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    Southeast Asia
     Mar 25, 2006
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 rights reserved. Please contact us about sales, syndication and republishing .)


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