Saturday, September 30, 2006

The power and politics behind Kularb Kaew

The power and politics behind Kularb Kaew
The first week under the Council for Democratic Reform under Constitutional Monarchy (CDRM) allowed for little public deliberation on the fate of the Shin-Temasek deal that set Thailand's crisis in motion.

Through the newly appointed National Counter Corruption Commission or some other body, however, authorities are certain soon to revisit that deal. Probes must continue into such aspects of the transaction as to whether the Singaporean People's Action Party (PAP) regime's investment company, Temasek Holdings, used nominees in purchasing Shin Corp. But they must not crowd out scrutiny of the underlying regional political dimensions of the transaction, which will remain relevant long after the CDRM relinquishes power and the Shin-Temasek scandal passes.

Perhaps the most significant unrecognised feature of the deal's politics involves the same Kularb Kaew at the centre of the probe into possible use of nominees. In essence, it is the mugging of the Thai political order by Southeast Asian money politics whose scale and stakes make the provincial chao phor and buffet cabinets of the country's pre-1997 politics look quaint.

The clue to understanding it lies in the business activities of the Thai-Malaysian tycoon Surin Upatkoon, aka Lau Khin Koon. Initial focus must fall on one of Surin/Lau's assets: the Malaysian firm MPHB, or Multi-Purpose Holdings Berhad. MPHB operates in financial services, stock-brokering, and gaming. It is no ordinary business concern. Its ownership and activities have long been political matters. MPHB originated in the mid-1970s, when thousands of relatively poor Malaysian Chinese investors pooled resources into a company large enough to take advantage of Malaysia's boom. MPHB's success lifted its chief executive Tan Koon Swan into the presidency of the Malaysian Chinese Association, a core member of the country's long-governing National Front coalition.

In 1985, a scandal involving another Tan firm forced him out of both politics and MPHB. Tan's fall made MPHB defenceless prey for members of Kuala Lumpur's voracious political-business-financial class. Going into receivership, it ended up controlled by interests linked to then-deputy prime minister Anwar Ibrahim.

Anwar's 1998 ouster put MPHB into play again. It fell into the hands of parties close to then-finance minister Daim Zainuddin, a KL wheeler-dealer who took a leading role in former prime minister Mahathir Mohamad's transformation of the Malaysian economy. Embedded in the lucrative cronyism that attended that transformation, Daim remains a major player in regional money politics.

In 2002, as The Nation reported last March, reports of a connection to Daim accompanied Surin/Lau's assumption of control over MPHB, replacing the parties earlier installed. While both Surin/Lau and Daim deny this connection, knowledgeable observers in Kuala Lumpur give the reports credence. They do not believe that Surin/Lau could take over MPHB's profitable four-digit lottery business without political support. (These same observers also claim that, in justifying his right to operate four-digit gaming, the Thai Surin/Lau stresses his Malaysian identity.) They argue that heavy-weight political backing came from Daim, regardless of whether he extended any financial backing to Surin/Lau. To apprecaite the Shin-Temesek scandal requires investigation of Surin/Lau's connection to Daim. It may explain Singapore's reliance on Surin/Lau to secure Thai participation in the deal. It would also clarify the scandal's ominous regional political dimension.

Surin/Lau told the Thai media that he invested in Kularb Kaew after being approached - seemingly out of the blue - by the Wall Street firm Goldman Sachs, which Temasek retained as adviser for the Shin purchase. It is worth recalling the role of the Malaysian Ong brothers in putting the Shin-Tesmasek deal together. Richard Ong serves as a managing director at Goldman Sachs, and Charles Ong is head of overseas investment strategy at Temasek and right-hand man to its executive director and CEO Ho Ching. Goldman could not approach Surin/Lau without authorisation from Temasek. But what might account for Temasek's interest in this mysterious figure? Surely his Thai passport was not enough. The following scenario offers a rough answer to this question.

When Thai investors in Kularb Kaew hesitated, Temasek was stuck. It needed a credible investor with Thai nationality to replace them. The uproar over its Shin purchase might make Temasek despair of finding such an investor among prominent Bangkok businessmen. How grand, then, to enlist a successful and wealthy Kuala Lumpur businessman with Thai citizenship. And how fortunate - if this is what happened - the Singaporeans must have felt when they contacted Surin/Lau and received assurances of his reliability from a man they trusted: Daim Zainuddin.

The strong relationship between Singapore's PAP regime and Daim is unmistakable in the way it is reflected in the writings of that regime's founding strongman, Harry Lee Kuan Yew, father of the current PAP Secretary-General and Singaporean Prime Minister Lee Hsien Loong and father-in-law of Temasek boss and the prime minister's wife, Ho Ching. The second volume of his memoirs, "From Third World to First", abounds with praise for Daim. It describes him as a man "who honoured his commitments", in clear contrast to Lee's view of other Malaysian politicians.

The Singapore establishment's esteem for Daim dates at least to 1990, when negotiations over Malaysian Railway land in Singapore brought the elder Lee and Daim together. Daim struck Lee as a man of talent, seriousness, and good faith. The resulting trust led to Daim and Temasek working together on a number of ventures. Temasek took a large stake in Daim's Alliance Bank in Malaysia, where Daim and the Singaporean colossus also have partnerships in financial services. They are jointly involved in a pair of banks in Indonesia and perhaps in ventures outside the region.

To outline the developments suggested here is to allege nothing illegal. It is to offer a narrative about money and power, not about the law. In this narrative, the question of whether Surin Upatkoon/Lau Khin Koon paid for his share in Kularb Kaew with his own money, with Temasek's, or with someone else's becomes a subsidiary question.

Money and politics rarely come together in transparent fashion. It is always in the interest of transparency's enemies to decry as conspiracy-theorising any attempts to get to the bottom of events. The Shin-Temasek deal appears to involve a group of serious pros in the regional money-and-power game: Daim Zainuddin, Singapore Inc's dominant Lee family and Thaksin and Pojaman Shinawatra.

Southeast Asia has fallen increasingly into the grip of such money-and-power pros, operating from within the region and showing little regard for national boundaries, national politics or even national welfare. Their games hurt ordinary Southeast Asians. These games will continue long after the CDRM returns authority to an elected government. And a failure to understand them means abdicating responsibility for weakening the grip of those who play them.

Uan Na Thap Thiang

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