Arrest warrant for Surin Upatkoon in Kularb Kaew case
Selective enforcement of Foreign Business Act?
By Jon Fernquest[Introduction|Vocabulary|Article]
[Reading Questions|Answers]
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The latest chapter in the saga of the Foreign Business Act (FBA) that has raged since last year's sale of Shin Corp to Singapore's sovereign wealth fund Temasek Holdings, played out yesterday as an arrest warrant was issued for Surin Upatkoon, the mysterious Thai tycoon who lives in Malaysia.
The arrest warrant was issued after Mr. Surin failed to appear for police questioning regarding his Kularb Kaew shareholdings.
Last September just before the coup, the Bangkok Post featured a detailed article on nominee shareholder structures of various companies in Thailand with large foreign shareholdings.
For further reading, check out Bangkok Post articles over the past two years on Shin Corp Sale to Coup.
Read an interview with Surin Upatkoon on his Kularb Kaew share holdings on August 21, 2006, before the coup last year.
a saga - a long story
Foreign Business Act (FBA) - Thailand's laws governing foreign ownership of businesses in Thailand
Shin Corp - telecommunications corporation sold by Thaksin to Singapore's Temasek (See Wikipedia on Sale of Shin Corp to Temasek Holdings)
a sovereign wealth fund - investment funds that manage a country's national savings, many central banks such as China's in recent years possess foreign reserves from exports massively in excess of needs for liquidity or foreign exchange management, it is widely believed most have diversified hugely into assets other than short term, highly liquid monetary ones (Source: Wikipedia)
Temasek Holdings - Owns and manages the Singapore Government's direct investments, both locally and overseas.
a holding company - a company which holds shares of other companies (doesn't produce anything)
Kularb Kaew - a holding company that held shares of Shin Corp
Reading Questions
Here are some questions to guide your reading (See answers at end):1. What prominent public figure was an arrest warrant issued for yesterday?
2. What is his background? (Outside research required)
3. Was Surin brought in for questioning by the police before the arrest warrant was issued? Why or why not?
4. Who initiated the case against Mr. Surin?
5. How long ago was the case initiated?
6. Who were the suspects named in the case initially and what positions do or did they hold?
7. Why was the Kularb Kaew holding company created, according to Pong Surasin?
8. How much of a stake did Pong Sarasin and Suphadej Poonpipat have in Kularb Kaew initially?
9. After Mr. Pong and Mr. Suphadej sold their stakes, who became the major stakeholder in Kularb Kaew? How much was the stake?
10. Why did the Commerce Ministry hold that Kularb Kaew was a nominee shareholder?
11. Did Pong Sarasin act as a nominee to help Kularb Kaew become a Thai company? (Express your opinion)
12. Why is the case against Mr. Surin an important case?
13. When did the Foreign Business Act first start being enforced?
14. Why was the nominee shareholding investigation broadened to other companies with large foreign shareholdings?
15. Which other foreign held companies were investigated?
16. When was the investigation broadened to these companies?
17. How are the cases against other companies with large foreign shareholdings going? Why? (Express your opinion)
18. How many foreign-Thai joint ventures does the Commerce Ministry believe could be in violation of the Foreign Business Act?
19. How must the Commerce Ministry proceed with the Surin case, if consistent rule of law is to be enforced?
Bangkok Post Article September 26, 2007
Politics leads to selective justice (Editorial)
The Bangkok South Criminal Court yesterday approved an arrest warrant for Surin Upatkoon, a major shareholder in Kularb Kaew. Mr Surin has repeatedly failed to turn up to answer police charges that he violated the Foreign Business Act by holding shares of Kularb Kaew as a nominee for Singapore's Temasek Holdings. Kularb Kaew, of course, is a major shareholder in Shin Corp, which Temasek purchased from the family of deposed prime minister Thaksin Shinawatra in January 2006. By all means, authorities have the right to prosecute anyone who violates the law. But justice is not served when one person is singled out for punishment while hundreds, if not thousands, go free. In this case, the charges against Mr Surin appear more like political retribution than an honest attempt by authorities to dole out justice.When the Commerce Ministry's Business Development Department handed over the Kularb Kaew case to police in October 2006, three suspects were named: Mr Surin, former Shin Corp chairman Pong Sarasin, and Suphadej Poonpipat, executive chairman of Thanachart Capital. It remains uncertain why police did not charge Mr Suphadej and Mr Pong as well.
At the time of the Shin sale back in January 2006, Mr Pong and Mr Suphadej held a combined stake of 51% in Kularb Kaew. Back then, Mr Pong told reporters: "Kularb Kaew was established to make Shin a Thai firm after the transactions, but I'll soon have to sell the stake." It's hard to come to any other conclusion but that Mr Pong admitted to acting as a nominee so Kularb Kaew could become a Thai company - the exact crime Mr Surin stands accused of. Mr Pong and Mr Suphadej, who were both found to have backed their "investments" using loans from the banks involved in the Shin takeover, within several months after the deal diluted their stakes to a combined 4.25% in Kularb Kaew. In March 2006, Mr Surin came on the scene, taking a 68% stake in the holding company. While Mr Surin has always maintained that he is not a nominee, the Commerce Ministry concluded earlier that he was, on the grounds that the proceeds used to buy the stake came through a "mysterious channel".
arrest warrant - official document ordering police to arrest a person
turn up - come to a place (you're expected to come to)
answer police charges - be asked questions about a legal case by the police
justice is not served - not fair or just [Thai: Yuhtitham]
singled out - receive special treatment that others do not receive
a stake - shareholdings, ownership in a company
a nominee, a nominee shareholder -
diluted their stakes - reduced their shareholdings
maintained that - claimed that, stated that
a channel - arrangements for money to be used for something
The Importance of the Case
This case remains highly significant because it strikes at the heart of the debate over the Foreign Business Act. For decades, authorities looked the other way as thousands of companies set up similar legal structures to sidestep the FBA. The law only started to be enforced, however, when Mr Thaksin's opponents sought to push him out of office.
Realising that any decision to punish Kularb Kaew could affect many nominally Thai-owned companies, the Commerce Ministry expanded the investigation to include more than 10 large companies in the days prior to last year's coup. They include hypermarkets Tesco Lotus and Carrefour, as well as mobile phone company DTAC, the main rival to Shin Corp's Advanced Info Service (AIS). DTAC is owned by Norway's Telenor.
significant - important
strikes at the heart of - is extremely relevant to
looked the other way - pretended not to notice that a rule is being broken
nominally - in name only but not actually
Inconsistencies?
Although the case against Mr Surin is moving forward, the cases against the other companies have gone nowhere. Why? Are firms who use legal structures similar to Kularb Kaew's not also in violation of the law? Or does the government know that retroactively enforcing the law by using this interpretation would seriously hurt the economy and Thailand's reputation for doing business?
The government needs to make a choice. Mr Thaksin has been out of Thailand for more than a year and a fresh election is coming in December. There is no more need to make a political point by singling out Mr Surin for punishment. Alternatively, if the police insist on bringing Mr Surin to trial, then serious investigations must occur into each and every one of the 1,200 foreign-Thai joint ventures that the Business Development Department suspects could be in breach of the law. If not, then this case will continue to be cited as further evidence that authorities are applying laws selectively for political purposes, and that does not bode well for the business climate or the country's independent institutions.
retroactively enforcing - people charged with crime before it was a law
reputation - be known or remembered for something good or bad
singling out - when one person in a group is treated in a different way
in breach of the law - broke the law, violated the law
cited as - used as an example of
does not bode well for - indicates a bad future for
business climate - whether people feel good or bad about doing business
Answer Key:
1. What prominent public figure was an arrest warrant issued for yesterday?
Mr. Surin Upatkoon.
2. What is his background?
(Outside research required)
3. Was Surin brought in for questioning by the police before the arrest warrant was issued? Why or why not?
No, he was not brought in. The police requested his presence in the past for questioning but he "failed to turn up" for police questioning in the past, so the police must have requested that he come in voluntarily for questioning.
4. Who initiated the case against Mr. Surin?
Commerce Ministry's Business Development Department initiated the case and handed it over to the police.
5. How long ago was the case initiated?
The case was initiated in October 2006, almost a year ago.
6. Who were the suspects named in the case initially and what positions do or did they hold?
a. Pong Sarasin, Shin Corp Chairman.
b. Suphadej Poonpipat, Executive Chairman of Thanachart Capital.
c. Mr. Surin.
7. Why was the Kularb Kaew holding company created, according to Pong Surasin?
"Kularb Kaew was established to make Shin a Thai firm after the transactions," according to a statement made by Pong Sarasin made in January 2006 ashort time before the Shin sale.
8. How much of a stake did Pong Sarasin and Suphadej Poonpipat have in Kularb Kaew initially?
They had a combined stake of 51% in Kularb Kaew.
9. After Mr. Pong and Mr. Suphadej sold their stakes, who became the major stakeholder in Kularb Kaew? How much was the stake?
Mr. Surin acquired a 68% stake in Kularb Kaew in March 2006, after Mr. Pong and Mr. Suphadej sold their stakes.
10. Why did the Commerce Ministry hold that Kularb Kaew was a nominee shareholder?
Because the money he used to purchase his 68% stake in Kularb Kaew in March 2006 came through "mysterious channels."
11. Did Pong Sarasin act as a nominee to help Kularb Kaew become a Thai company? (Express your opinion)
12. Why is the case against Mr. Surin an important case?
13. When did the Foreign Business Act first start being enforced?
When Thaksin's opponents were trying to puch him out of office and discredit his political legitimacy.
14. Why was the nominee shareholding investigation broadened to other companies with large foreign shareholdings?
Because the Commerce Ministry realised that "any decision to punish Kularb Kaew could affect many nominally Thai-owned companies."
15. Which other foreign held companies were investigated?
a. Tesco Lotus.
b. Carrefour.
c. DTAC owned by Norway's Telenor.
16. When was the investigation broadened to these companies?
In the days prior to last year's coup in September 2006.
17. How are the cases against other companies with large foreign shareholdings going? Why? (Express your opinion)
These cases are not going so well, perhaps because the government believes that "retroactively enforcing the law by using this interpretation would seriously hurt the economy and Thailand's reputation for doing business."
18. How many foreign-Thai joint ventures does the Commerce Ministry believe could be in violation of the Foreign Business Act?
1,200.
19. How must the Commerce Ministry proceed with the Surin case, if consistent rule of law is to be enforced?
It must investigate all the other joint ventures and bring charges against those who violate the Foreign Business Act also.
