Thai court sets a powerful
precedent By Shawn W Crispin
BANGKOK - Thailand's fast-track
privatization program has been dramatically
derailed through a court decision that signals
future legal troubles for Prime Minister Thaksin
Shinawatra's scandal-ridden government.
The Supreme Administrative Court ruled on
Thursday that Thaksin's plans to float a 25% stake
in the country's electricity-generating monopoly
suffered from conflicts of interest, that public
hearings had been incomplete,
and that if the plan had been allowed to proceed
it would have created unfair competitive
advantages. Previous attempts to list EGAT Plc
were scrapped because of strong opposition from
the state agency's labor union.
Significantly, the decision represents the
first time a Thai court has ruled that Thaksin's
government is guilty of a conflict of interest,
allegations that the premier has consistently
denied throughout his five-year tenure.
Government spokesman Surapong Suebwonglee
played down the ruling's significance, but the
landmark decision will put on hold Thaksin's other
privatization plans, and could open to legal
challenge earlier state-enterprise share offerings
orchestrated by his government.
The
privatization of state-owned enterprises was once
one of Thaksin's flagship economic policies. He
vowed that more private ownership would modernize
the country's stodgy state concerns and would
breathe new life into the stock exchange. EGAT's
listing would have represented Thailand's largest
ever initial public offering, generating an
estimated 34.9 billion baht (US$892.5 million) in
funds.
More important, perhaps, the
Administrative Court's precedent could pave the
way for new legal challenges to Thaksin's hold on
political power. Slowly but surely, the judiciary
appears to be aligning itself with the complaints
and grievances aired by the growing people-power
movement that until now has tried to drive Thaksin
from power through peaceful street protests.
This month a Thai criminal court ruled in
favor of an activist and journalists over Shin
Corp on the grounds that telecommunications
frequencies are to be used for the public good and
that public companies that profit from state
concessions are open to public criticism if it
protects the national interest.
Legal
channels Those court rulings represent a
significant turn of political events. Thaksin and
his affiliated business interests have for the
past five years stifled any conflict-of-interest
allegations through a string of crippling
criminal-defamation charges aimed at critical
academics, activists, politicians and journalists.
Last month, the Constitutional Court
rejected a legal petition submitted by a group of
senators that called for Thaksin's impeachment on
the grounds that he had a conflict of interest in
his family's recent decision to sell their stake
in Shin Corp to Singapore's Temasek Holdings, a
transaction that netted the Shinawatras $1.86
billion.
The senators had claimed to have
compiled credible evidence of Thaksin's complicity
in the sale, even though he legally transferred
his holdings to family members on assuming
political office in 2001. The Constitutional
Court, which controversially in August 2001
overruled a corruption conviction handed down
against Thaksin by the National Counter-Corruption
Commission in 2000, was legally bound by the
constitution at least to consider the senators'
petition.
Opposition politicians, and now
a growing people-power movement, have vigorously
complained about the lack of legal recourse to
pursue corruption allegations against Thaksin and
his ministers. Because Thaksin controls an
overwhelming majority in parliament, though
nationally televised censure debates featuring
corruption allegations have been embarrassing for
his government, they have never been enough to
bring down any of his ministers.
Meanwhile, his government has aggressively
moved to undermine the independence of various
checking and balancing institutions established by
the 1997 constitution through the placement and
promotion of his political allies to agencies' top
posts.
Most recently, opposition
politicians have accused Thaksin's ministers of
manipulating the database of the nominally
independent Election Commission to ensure that
April 2 elections proceed smoothly. The opposition
Democrat Party has strategically boycotted the
polls, which could lead to a constitutional crisis
if every constituency is not represented in a new
parliament.
Auditor general Jaruvan
Maintaka, whom the Senate tried to remove from
office but failed without royal endorsement,
recently told a Bangkok seminar that Thaksin's
government was the most corrupt that Thailand had
ever witnessed. Her office had earlier surveyed
100 different government-tendered
road-construction projects across the country, and
found that not one of them was built to the
original specifications. To date, no politicians
of the ruling Thai Rak Thai party have been
accused of or prosecuted for any wrongdoing in the
suspect infrastructure projects.
Last
year's scandal over the purchase of CTX
explosive-detection devices for the new Bangkok
international airport serves as another case in
point of the lack of legal recourse. Questions
over the pricing of the devices caused a splash in
many Thai newspapers, but the politically charged
allegations against transport minister and Thai
Rak Thai secretary general Suriya Jungrungreangkit
failed to stick after a state-led investigation
into the allegations drew blanks. Thaksin himself
had discussed purchasing the state-of-the-art
devices during a 2005 cabinet meeting, months
before the allegations blew up.
The
Administrative Court's ruling promises to
galvanize new legal charges against Thaksin and
his ministers, opposition politicians say. Sources
close to auditor general Jaruvan, for instance,
say that her investigators have recently uncovered
damning new evidence of government corruption in
the CTX scandal, and her subordinates are now
making back-channel efforts to submit the evidence
to senior US Congresswoman Nancy Pelosi
(discrepancies in the deal were originally
uncovered by US authorities investigating a US
company that sold the devices to Thailand).
The resort to legal, rather than
extra-constitutional, means to oust Thaksin from
office would conceivably reinvigorate Thailand's
battered and bruised democracy, some political
analysts say. The people-power movement that has
rocked Thaksin's government has effectively voiced
concerns about allegations of abuse of power, but
many feel that to salvage the future of Thai
democracy, Thaksin should be brought to justice or
absolved of any guilt through the courts rather
than the streets.
Opposition politicians
have indicated their intention to use legal
channels to probe the opaque finances of Thaksin's
government, as well as his family's business
dealings, should they assume power through an
extra-constitutional intervention led by His
Majesty King Bhumibol Adulyadej. The Thai Rak Thai
party has remained remarkably cohesive throughout
the current political crisis - though the
opposition claims this is because senior party
members fear independent probes into their own
personal accounts.
Some of Thaksin's chief
aides have reportedly made inquiries into taking
up residence in Western countries, including the
United Kingdom, should Thaksin's government
somehow fall unceremoniously from power, according
to a senior Thai senator.
Electric
charges Thaksin's plans for EGAT go to the
heart of the complaints and grievances being
lodged against his controversial style of
governance. On taking office in 2001, Thaksin
sidelined respected technocrat Piyasavati
Amranand, then the head of the state-run National
Energy Planning Office (NEPO).
Under
Piyasavati's watch, NEPO had drawn up extensive
blueprints for breaking up EGAT's monopoly and
moving the power sector toward a price-competitive
power-pool arrangement, which included strict
license-revoking measures to guard against
collusive behavior. That plan, which aimed to
break EGAT into two mutually competitive
producers, had EGAT managers up in arms.
Thaksin immediately scrapped those reform
plans and proceeded with a watered-down
arrangement that would have allowed EGAT to
maintain its monopoly pricing power over the
market. That revision looked good to senior EGAT
managers, but failed to appease its politically
powerful labor union, which feared that a move
toward a more private footing would lead to higher
electricity prices and might lead to staff
reductions. EGAT has more than 29,000 employees,
the most of any Thai state agency.
In a
forerunner to the people-power rallies that are
now bidding to dislodge Thaksin from power, EGAT
staged a series of nationalistic rallies accusing
Thaksin of trying to sell off vital national
assets to foreigners and, just as damning, to the
family members of Thai Rak Thai politicians.
Somsak Kosaisuk, secretary general of the State
Enterprise Labor Union, led EGAT's previous
protests and has since become a core member of the
motley crew represented by the People's Alliance
for Democracy movement.
EGAT's union
arguably had reason to be concerned. In November
2001, Thaksin's government listed a 30% stake in
PTT Pcl, the state oil-and-gas concern that has
monopoly power over fuel distribution in the
country and a guaranteed internal rate of return
of 18%. That allotment sold out in less than one
minute, at the time leaving thousands of queued
retail investors empty-handed.
News
reports at the time indicated that family members
of Thai Rak Thai secretary general Suriya had
received unusually large proportions of PTT's
initial public offering. Since then, PTT's share
price has gone through the roof, skyrocketing
nearly 600% from its initial price of 35 baht per
share to its current market value of about 240
baht.
EGAT's privatization would have
similarly allowed the enterprise to maintain its
state-enterprise status as well as monopoly
control over pricing policies. Bangkok-based
energy analysts predict that EGAT shares would
have similarly skyrocketed from their proposed
initial offering price once the shares were listed
on the open market.
Critics of EGAT's
privatization plan feared that backroom
maneuvering would have determined who received the
lion's share of the allotment, as happened with
the PTT offering. In 2004, in a bid to head off
the EGAT protests, Thaksin publicly acknowledged
"irregularities" surrounding PTT's share offering
and vowed that the EGAT offering would be more
transparent and equitable in its distribution.
With the Supreme Administrative Court
ruling against him, and more conflict-of-interest
charges likely in the legal pipeline, Thaksin may
now wish he had never uttered those words.
Shawn W Crispin is Asia Times
Online’s Southeast Asia editor.
(Copyright 2006 Asia Times Online Ltd. All
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