On being in the network

9 07 2014

Some years ago, academic Duncan McCargo came up with the descriptive notion of a “network monarchy.” By this he meant a “form of governance operating in Thailand” that considered the “political order is characterized by network-based politics. From 1973 to 2001, Thailand’s leading political network was that of the reigning monarch, King Bhumibol.” He adds that this approach means the:

monarch will be presented as the central component of a rather novel mode of governance, best understood in terms of political networks. Thailand’s ‘network monarchy’ is centred on Privy Council President Prem Tinsulanond. Network monarchy is a form of semi-monarchical rule: the Thai King and his allies have forged a modern form of monarchy as a para-political institution.

 McCargo says the:

main features of Thailand’s network monarchy from 1980 to 2001 were as follows: the monarch was the ultimate arbiter of political decisions in times of crisis; the  monarchy was the primary source of national legitimacy; the King acted as a didactic commentator on national issues, helping to set the national agenda, especially through his annual birthday speeches; the monarch intervened actively in political developments, largely by working through proxies such as privy councillors and trusted military figures; and the lead proxy, former army commander and prime minister Prem Tinsulanond, helped determine the nature of coalition governments, and monitored the process of military and other promotions. At heart, network governance of this kind relied on placing the right people (mainly, the right men) in the right jobs.

Academic Serhat Ünaldi took a slightly different tack, talking of “working towards the monarchy” which he says,

refers to actions by individuals or groups who aim at expanding and/or protecting the sacred charisma of the monarchy. In turn, the monarchy’s sacred charisma serves as the most potent source of symbolic capital in Thailand. It legitimises the accumulation of other forms of capital, most notably economic capital, for the benefit of the person or group performing the actions.

So how does the network who deal on the monarchy work? Almost no one, apart from insiders knows, but a small window has just been opened. Bloomberg has a great story by former Sondhi Limthongkul employee William Mellor that sheds some light on the network and the benefits it provides. I t concerns William Heinecke, a billionaire American-turned-Thai businessman who is said to have spent a “lifetime betting on turbulent Thailand” and doing very nicely.William Heinecke

But has it been a bet? Or were there significant supports in place that allowed him to “work towards the monarchy” or even allowed him entry to the fabled network? The very first line in the article sets a reader thinking that this man has the protection he needs, for in his penthouse with “spa, a wine cellar, a marble staircase” he also has “memorabilia that includes a costume worn by Yul Brynner in the Broadway musical The King and I.” The King and I is banned in Thailand. Think of the woman being threatened with lese majeste because she used “long live” the wrong way! Bill’s either got big balls or plenty of support and protection.

It is the latter, for he has repeatedly spoken out in support of royalist Thailand and did so again following the coup. He says the coup and military dictatorship is “like a rebooting of the system,” which is the anti-democrat line from 2006 and 2014. He adds: “The government had come to a standstill. There would have been continued political conflict if the military hadn’t stepped in. Democracy will eventually be returned to the people, as has always happened in the past.” But what kind of “democracy.” As a wealthy businessman, working towards the network, he wants a democracy that preserves his political and economic power and that of the network.

Yes, he’s protecting his business interests which are all services and rely heavily on tourism and consumption, but he’s speaking for and to the network.

Heinecke “surrendered his U.S. passport for Thai citizenship in 1991” and created “a multinational hotel, restaurant and retail empire that has survived five previous military takeovers, the 1997-to-1998 Asian financial crisis, a deadly 2004 tsunami that swept away one of his resorts and bruising corporate skirmishes with foes as powerful as Goldman Sachs Group Inc.”

How did he get started? Here’s the key:

Perhaps no foreign-born investor has made a bigger personal bet on Thailand than Heinecke. As a U.S. diplomat’s son studying at the International School Bangkok in 1967, he resisted parental pressure to return home to enroll at Washington’s Georgetown University.

Instead, at age 17, he borrowed $1,200 and set up an office-cleaning company. By the time he became a Thai citizen, Heinecke had forged business ties with the royal family’s asset managers by leasing crown land on which he built hotels.

“Bill struck me as a go-getter but also as an honest person,” says Usni Pramoj, who heads the office that manages the king’s private property and who signed the first such deal in 1976.

“It was the start of a long and trusting relationship,” Heinecke wrote….

The Crown Property Bureau claims to have supported a 27-year-old American get started. They must have seen remarkable potential. He’s paid them back in bucket loads, and not just with political capital. The story points out:

Since bottoming during the Asian financial crisis in January 1998, Minor stock has soared 50-fold — more than 10 times the return of the SET Index, according to data compiled by Bloomberg. This year as of July 8, it has risen 49 percent compared with a 16 percent gain in the benchmark gauge.

A prime beneficiary of Minor’s surge is Thailand’s King Bhumibol Adulyadej, who owns 2 percent of the company in his own name. Another 4 percent is held by other royal family members and the Crown Property Bureau, the monarchy’s money manager — putting the value of the royal holdings at $227 million.

Remarkably, the story states that a man who “speaks barely 100 words of their language,” managed to pass the Thai-language test to get residence and citizenship. Or maybe he just had a powerful reference. He’s certainly trusted by the CPB:

Just how trusting became clear in 1999, when another of the monarchy’s money managers, the Crown Property Bureau, helped Heinecke thwart Goldman Sachs’s $46 million hostile takeover of Rajadamri Hotel Pcl, owner of the Bangkok property then known as the Regent and since renamed the Four Seasons.

The hotel stands on land owned by the royal family, and Heinecke, who controlled 25 percent of Rajadamri’s shares, rallied the property bureau and other stockholders to his side. Goldman finally ended up with only a 41 percent stake and, in 2003, sold out to Heinecke for $19 million.

“Goldman’s offer was higher than Bill’s, but Bill’s PR machine was better,” Thadani says. “He persuaded other shareholders the hotel was a sacred Thai asset that mustn’t fall into foreign hands.” Edward Naylor, Goldman’s Hong Kong–based spokesman, declined to comment.

Being inside the magic circle in Thailand, be it network or something else, can be very lucrative and rewarding, for both sides.





2 responses

22 05 2016
Two years of military dictatorship | Political Prisoners in Thailand

[…] seems as somehow representative of particular interests. The one we found most revealing was from palace-connected coup supporter and wealthy businessman William Heinecke. It reflects that fact that most royalists […]

22 05 2016
Two years of military dictatorship | Political Prisoners of Thailand

[…] seems as somehow representative of particular interests. The one we found most revealing was from palace-connected coup supporter and wealthy businessman William Heinecke. It reflects that fact that most royalists […]

%d bloggers like this: