Temasek factor

Our readers have asked us why there seems to be a sustained interest on the intramurals at the Philippine Racing Club Inc. (PRCI). It will be recalled that this column has, to the best it can, provided updates on the crusade of PRCI’s Filipino minority shareholders for transparency and its legal action against the firm’s majority directors led by nominees of the Kuala Lumpur-based Magnum Holdings Inc.

The Magnum group is allied with some Filipino directors which include Wincorp’s Santiago Cua Sr. known in local Chinese circles as Cua Sing Huan, his son Solomon, Sta. Lucia head honcho Exequiel Robles and former defense chief Renato de Villa.

Recently, the Court of Appeals (CA) junked a petition by the Magnum-Cua group to stop the trial court from hearing the derivative suit filed by the Filipino minority against them.

It will be recalled that the Filipino shareholders have questioned the move of the Magnum-Cua group to swap the title of this property, currently with an estimated value of P10 billion, with shares in a P25-million firm called JTH Davies Holdings.

The Filipino shareholders were alarmed by this move, noting the apparent lopsidedness of the deal. They also questioned the purchase of JTH Davies, the prospective recipient of the P10-billion real estate gift. The firm was allegedly bought for close P400 million at a time when its authorized capitalization was a mere P25 million, and was suffering from heavy losses after it lost its major business assets.

But their real fear is the apparent lack of transparency in the moves of the majority as far as the very core of PRCI’s business is concerned — the racetrack.

There are reports that PRCI majority director Solomon Cua admitted in open court that he did not divulge certain crucial information to the PRCI board regarding the planned purchase of JTH Davies.

Cua also allegedly admitted that he had been planning the purchase since March 2006 and had even commissioned a due diligence report without the inkling of the PRCI Board. 

Tip of the iceberg? What other vital information have been withheld from PRCI investors and shareholders?

The apparent lack of transparency in the moves of the majority directors is said to have been aggravated by the presence of an enigmatic figure in its board, a nominee of the Magnum group named Datuk Surin Upatkoon.

 Surin Upatkoon is the Thai name of the same person whose Chinese soubriquet is Lau Khin Kun. Why he has both a Thai and a Chinese name is currently the subject of speculation in business circles in various parts of Asia. “Datuk” is his Malaysian honorific title.

Surin, therefore, sports the title and name that makes him a major politico-business player in several major Asian economic centers: Kuala Lumpur, Singapore, Thailand, Manila and even perhaps Taiwan.

 Surin’s presence in the PRCI board raised alarm over the possibility that this Thai-Chinese could be the chief cook of the JTH Davies purchase and swap deals.

The fear is not without basis, observers say. Exactly one year ago this month, Surin’s Bangkok-registered firm called Kularb Kaew was reported by Asian newspapers as having been found by the Thai Commerce Ministry as guilty of violating that country’s Foreign Business Act. The case against Surin and his company was forwarded to the Thai police for action.

Reports said the Thai Commerce Ministry found that Surin’s Kularb Kaew breached the law which bans Thai investors from acting as nominees for foreigners who might want to control businesses reserved for Thai nationals alone. 

The “foreigner” in question is Singapore ‘s Temasek Holdings, a powerful firm which controls the investments of the Singaporean government. Temasek, it was discovered, actually owns another firm called Cypress Holdings which in turn controls Surin’s Kularb Kaew.

Kularb Kaew, in turn, was reportedly used by Temasek to buy control into Shin Corp. which owns interests in vital sectors including Thai telecommunication which is reserved for Thai nationals according to their law.

In local business parlance, this “nominee” or “proxy” operation is called “fronting”. “Dummy” is the less genteel term.

Under Thai law, parties acting as nominees to evade the 49-percent foreign shareholding limit face a jail term of up to three years and fines of up to a million baht. The firm could be dissolved in the aftermath of a guilty finding.

The fear in the local business sector is that there could be a “Temasek”-type element in the bid to put the P10-billion Sta. Ana racetrack into the hands of the P25-million JTH Davies.

We do not know if the fear has basis in fact.  But the controversial Surin Upatkoon sits on the PRCI board. And the  locals are said to be alarmed by Surin’s presence. 

The historic Sta. Ana racetrack is one piece of national real estate treasure that they would not want to be “Temasekized”.

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