Thaksin’s tax saga: One bizarre rationale begets another

opinion March 22, 2017 01:00

By Tulsathit Taptim

It’s a story of two camps going out of their way in a bid to outsmart each other. If the renewed efforts to tax Thaksin Shinawatra over the 2006 sale of Shin Corp to Singapore’s Temasek are baffling, the scheme he allegedly used to evade that tax is no less perplexing. 

Forget everything you know, folks, and welcome to a financial and political black hole where all basic reasoning breaks down.

Let’s talk about the fresh attempts to tax him first. The tax law says they are redundant since the statute of limitations on any charges has expired. The government of Prime Minister Prayut Chan-o-cha, however, is applying the civil law, which it insists allows one last try thanks to a longer statute of limitations. The civil law can be applied because the case is a crime, not a matter of someone innocently filing wrong information or forgetting to pay the Revenue Department, the government points out.

The Thaksin side can be forgiven for thinking the revival of the case is an arm-twisting tactic to force his participation in “reconciliation” talks. But let’s forget about that for the moment and stick with the legal situation. The Thaksin camp can cite basic legal principles that “specific laws” should take precedence over general laws. In other words, sectors governed by their own specific law like taxation should observe that law on every matter – including how long a case can last.

Citing principles is a risky political move, however. Thaksin has not always been on the right side of principles. In fact, several “principles” were endangered by his actions in the Temasek sale in the first place.

Here’s a background on how a “missing” tax payment of about Bt10 billion has damaged many things beyond repair in political, national and even international terms. It started with the setting up of Ample Rich Investments for just one dollar in the British Virgin Islands in 1999. Registered by Thaksin himself, this new company bought Shin Corp stocks at Bt10 a share for a total deal worth Bt329 million. Adding to the intrigue, Ample Rich Investments borrowed the money from Shin Corp to complete the deal.

Thaksin claimed the whole deal was aimed to help his telecom empire make inroads on the US Nasdaq stock exchange. It seemed an honest ambition but for the fact that he failed to report this part of his assets while holding political office. Ample Rich Investments stocks formed part of the infamous “share concealment scheme” that involved his household staff.

In December 2000, Thaksin, rocked by the share-concealment inquiry, reportedly “sold” Ample Rich to his son, Panthongtae, for one dollar. In August 2001, splitting par value of Shin shares meant Ample Rich was holding 329.2 million Shin shares (from 32.92 million shares). Thaksin’s daughter, Pinthongta, became an Ample Rich co-owner after buying a one-dollar Ample Rich share from her brother in May 2005 after he had increased its registered capital to five dollars (five shares). They each owned 164.6 million Shin shares.

In 2006, Ample Rich Investments “sold” the Shin shares to its “owners”, Panthongtae and Pinthongta, for Bt1 apiece. Just a few days after that, the 329.2 million Shin shares headed straight into the hands of Temasek – at Bt49.25 apiece. The Shinawatras argued that no tax had to be paid, because Ample Rich was “not making any profit”. Let’s put it this way: Panthongtae and Pinthongta – “the Ample Rich owners” – could not sell directly to Temasek because they would have been taxed heavily. They had to sell the shares to Panthongtae and Pinthongta “the individuals”, who could “park” the shares and then sell them as individuals in the stock market.

Was it a legitimate means to avoid tax, or was it an illegal scheme? You tell me. A significant detail is that Thaksin was prime minister of Thailand during much of all this.

A lot has happened since the Temasek sale, including two coups and countless often-violent protests. A key post-Temasek incident was the seizure of the Shinawatras’ assets, including the money they received from the Singaporeans.

So, here’s another key question: With the asset seizure, is it fair to try to tax him again?

“What else do they want from us?” Panthongtae asked, quite understandably. 

To tell the truth, I don’t quite get it, either. All I can say is this: If this is a world where Panthongtae the Ample Rich owner can sell Shin Corp shares at Bt1 apiece to Panthongtae the individual who resold them at Bt49.25 per unit in the stock market, tax-free, this also must be a world where a court can seize the money made from such a clever trade and the Revenue Department can say we had nothing to do with the seizure and we still want to tax you retroactively anyway.