Bangkok Post:12/08/08
The market simply happens to be right
The stock market, my old hunting ground, leapt back past the 700-mark last Thursday on two significant rumours that Thaksin will not be returning to Thailand, and that a group of 90 MPs who previously were hardcore Thai Rak Thai MPs, will cross over from People Power to form a government with the Democrats.
On Friday, the market gave up most of its gains, partly owing to overnight weakness in the US markets but also because there was confirmation that Thaksin had a return ticket he intended to use (though in the end he didn't).
There was also a denial from Suthep Thaugsuban, secretary-general of the Democrat party, that there had been any talks with the ex-TRT group.
The market's reaction was telling clearly the message was it wanted stability and that stability would come from the ex-prime minister being out of the picture and the two main political camps co-habitating.
I have always believed the first to be a necessary condition to a return to normality.
The main signal of Thaksin's demise was, of course, the guilty verdict on the tax dodging case against his wife and her brother. It was not just the ruling but the message that went with it the court effectively said, ``With power comes great responsibility'' and that the prime minister's wife chose to abuse that power.
It was ironic that the Finance Minister subsequently used precisely this quotation to claim that he has nothing against the Bank of Thailand governor, though I thought the fact that he credited the remark to Spider-Man somewhat lessened its gravitas!
The guilty verdict of course was a milestone and the impact is more of a tsunami than a ripple. The Revenue people at the Ministry of Finance are scrambling to avoid additional charges of criminal negligence and are preparing to file a civil case against the officers responsible for allowing the statute of limitations on the tax case to expire. That will not help us retrieve the millions in baht of tax due but it is a dire warning to civil servants not to aid and abet in such cases again.
I came in late to the long campaign by the Democrats to highlight the criminal conspiracy regarding the Potjaman/Bannapot case.
The Democrat motto, originally in Sanskrit, translates as ``Truth Never Dies'' and it was my colleague, Kobsak Sabhavasu, who first highlighted the truth back in 2001.
I vividly recall our feisty Phatthalung MP Nipit Indharasombat grilling the government in 2005 on the same subject whilst I played a small part in the saga in 2006 by writing a part of the best-selling book on this and other irregularities with another colleague, Alongkorn Ponlaboot.
The current Deputy Minister of Finance even responded to my questioning in the House on this issue just a few months ago, saying that it was too late for anything to be done only, as I mentioned earlier, for an internal investigative team to be set up in haste after last week's criminal court ruling. It is, indeed, good to see truth prevail.
Moreover, there are other Shinawatra tax-related cases pending. The most significant being the claim against the two Shinawatra siblings for taxes they should have paid when they acquired SHIN shares from Ample Rich at 1 baht, knowing they would be selling them at 49.25 baht two days later. This is still with the Revenue Department, on appeal.
My father asked me a rhetorical question the day after the Potjaman verdict was read out. He wondered what has become of our society that hundreds of people would hang about outside a courtroom, some on the verge of tears, in support of power-hungry, tax-dodging billionaires. The actual question was not so polite, but it is one we must all address.
So it seems that we are inching closer to the end game I was referring to in my column two weeks ago. The market senses it, too. Political consolidation will occur but just do not expect oil to mix with water, it is not good for the engines not good for the country in the long term.
I believe we are now also beginning to be able to think long-term again, regarding what Thailand and its people needs. A prominent economist at Phatra, Dr Supavhud Saicheua, said in a recent seminar (the same event where our Finance Minister talked about Spider-Man) that what is most important is setting the right priorities. Investors will react positively to signs that the political class will agree and commit to a national agenda on matters such as irrigation, transportation, education and healthcare reform. I would add that we need also to convince the public that this is what would benefit them in the long term.
Free trains and bus rides are important too, but we will get nowhere competing with each other only at that level.
We must also insist on the commitment towards the building of strong institutions. If we can't trust politicians to behave, then we must be assured that the checks and balances are strong. What we must continue to fight against, therefore, is the subsuming of institutions by politicians.
I hate to sound like I'm preaching but, for example, what is of great concern to us at the moment is the relentless assault on the banking and capital markets by the Finance Minister and his circle.
We are resolute in challenging the legality of his appointments of individuals with obvious conflicts of interest to the selection committee for the Board of the Bank of Thailand. We are appalled at the insular and inappropriate appointments as selection committee members for BoT and chairman of the selection committee for the board of the SEC. One in particular was, of course, charged by the NCCC with corruption and separately sued for abuse of power whilst chairman of a government bank. We were incredulous that the SEC board that he selected just a month ago would turn around and in turn appoint him as a director of the Stock Exchange of Thailand. This is spitting in the face of all the corporate governance standards promoted by both agencies and begs the question of why it is necessary for the Finance Minister to install so many unqualified men with questionable legal and ethical standing, to these two critical regulatory bodies?
What I can see is the impact this will have on many key legal cases against the ``old power'' as well as the individuals appointed as directors.
What I will also be on the lookout for is a return to the days of the ramping of political stocks. With potential elections looming after the budget and military reshuffle, all manner of fund-raising begins in earnest.
Citizens, be alert!
Korn Chatikavanij