Who does he serve?

[limbo]

Who does he serve?

Published on January 25, 2006 The Nation

 

Move to limit PM?s conflicts of interest has backfired as critics slam ?unethical tax avoidance?. Is it an end to conflict of interests, or is it conflict of interests in the extreme?

 

With the dust settling on the historic takeover of Shin Corp, the purported attempt to improve Prime Minister Thaksin Shinawatra?s political image is threatening to backfire, with a growing number of critics questioning whether he has jeopardised public interests with the Bt73-billion sell-off ? virtually tax-free.

 

Academics, non-partisan senators and opposition MPs charged yesterday that Thaksin had completely forgotten that he was prime minister from the time the Temasek takeover was conceived to when the deal was finalised and scrutinised. They said that not only did he fail to protect public interests linked to the deal, but his government also turned a blind eye to or acted dubiously on questionable practices by the parties involved.

 

They sharply criticised Finance Minister Thanong Bidaya as well as top officials at the Revenue Department, and Securities and Exchange Commission, among other state agencies, for serving the interests of the premier?s family at the expense of other taxpayers and minor shareholders of Shin Corp subsidiaries.

 

Senator Seri Suwannapanont told The Nation that the premier should have advised his family members to pay full taxes on the deal ? to set a proper example for other taxpayers.

 

Thaksin?s children and relatives reportedly paid only Bt25 million in the form of value-added tax on stock brokerage commission fees.

 

Senator Chirmsak Pinthong said the Revenue Code was apparently twisted by pro-government officials to help the premier?s family avoid paying huge taxes on profits made by the share sale.

 

?Finance Minister Thanong Bidaya acted as if he were the chief financial officer of the Shinawatra family, rather than the finance minister, since he immediately concluded that the deal was not subject to any income tax,? the senator said.

 

?On the other hand, the finance minister earlier reiterated that all taxmen at revenue, customs and excise departments must ensure that they meet the target of reaping an additional Bt16.7 billion in taxes from businesses and the general public,? said Chirmsak, chairman of the Senate committee investigating corruption cases.

 

The Revenue Department had made several contradictory rulings on the Shin-Temasek deal to help the premier?s family, he said.

 

?Once, the agency ruled that the shares transferred by Thaksin and his wife to relatives were not subject to income tax. The reason was that the shares were considered as gifts and that the recipients had not earned any income as a result, even though the transfer was done outside the stock market, the capital gains from which are normally taxable.

 

?Then, it recently cited other clauses of the Revenue Code to justify the tax exemption for the premier?s family when these shares were actually sold to foreigners on Monday,? Chirmsak said.

 

Sombat Thamrongthanyawong, from the National Institute of Development Administration, said Thaksin would find it difficult as premier to persuade the public to abide by the law in paying taxes properly since his family did not set a good example.

 

?The deal could encourage others to evade and avoid taxes in a similar fashion. As the country?s political leader, the premier has lost his legitimacy in urging the public to pay proper taxes since he did not get his own family do so,? Sombat said.

 

Kiat Sithi-amorn, of the opposition Democrat Party, said the Revenue Department seemed to have reversed its role as a tax collector.

 

?The tax office is supposed to chase taxes for the state coffers, but in the Shin deal it did the opposite by finding loopholes for the premier?s family to avoid paying taxes,? he said.

 

Kiat also criticised the SEC for failing to protect minor shareholders of ShinSat and iTV, subsidiaries of Shin Corp, by exempting Temasek from having to make a tender offer to buy the rest of shares from small shareholders.

 

The premier?s family had also circumvented the alien business law, which bars foreigners from holding more than 49 per cent in Thai companies, he said, adding that the telecom law was also hastily enforced to facilitate the Shin-Temasek deal.

 

Parinya Tewanaruemitkul, a lecturer at Thammasat University, said the historic deal would create ethical problems in Thai society.

 

?Tax avoidance will worsen because the premier?s family has set a bad precedent. Since the Revenue Department did not do its duty, citizens have no other choice but to question the integrity of our political leader,? he said.

 

Sangsit Piriyarangsan, an economist, said Thaksin had acted purely as a businessman when his family cut the Shin-Temasek deal, rather than as prime minister.

 

Siriyasai Katasila, of the Campaign for Popular Democracy, said the Revenue Department and SEC appeared to have worked for the premier?s family ? not the public good. ?We?ll have to closely watch the following phases of selling off state enterprises and the third-generation mobile-phone business for any corrupt practices,? he said.

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Revenue Dept should do tax audits on Yingluck and Bhanapot, Chirmsak says

Published on January 25, 2006

 

Senator Chirmsak Pinthong called yesterday for tax audits of beneficiaries of the Bt73.3-billion Shin Corp takeover, including a sister and a brother-in-law of Prime Minister Thaksin Shinawatra. ?The Revenue Department should particularly target Thaksin?s sister Yingluck Shinawatra and his in-law Bhanapot Damapong,? he said.

 

In 2000, Thaksin gave his Shin shares to Yingluck and the transaction was exempted from tax on grounds that it happened outside the stock market and that Yingluck earned nothing since she had yet to sell the shares, he said.

 

But on Monday, Yingluck sold 20 million Shin shares and earned about Bt985 million, he said.

 

In Bhanapot?s case, Thaksin?s wife Khunying Pojaman made a tax-exempt transfer of 4.5 million Shin shares to her brother, he said. Bhanapot earned about Bt19.9 billion from Monday?s deal, the senator said. He urged tax collectors to ensure that the Shinawatra and Damapong families comply with tax laws ? and not allow them to exploit loopholes.

 

He slammed Finance Minister Thanong Bidaya for rushing to confirm that the deal enjoyed tax privileges, attacking him for acting like a Shinawatra tax adviser rather than a public servant.

 

?I find it unacceptable that the Finance Ministry has just announced stringent measures to collect Bt16.7 billion in income tax from the people but turns a blind eye to the Shin deal that was clearly designed to evade tax,? he said.

 

The senator felt it suspicious that Shin?s share price peaked just as the deal was concluded. ?The gain on Shin shares coincided with key events, such as the enactment of a new law to cap foreign ownership, the exemption of Bt16-billion in excise for the iPStar communication satellite and the conversion of concession fees into tariffs for mobile operator AIS,? he noted.

 

Thaksin steered the government while things conveniently happened in favour of Shin shares.

 

?I wonder whether the sale of Shin Corp to foreign investors is but a ploy to lessen political risk in case someone faces an asset-seizure order in the future.? Relevant authorities, including the Bank of Thailand, the Anti Money Laundering Office and the National Counter Corruption Commission, should monitor the flow of funds earned from the Shin deal, he said.

 

?The Shin deal should serve as a costly lesson about having a businessman to lead the country ? as business would come before national interest,? he said.

 

?If we go by the political standards as practised in England, then Thaksin is a bankrupt man, ethically and morally, three times over,? he added.

 

Senator Thongbai Thongpao said Thaksin might have got his way with the tax law, but in the process had revealed his true colours for being a frugal rich man bent on avoiding his tax responsibility.

 

?This is a moral question and Thaksin?s conduct is a good example of his lack of conscience as a tax-paying citizen in spite of his wealth and high position,? he said.

 

Senator Seri Suwanpanont said close timing between the Shin deal and the new law on foreign ownership tarnished the PM?s image.

 

?Within days following the enactment of new provisions, Thaksin took advantage to conclude the deal with foreigners,? he said.

 

Prapasri Osathanon

 

The Nation

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Explanation required

Published on January 25, 2006

 

Prime Minister Thaksin Shinawatra should explain to the public how the sale of Shin Corp shares benefits the people, Democrat MP Kiat Sittheeamorn said yesterday.

 

The MP said the premier should also check his facts, because the capital gains tax exemption isn?t universal, as Thaksin claimed.

 

The objective of the exemption is to stimulate the stock market by attracting small investors, Kiat said. But this big-lot sale of shares was a misuse of it, he said.

 

Moreover, Kiat said, the Securities and Exchange Commission should investigate whether insider trading had occurred, because the parties involved agreed to trade at a price higher than the market price months before the sale. They might have shared information or engaged in deals to take advantage of small investors, he said.

 

Government MPs from Wang Nam Yen and Pho Mod Dam factions of the ruling Thai Rak Thai Party attacked Thaksin for acting like a sold-out politician who put his family before the country. MP Chalermchai Ularnkul said the prime minister had engineered the deal to favour his family without making full disclosure to the public and small shareholders.

 

Thaksin misled 375 Thai Rak Thai MPs to vote for the amended legislation to boost foreign ownership in the telecom business to 49 per cent, he said, noting that his colleagues had unwittingly paved the way for the Shin takeover.

 

?It is ironic that the government ends up as the administration for one family,? MP Pramuan Ruchanaseree said.

 

Kornchanok Raksaseri,

 

The Nation

[Lord Toad]

By Western standards there are a lot more questions than there will ever be answers on this whole deal. It reality such a deal would be inconceivable in any sophisticated democracy. But the most amazing aspect of it all to me is that it has gone through with little more than heckling from the side lines.

I suppose the numbers are just too large for any average person to understand but if you consider that the money going abroad is taking the money away from the wealth of Thailand then every man, women and child in the kingdom has just lost 1,250 Baht.

Mind you with all that money to spend T might just b?.. off and spend it! But which marauder comes next?

[MaiLuk]

>>but if you consider that the money going abroad is taking the money away from the wealth of Thailand<<

 

I missed that part. Where is the money going?

[MaiLuk]

Thaksin misled 375 Thai Rak Thai MPs to vote for the amended legislation to boost foreign ownership in the telecom business to 49 per cent, he said, noting that his colleagues had unwittingly paved the way for the Shin takeover.

 

?It is ironic that the government ends up as the administration for one family,? MP Pramuan Ruchanaseree said.

 

The whole deal is the most astonishing example of Mr Shin boy conniving his way into huge profits that i've read yet. But i probably have missed a few other examples

 

Isn't the shin man admired by the public? Just goes to show in LOS there is a slightly different attitude toward scamming. The biggest scammer is the biggest hero ::

[jxxxl]

Does anyone know if this was a cash deal or a stock swap? It sounds like he sold the shares for cash but I haven't seen it specifically stated. In the US, you don't pay tax on a stock swap until you sell the new shares you received in trade. However, a cash deal is a taxable event in the year it happens. Also, the recipient of a gift must pay tax above a relatively small annual tax-free limit.

 

I understand this is not the US, but it sounds like Mr. T wiggled his way out of a huge tax bill. Being the PM, this is inexcusable. Lets what and see, but I will be shocked if the public is stupid enough to let him get away with this.

[MaiLuk]

>>Also, the recipient of a gift must pay tax above a relatively small annual tax-free limit.<<

 

In the US you can gift any amount you want. No tax is paid until the grantor dies than he has to pay estate tax on the earlier gifts. The republicans are working on eliminating the tax altogether.

 

According to the article, the shares were transferred between family members in 2001. When people complained, taksin said it was only gifts and if it had been a sale then he would have to pay tax. This time it is a sale.

 

If it was a baht 73 billion sell-off as the article states, it is very clear that taksin owes tax under the tax law. He did the right thing buying his way into office. The tax savings alone has financed the vote buying a thousand times over.

[Lord Toad]

Basically he has swapped 50% of Shin for 10% of Sing tel.

But, of course, that means his new holdings are outside Thailand.

 

There are clearly all kinds of ramifications as well as skating around laws. But in Thailand the tax code is treated in a very arbitrary way even by the tax office. Everything is a matter of negotiation: not fact. Any company trying to operate within and according to the Thai tax codes gets clobbered by the revenue. Ask any sebior accountant dealing with multi-nationals about that!

[Khun_Kong]

I am positive that I read that 26 billion baht was financed by a consortium of Thai banks and holding companies. I am sure that it is impossible for Thai banks to operate in a collusive or less than transparent, legal and intelligent manner.

 

Wish I could get that kind of credit!