recommended investors refrain from buying the shares, because of its unclear future, the Securities and Exchange Commission (SEC) asked the DSI for information that might pinpoint any company executives who may have been involved with alleged share concealment.

"If any executives were involved, they must resign," said SEC deputy secretary-general Prasong Winaipaet. "If they stay in their posts, it could affect the company's transactions, which will not be approved by the SEC or the Stock Exchange of Thailand (SET)."

Thaksin's youngest sister, Yingluck Shinawatra, is the company's CEO.

The stock was the seventh top loser yesterday. It fell at the opening bell and headed further south to the day's trough of Bt8.70 before rebounding slightly to close at Bt8.85, a drop of 6.84 per cent.

After a roller-coaster ride throughout yesterday's trading, the market closed 0.32 per cent lower at 763.78 points.

SC Asset acknowledged in a statement submitted to the SET that it had received a summons from the DSI informing it of allegations that the company had violated Articles 65 and 278 of the Securities and Exchange Act of 1992, as announced yesterday by DSI director Sunai Manomai-udom.

SC Asset affirmed it had disclosed all information regarding the relevant transactions as required by law and that the company was willing to explain and defend itself against the allegations in a court of law.

Pongpan Apinyakul, senior vice president for research at Kim Eng Securities (Thailand), said his firm changed its recommendation from "buy" to "avoid" after the DSI filed charges against Thaksin and his wife, Pojaman, for alleged concealment of SC Asset's shares through nominee companies.

SET data as of April show Thaksin's two daughters, Pinthongta and Paetongtarn, each hold 28.97 per cent of SC Asset, Thaksin's wife Pojaman 2.88 per cent and Bhanapot Damapong 4.95 per cent.

"Although the allegation has nothing to do with SC Asset's business - as it involves share concealment by the company's major shareholders - it will have a psychological impact on the company," he said. Those who are planning to buy residences developed by SC Asset may delay their decisions or change to other property projects out of fear of uncertainty.

The DSI has charged Thaksin, his wife and Busaba Damapong with share concealment in a case linking British Virgin Islands-registered company Win Mark with SC Asset.

If convicted under the Securities and Exchange Act, Thaksin will be subject to up to five years' imprisonment and a fine of no more than twice the value of the shares he offered to sell to related parties. The value of shares Thaksin sold in 2000 was Bt969 million, meaning he could face a fine of Bt1.938 billion.

All suspects have been ordered to appear before police next week.

In 2000, Thaksin said he sold shares in three property companies - OAI Property, PT and SCK Asset - to Win Mark for a total of Bt906 million. However, the Democrats found that Win Mark also held shares in two other companies: SC Office Park and Worth Supplies. The total investment in the five firms was Bt1.5 billion. In Thaksin's 2000 statement, the former prime minister said Win Mark had bought the shares on expectation of reaping profits when the firms were listed.

However, Win Mark sold its shares in OAI Property to the Value Asset Fund of Malaysia (VAF) in 2003, and three weeks later VAF sold the shares to the Overseas Globe Fund and Offshore Dynamic Fund Inc. The three funds share the same address in Malaysia. Remarkably, the sale took place before OAI Property, later renamed SC Asset, was about to list on the SET in November 2003.

VAF also transferred the right to buy 70 million new shares of OAI at their Bt10 par value to Pinthongta and Paetongtarn. Based on the initial public offering price of Bt15 a share, the two children automatically netted a total profit of Bt350 million.

Siam City Securities' senior analyst Mayuree Chowikarn said stock investors should avoid snapping up SC Asset's stock.

The news will put SC Asset shares under pressure, although it will not affect the property developer's business, she said.

"It is not surprising that SC Asset's share price declined. In business terms, its stance is unclear. Yingluck Shinawatra will take time to make a clearer business plan," she said.

Meanwhile, SET president Patareeya Benjapholchai said SC Asset's stock had not been suspended from trading, because the DSI had charged the company's major shareholders and not the company, and the charges would not be a threat to its earnings.

The SET must wait for the result of investigations and clarification from executives before deciding to post any signs on the company's stock, she said.

However, the stock exchange has asked SC Asset executives to clarify effects on the company from the allegations, Patareeya said.

Siriporn Chanjindamanee,

Oranan Paweewun

The Nation