Big Deal, Rough Edges

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On Jan. 23 the Singapore government and other investors bought a controlling stake in Thailand's Shin Corp. from the family of Thai Prime Minister Thaksin Shinawatra. The $1.87 billion deal has sparked big protests.

What is Shin Corp.?
It's a conglomerate that owns Thailand's biggest mobile-phone operator and Internet provider. Thaksin ran it until he became Prime Minister in 2001, when he transferred his stake to family members and household employees to comply with a ban on cabinet ministers owning shares in firms deemed to be in the "national interest," like telecoms.

Why was Shin sold?
The Thai press reported that Thaksin's family wanted him to concentrate on politics. Indeed, the sale provides the Prime Minister with a vast war chest should he decide to campaign for a third term. But the motivation could also be commercial: an offer too good to refuse at a time when Thailand's telecom sector is being deregulated and will become more competitive.

Why is the sale drawing flak?
Some Thais are upset that a major utility is now controlled by a foreign entity. Others resent the windfall gained by Thaksin's family, and say minority shareholders have been shortchanged. Local regulators ultimately decided that the purchase of an 11% stake in Shin by Thaksin's son and daughter on the eve of the sale was not insider trading even though they scored huge gains, but also said it was possible his son, Phantongtae, had not properly disclosed his stake in the purchasing firm.

So is Thaksin in trouble?
Legally, no (though his son could face a fine). Politically, maybe. Thaksin and his party were re-elected a year ago in a landslide victory. But his administration has since been on the defensive. Ethnic violence in the country's south continues unabated, opposition rallies are getting bigger, and a corruption scandal involving Bangkok's new airport refuses to go away. The Shin controversy adds to the growing perception that Thaksin's aura of invincibility has dissipated.