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Tuesday, 10 November 2009
Asia Sentinel

Thaksin needles the government and a fugitive financier is returned

The government of Thai Prime Minister Abhisit Vejjajiva and his Democrat Party are being battered by a series of events including the visit to Phnom Penh this week by Thaksin Shinawatra, the leader ousted in a 2006 coup, and a wide-ranging interview that Thaksin gave in Dubai to the Times of London in which, among other things, he accused the Privy Council surrounding King Bhumibol Adulyadej of manipulating the monarch.

Also the extradition of disgraced financier Rakesh Saxena, 57, who had staged the longest battle in Canadian history to avoid being sent back to Thailand to face charges he had helped to embezzle tens of millions of dollars in phony bank loans in 1996, now injects a volatile new set of issues into Thailand's shaky political agenda.

How much damage the political contest has caused is uncertain. Nomura Global Economics reported in late October that: "The Thai economy contracted the most among Asean countries in 2Q09 in year-on-year terms, driven by a decline in exports (-21.8%) and gross fixed capital formation (-10.1%)" and that "political uncertainty has delayed a recovery in consumption and investment."

The Thaksin interview, a long series of self-justifications which can be found here, has outraged government officials at a time when Abhisit is scheduled to be at the Asia-Pacific Economic Cooperation summit in Singapore and meet with US President Barack Obama. It can also be expected to drive the royalists in the People's Alliance for Democracy, which twice brought down governments aligned with Thaksin, into new demonstrations over Thaksin's supposed disloyalty and meddling by Cambodian Prime Minister Hun Sen in Thai affairs by offering Thaksin a position as his "economic adviser."

Saxena arrived last Friday, bundled in blankets in a wheelchair and said to be suffering from a stroke that had partly paralyzed him. He was immediately whisked away to Thailand's Crime Suppression Bureau. Prior to his flight from Thailand, he was said to be close to Newin Chidchob, the Northern Thailand politician whose defection along with those of 16 of his followers from the Thaksin delivered Abhisit Vejjajiva and the Democrat Party to power.

The supporters of the billionaire fugitive Thaksin have been clamoring for Saxena's extradition for months on the theory that bringing him back could put the Democrat-led majority coalition in danger. Along with Newin, several other politicians in his camp, including Suchart Tancharoen and Pairoj Suwanchawee, have been identified as making money from the fraud perpetrated by Saxena. Prior to his extradition from Vancouver, BC, Saxena said he feared for his life. He later said had a full list of the politicians, some now in the cabinet, who were involved in the scandal that sent him in flight. The Democrats have assured the press that he is under 24-hour guard in Bangkok.

For his part, Abhisit has pledged cooperation with the authorities, telling reporters that "Everyone is obliged to supply information even though such information may harm the cliques within the government because we have to uphold the national interest."

Although the Democrats were in opposition and led the censure debate over the Bank of Commerce scandal, the support of Newin's so-called Group of 16 was instrumental in delivering Abhisit and the Democrats to the shaky hold on power that they have enjoyed for the last several months. Many of Newin's allies are now scattered throughout the unwieldy 35-member Thai cabinet.

Over the last week, Cambodian Prime Minister Hun Sen added to the uncertainty by offering to employ Thaksin Shinawatra as an "economics advisor," perhaps in retaliation for PAD anti-Cambodian activity at the Preah Vihear temple since 2008. Both countries have recalled their respective ambassadors over the affair. Despite the political setbacks, the absent Thaksin probably remains the second-most popular figure after the ailing king.

Saxena's return, given his role in the linchpin of the scandal, couldn't be more inconvenient for Abhisit. It was Saxena's role as treasurer advisor to the Bangkok Bank of Commerce, whose collapse with US$3 billion in debt in 1996 was one of the contributing factors to the devaluation of the Thai baht and ultimately the Asian Financial Crisis of 1997-1998. He was charged with looting US$88 million through establishing a series of phony loans through the bank. According to media reports, he and his team identified moribund companies, pumped up their balance sheets while looting the assets and firing staff, then sold them to unsuspecting shareholders. Among the companies targeted as takeover objects were Morakot Industries, Jalaprathan Cement, Semiconductor Venture International and Phoenix Pulp and Paper.

In July of 1995, according to reports, he transferred more than US$80 million out of Thailand in defiance of banking regulations and, shortly after that, followed the money out to Canada.

The financier ultimately washed up in British Columbia, where his extradition hearing was the longest in Canadian history. Even after the presiding judge ruled there were grounds to extradite him, it took the federal justice minister more than three years to order his return to Thailand.

The return of Saxena -- who has been implicated in a series of dubious stock schemes and a counter-coup in Sierra Leone while under house arrest in Vancouver, comes at an extremely sensitive time for Thailand, with Bhumibol increasingly infirm. The 86-year-old monarch last week returned to the public eye after more than a month in hospital, more frail than ever and with the royal succession in doubt although the official line is that he will get the job. The king's son, Vajiralongkorn, is deeply unpopular and it appears that the royal family may be in the hands of a regency run by the queen, Sirikit.

Abhisit, in Singapore this week for the APEC conference, and his Democrats are beset on one side by the pro-Thaksin Red Shirts, who have now formed the Phieu Thai Party, and the anti-Thaksin Yellow Shirts, who are establishing a royalist party of their own, the New Politics Party which was formed in July.

There appears to be considerable behind-the-scenes agitation to pardon Thaksin, perhaps in exchange for his forsaking political activity in exchange for the restoration of his billion-dollar telecommunications fortune. Whatever happens, Saxena's return adds yet another explosive to the volatile mixture that is Thai politics.