People close to the Bt73-billion deal between Temasek Group of Singapore and the premier’s children and brother-in-law Bannapot Damapong said the buyer originally wanted only Advanced Info Service Plc (AIS), but that would have saddled the sellers with a huge tax bill.

Instead, the deal was done via the sale of Shin Corp, AIS’ parent firm, to evade the tax liability.

Korn said that if the premier’s relatives had sold their stake in the country’s largest mobile service provider directly to Temasek, they would have been subject to 30-per-cent income tax on the transaction.

Prior to yesterday’s deal, Thaksin’s family and brother-in-law held 1,200 million shares in AIS which, based on the latest closing price of Bt104 per share, would have fetched nearly Bt125 billion.

The tax Shin Corp would have to pay on this sale works out about Bt37 billion. Given that the premier’s children and relatives controlled nearly 50 per cent of Shin Corp, they would have to pay nearly Bt19 billion in taxes via the corporate entity.

According to Thai law, individual shareholders are not subject to any income tax if they sell via the stock market, as was the case with yesterday’s deal.

In addition, Korn said the Securities and Exchange Commission did not do its duty properly because it failed to protect minor shareholders’ rights in Shin Corp’s subsidiaries, especially Shin Sat and iTV.

According to SEC, Temasek was not required to make a tender offer to buy shares from minor shareholders of these two firms even though the Shin Corp sale involved more than 25 per cent shares of both Shin Sat and iTV.

The opposition MP is also worried that the sale of majority stakes in Shin Sat and iTV to foreign investors could lead to problems for national security since satellite services and TV stations are considered to be vital to national interests.

Trakoon Meechai, a Chulalongkorn University political scientist, believed that although the sale could stop criticism of conflicts of interest against Thaksin, he was not sure if the proceeds would be re-invested in joint ventures with foreign firms for mega infrastructure projects being promoted by the government.

Economist Sangsit Piriyarangsan also believed the premier’s family was aware that the buyer was interested only in AIS and Shin Satellite, but not the rest of subsidiaries.

“They apparently intended to avoid paying a huge amount of tax which they would be liable for if they sold only AIS,” he said.

On iTV, Sangsit said the station was set up as an independent free TV station so he was not sure if the country’s national interests would be negatively affected as a result of yesterday’s deal.

Media activist Supinya Klangnarong, said the reason of avoiding conflict of interest given by the premier for the share sell-off was not credible.