Updated: Big deals for the Crown Property Bureau

7 10 2017

In a somewhat bland Bangkok Post article it is reported that the “Crown Property Bureau’s shareholding in Siam Commercial Bank (SCB), Thailand’s third-largest bank by assets, has declined by 3.33%…”.

That amounts to about 17 billion baht or more than half a billion dollars.

The CPB remains the bank’s largest shareholder after the transaction on 2 October. There were few other details.

SCB shares fell every day following the transaction in a market that reached a 24 year high.

The Post provided no other detail or any analysis suggesting fear at work.

Sure enough, a Reuters report suggests murky trading. It states that the shares “have been transferred on behalf of King Maha Vajiralongkorn from the Crown Property Bureau…”.

The report adds that the Securities Commission “filing by the Crown Property Bureau did not identify the ultimate beneficiary of the shares, nor did it indicate if any money had been paid for the shares.”

This is an odd “transaction.” It may have been a sale, but we don’t know. (PPT could not locate the announcement at the SCB website or those of the Securities and Exchange Commission or the Securities Exchange of Thailand.)

Reuters states that the CPB confirmed the transaction but declined comment further. An official reportedly said: “It is his majesty’s private affair so I cannot comment further…”.

The SCB also “declined to comment on the transaction in its shares.”

That’s odd for a publicly listed firm and will probably worry some institutional investors. If we were SCB shareholders we’d be very concerned about this lack of transparency. After all, SCB is supposed to be a public company, not a royal plaything.

This isn’t the only recent deal that lacks transparency. Back in late 1994, there was a deal done to buy most of Kempinski, the hotels company. The annual report for that year stated:

It was the SCB that headed up this takeover, with its chairman becoming the chair of Kempinski. When the economic crisis hit, Dusit Thani “sold its share of Kempinski Hotels to its partner, the Siam Commercial Bank…”. Exactly how this was done is unclear as the SCB was struggling at this time.

In a remarkably opaque statement at the Kempinski website, it is stated:

In 2004, the Thailand Crown Property Bureau took over a majority holding in Kempinski AG, which enabled the company to extend its portfolio even further by means of a global expansion strategy and to develop new markets.

How the CPB obtained Kempinski from SCB is unclear. The same site then adds, equally opaquely:

After 13 years, in February 2017, the two existing shareholders formalised previous plans for an equity transfer between them and the majority shares are now held by the existing Bahraini-shareholder while the shareholder from Thailand now owns a minority.

Some say the “equity transfer” was worth one billion Euros. That means about $1.6 billion in two known but opaque deals in 2017. These coincide with the king’s formal expansion of his power over royal loot.

Update: The Nikkei Asian Review states that it is King Vajiralongkorn who “has personally become a major shareholder in Siam Commercial Bank (SCB) following the transfer this week of shares held by the Crown Property Bureau (CPB) valued at about $500 million.” It adds: “report filed with the SEC by the Crown Property Bureau, it was stated that the 3.33% holding had been transferred to King Vajiralongkorn, but there was no indication as to whether there was any payment for the stake.”

The motivation for such a transfer remain unclear.





Updated: Royal wealth and the squeeze on the taxpayer

13 09 2017

Academic Pavin Chachavalpongpun has recently published an op-ed at The Japan Times. “A very wealthy monarch grows wealthier” examines the July “reorganization of the Crown Property Bureau, to pave the way for his [King Vajiralongkorn’s] control of this financial wing of the monarchy.”

Pavin observes that:

The new legislation was approved by the military government of Gen. Prayuth Chan-ocha, which appointed Vajiralongkorn as the sole authority over royal wealth. This dismantled the traditional mechanism put in place by his father … who appointed a government official to manage the crown property. Instead, under the new bill, Vajiralongkorn will set up a board of directors to oversee his assets.

We don’t think this is entirely accurate. It is odd to call the previous arrangement “traditional.” Rather, laws that have been revised a couple of times since 1932 established that the Minister of Finance would chair the CPB (as Pavin later notes). It is that governmental link that has been removed and the CPB made the preserve of the king. Pavin is right to note that:

There are two key characteristics of the legislation. First, the king is entitled to appoint the board members, as well as to remove them, at his discretion. Second, the law prohibits the taking away of royal assets without the king’s approval.

As others have noted, this new arrangement means the “Crown Property Bureau is the corporate arm of the monarchy, performing as the major shareholder of the kingdom’s biggest cement company and one of the largest commercial banks.” It’s also correct that “the most valuable assets owned by the royal family are huge swaths of land, much of it in prime areas in central Bangkok.”

Pavin is also correct to argue that “the financial status of the monarchy [the CPB and private wealth combined] has dominated Thailand’s economic landscape. The super-rich status of the king played a vital part in buttressing the political power of the royal family.” Likewise, it is certainly true that part of the CPB’s business success “derived from special privileges granted to the monarchy in conducting business” without transparency or accountability.

Then there’s the capacity of this fabulously wealthy monarchy to leech off the taxpayer. Not only does the CPB pay no taxes (its listed companies do) but there’s a seemingly bottomless money pit that takes money from the taxpayer and redistributes it to the richest of Thailand’s rich.

The much touted “royal projects” are funded by the taxpayer – thank General Prem Tinsulanonda for that redistribution when he was unelected premier. And then there is the cash spent on the “operations of the Bureau of the Royal Household and the expenses of the monarch and his extended family members,” along with bags of money for “promoting” the monarchy.

Despite the wealth of the Crown Property Bureau, the monarchy is allocated generous funds from the government for private and public expenses. Around $170 million annually in state funding covers the salaries of staff working in the Royal Household Bureau and other palace offices, including protection provided for the royal family by the security forces.

Pavin reckons the “budget for the promotion of the dignity of the monarchy,” was almost $400 million in 2003, increasing to $438 million in 2015.

We looked at the 2016 and 2017 budget years in documents available from the Budget Bureau (Thailand’s Budget In Brief), and we think the figures are striking. In 2016, the amount for “upholding, protecting and preserving the monarchy”under the National Security Strategy, on its own, comes to about $555 million. As can be seen in the attached snip, there’s more in the budget for “unified reconciliation.”

The interesting thing is that when one goes through the budget lines provided it is decidedly unclear if the strategies listed as 2.1 and 2.2 overlap the roughly $340 million for royal projects, royal travel, royal bureaus, royal vanity projects and so on. Given that every ministry and department will spend oodles on royal promotion not covered under the programs above, we are thinking that, in 2016, the monarchy cost Thai taxpayers something like $700-800 million.

How does this look in 2017? The format provided is different, but we located this:It seems highly unlikely that the programs have changed this much. Rather, the changed format is suggestive of covering up the huge amount on “upholding, protecting and preserving the monarchy” in 2016. What we do observe is that the second program has gone up by about 60%. In looking at details of funding to royal projects, royal travel, royal bureaus, royal vanity projects and so on, there has been a 37.8% increase, thanks mainly to the creation of a budget line for the Chulabhorn Research Institute (about $115 million). The total budget in these lines in 2017 was $472 million. We might guess that the total taxpayer bill for all things royal is around $1 billion.

(Correct us if you think we are wrong in our calculations.)

Whatever way you look at it, this fabulously wealthy king and royal family, worth perhaps $50-60 billion, also leeches off the taxpayer to the tune of another $1 billion a year.

Update: Somsak Jeamteerasakul wants to challenge some of the points made by Pavin:

Pavin’s article contains some significant errors or misleading statements, and this post doesn’t correct them, even repeats them. For instance. it’s not “right to note” the “two characteristics” of the new legislation. Those two were already there in the previous law. In fact, the second ”characteristic” is quite misleading to put it that way, both in the case of the previous law (article 7 which was more suit to describe as Pavin does, but still isn’t entirely apt) and the new law (article 8 last para., which doesn’t really mean what Pavin says; it is not about [others] ‘taking away’ royal assets at all, just saying that the king-appointed committee couldn’t sell or make any transaction of the asset without his formal approval). Pavin was also wrong to say the late king “appointed a government official to manage the crown property”. The next sentence is also mistaken: “instead, the – no, it’s not something King X does ‘instead’; his father also did. Pavin was wrong again to say “Under King Bhumibol, the board of directors for the royal assets answered to the finance minister.” In both the letters of the old law (read carefully article 4, nothing about ‘answered to’ at all) and in practice (for 70 years, finance ministers of all successive governments did have any say in the management of the CPB). In consequence and in this context, Pavin’s next sentence is also incorrect: “NOW, it is independent of the government.” It isn’t “now” that the CPB is ‘independent of the government.’; it had always been since 1948.

As we said above, there were some problems with Pavin’s characterization of the new law, but Somsak is rather picky on this stuff, being immersed in the detail. We don’t believe that Pavin states that the “two characteristics” are new in the new law. Somsak prefers a very careful reading, and that’s fine. We pretty much agree with his other points.

However, we were more interested in taxpayer funding to the monarchy. As we said above, we are keen to know if our calculations are wonky.





CPB and more shopping

24 08 2017

A major reshaping of Bangkok’s Lumpini area is planned. The Crown Property Bureau is about to make another fortune. Yukako Ono reports on this at the Nikkei Asian Review.

The CPB has made several prime pieces of real estate available for large major urban redevelopment projects.

The biggest of these is with the TCC Group, “the family-owned conglomerate known for brewery subsidiary Thai Beverage,” owned by Sino-Thai tycoon and heavy investor in royal futures, Charoen Sirivadhanabhakdi and his family.

The CPB is leasing land to TCC for up to six decades for its One Bangkok project, “the nation’s largest-ever private redevelopment project, valued at 120 billion baht ($3.6 billion).” Ono says this “vast mixed-use complex will cover 167,000 sq. meters along Witthayu Road, an area home to Japanese, U.S. and British embassies as well as luxury hotels. That prime location drew redevelopment proposals from 21 bidders.” It will include “[f]ive office buildings, five hotels, three condominiums and a shopping mall will take over the location, which used to field a Thai boxing stadium and a night market.”

Part of this land is an area that was an area that was taken from the royals after 1932 but returned to them at an undisclosed time.

Up the road, “hotel operator Dusit International has joined hands with Central Pattana, a property development unit of retail giant Central Group, to close the … Dusit Thani … hotel and replace it with a 36.7 billion-baht mixed-use project that is to include a new Dusit hotel and shopping mall. In extending its property bureau [CPB] lease for the land, Dusit was able to gain an additional 8,000 sq. meters of real estate.”

The property bureau [CPB] itself is participating in the redevelopment boom through fully owned subsidiary Siam Sindhorn. Its first project, an 89,600-sq.-meter hybrid facility, is set for full completion in 2019.

Siam Sindhorn opened a condo at the site earlier this year, which the company says contains interior furnishings and utilities from across the globe. A 30-year lease commands an average of 240,000 baht per square meter, about twice the average going rate for Bangkok’s city center. Siam Sindhorn has begun marketing the development to investors in China, Japan and Western nations.

More upscale shopping, more luxury condos, more luxury hotels. Remember the CPB propaganda about helping small shophouse owners?





Updated: Royalism undermines popular sovereignty

14 08 2017

Everyone knows that the prince, now king, began his purges of the palace from late 2014, when he “divorced” Srirasmi. Dozens of her family and associates were jailed. Then there were the clearances that saw “unreliables” ditched, deaths in custody, lese majeste jailings and the use of a personal jail. Some fearful palace associates, now out of favor, fled the country.

This was followed by an aggregation of control to the palace. The constitution was secretly changed to accord with the king’s desires and then secret meetings of the puppet assembly gave him control over formerly state bureaucratic departments and the vast wealth of the Crown Property Bureau to the king.

Has he finished? Probably not. Fear and favor mean that an erratic king will lose interest in some people and some things and will need to be rid of them. Then he’ll desire control over other people and things.

But one of the other things that is noticeable is the “normalization” of the reign, as if nothing has changed or that the changes made are in line with the normal activities of the king and palace. Yet even this “normalization” has been a process of promoting a heightened royalism.

The media has been used recently to promote royalism. The excuse has been the queen’s 85th birthday, with a series of “stories” about “people nationwide” celebrating her birthday. Many of the photos showed military men and bureaucrats doing the celebrating.

The Dictator was especially prominent, leading the junta in an alms-giving exercise for 851 monks at the Royal Plaza, claiming it was also a tribute to the dead monarch.

More specific propaganda pieces have dwelt on “merit” and filial piety. For example, the Bangkok Post has run pictures of the king, his mother and Princess Sirindhorn making merit together.

Other royal stories include a donation to of 100 million baht to Siriraj Hospital, with the king thanking the hospital for taking care of his father. The money is said to have “come from revenue from selling his diaries featuring his drawings…”.

While we might doubt that so much money can be made from the sale of a collection of childish drawings, the junta’s support for the king has been strong and maybe it bought many diaries and distributed them.

But back to deepening royalism. The Nation reports on a “revival” of Kukrit Pramoj’s restorationist story “Four Reigns.” Kukrit was an incessant promoter of royalism, ideologue for the dictatorial General Sarit Thanarat, booster for King Bhumibol and diplomat for royalism translated for foreigners.

The Four Reigns is now Six Reigns. According to The Nation, the “restaging of Thailand’s most commercially successful musical play is more pro-absolute monarchy than ever.”

The play opens with the scene in which the spirit of Mae Phloi starts to recount her life story and confirm her unwavering love for “kings”, and the background is the familiar image of people gathering outside the wall of the Grand Palace paying respect to the late King Bhumibol.

And with the last scene showing Thai people paying respect to King Vajiralongkorn, the play now covers six, not four, reigns.

Clearly, the play … tries, more clearly than the original novel, to prove … that Thailand was much better before 1932 than after. This outdated attitude doesn’t sit too well in 2017 Thailand, as we try to build our political system from “military junta under a constitutional monarchy” to “unitary parliamentary constitutional monarchy”, a kind of democracy that is already difficult to explain to our friends from many countries.

This royalism can only deepen as the cremation of the dead king approaches and as Vajiralongkorn and the junta further embed his reign and undermine notions of popular sovereignty.

Update: The new king is the old king propaganda continues, with two stories at The Nation of the king’s donations to 300 flood victims and 39 students in the south. We should add that there is no evidence provided of where the funds come from. Like royal projects, it may be that “donations” are all taxpayer funded.





Catching up on the monarchy

8 08 2017

PPT has been posting regularly and yet we have not been able to post on all the stories in the media we’ve found interesting on or related to Thailand’s most feudal of institutions. Thus, this post is a catch-up. We will list several of these stories, from the past week or so, with little comment and just a quote of interest from each one:

Thai dissident’s lonely fight to keep history alive

Carrying a bucket of cement and a heavy bronze plaque, Ekachai Hongkangwan set out across Bangkok’s heavily-policed Royal Plaza in late June to perform a solo act of D-I-Y dissent.

But the 42-year-old was quickly bundled into a police van before he could lay down the metal disc – an exact replica of a monument that was mysteriously removed in April, sparking fears officials were trying to whitewash history.

The attempted restoration was a dangerous and rare act of subversion in a country smothered by an arch-royalist military and where criticism of the monarchy is being purged at an unprecedented rate.

Silencing dissent: digital capitalism, the military junta and Thailand’s permanent state of exception (we are not exactly sure how an exception becomes permanent)

In the last three years of military rule in Thailand, arrests and prosecutions for defamation, sedition and offences under the Computer Crimes Act have soared. Human rights advocates, democracy campaigners and ordinary citizens have been threatened, harassed and detained in military camps. The junta have sought to silence public discourse on every conceivable aspect of their rule. Global social media platforms are ground zero in this repression, and each month citizens are arrested and detained for what they post, share and like on Facebook.

Thai King’s Birthday Celebrations Mark Consolidation of Power

Thailand to celebrate birthday of assertive new King

The new monarch has shaken up the palace. A law quietly passed in April by Thailand’s interim assembly allowed him to consolidate control over five agencies which handle palace affairs and security. These agencies, which previously reported to the prime minister and defence ministry, remain funded by the state, but need not return revenue to the treasury.

A Straits Times examination of over 100 notices published on the Royal Gazette website since January shows the palace has promoted over 200 employees, removed or demoted over a dozen, as well as appointed over 100 more – many of them senior government servants.

All these moves have taken place amid tighter enforcement of Thailand’s lese majeste law, under which individuals have been jailed not just for insulting or defaming royalty, but also for trying to profit from their connections to the palace. Open discussion about the king, already constrained under the previous reign, has withered.

King Maha Vajiralongkorn expands his territory – but at what cost?

Change is afoot in Thailand. Amidst continued instability and uncertainty, King … Vajiralongkorn asserts more control. This move puts the ruling military junta in check.

The king now has full control of the agency that manages the holdings of the monarchy. Details about the Crown Property Bureau (CPB) are shrouded in secrecy. But it is worth at least US$30 billion thanks to significant holdings and investments, estimates suggested.

The Frontlines of Cyber Repression: Thailand and the Crop Top King

This post is the first of many in which we will begin the process of documenting the digital frontlines of cyber repression. By building better awareness about cyber repression, we hope this blog series will help illustrate current examples from across a wide spectrum of states and highlight actions being taken to push back on repression.

Trial of Yingluck sparks deeper crisis for Thailand

Why must she be eliminated at this point in time? The political elites are increasingly concerned about their position of power now that King Bhumibol Adulyadej, who passed away last October, is no longer on the political scene. Under Bhumibol, their political interests were firmly secured through the monarchy network, which had dominated political life for decades. Without Bhumibol, Thailand has moved into an uncertain phase under the new controversial king, Vajiralongkorn. Those political elites fear that the Shinawatras might exploit political uncertainties to regain power.





All that money and the Crown Property Bureau

28 07 2017

No one who has decided that monarchy matters in Thailand will be happy about the headline recently at the ASEAN Economist: “Clown king nears crisis point.”

Taylor McDonald’s piece uses material from Andrew MacGregor Marshall, now described as a “veteran observer of the Thai monarchy,” and apparently drawn from a recent BBC interview. Marshall, who previously argued that there was a succession crisis in Thailand, is cited in this report as declaring that “the situation was becoming increasingly unsustainable.” He is quoted as believing that as “details of the king’s lifestyle spread, the kingdom was approaching a ‘crisis point’…”.

We are not sure that there is any more crisis now than over the last decade or so, although Marshall’s account of the king’s cruelty, womanizing and his grab for power while re-feudalizing the palace are all undoubted, we have yet to see “crisis.” Some speculate that the crisis comes after the previous king is cremated.The article makes this point:

How much longer Thailand’s inflexible generals will tolerate Vajiralongkorn as their head of state will have to be seen. He will no doubt go down, along with the Emperor Caligula, as a key case study used by republicans arguing against constitutional monarchy.

While we may hope that this king gets the boot, the fact is that the deep political change needed in Thailand – an end to the monarchy – remains unlikely. That’s our speculation.

But to the point of this post. What caught PPT’s attention in the article were comments about the Crown Property Bureau.

The article states: “A close aide of Thailand’s King … Vajiralongkorn was this month named head of the agency which manages the monarchy’s vast holdings after legal changes giving the king total control of the Crown Property Bureau.”

About a week or so ago, secretly considered changes to the law governing the CPB were announced, giving the king absolute command over it. That change, the article notes, mean it is no longer possible for royalist regimes to claim the CPB is not the king’s but held “in trust for the nation.”

The CPB website continues to allow the download of a chapter on crown property in the palace-approved book King Bhumibol Adulyadej. A Life’s Work, which begins the chapter this way:

Since 1936, the law has made a clear distinction between property that belongs to the king as a person and that which belongs to the crown as an institution. The Crown Property Bureau (CPB) exists to manage the property of the crown. This property does not belong to the king in his private capacity, but to the monarchy as an institution which continues from reign to reign. This rather special category of property arose when an absolute monarchy, under which the king was lord over his realm and everything in it, both people and property, evolved into a constitutional monarchy that exists within a vibrant globalised economy.

By legal definition, the CPB is a juristic person. It is not part of the palace administration, nor is it a government agency, nor is it a private firm. It is a unique institution. It is also a rather mysterious institution.

The distinction between crown and person is now removed by the changes made by the military junta, responding to the king’s demand.

A later part of the chapter is about The Crown Property Act of 1948 which:

… reconstituted the CPB as a juristic person, independent of government and not placed under any ministry. The minister of finance remained as the ex-officio chairman of the CPB board. Other board members were to be appointed by the king. One of these would hold the post of director-general of the CPB and have full executive power.

That was also changed a couple of weeks ago. Now the king has control of the CPB. As the article states, this change “removes any pretence that the assets are for anything other than the private use of the eccentric king.”

Air Chief Marshal Satitpong Sukvimol is now the “chair the bureau, a role which was previously held by the finance minister.” The report states that “Satitpong is Vajiralongkorn’s long-serving private secretary and was put in charge of the king’s private property in January.” The linking of the king’s private property and that of the crown, long a fiction in reality but maintained in law, is now gone, giving Vajiralongkorn control over a vast economic empire. PPT estimates that the CPB controls assets of about $55-60 billion and his personal property is likely to be at least another $10 billion.

The changes at the CPB go further, with the king putting other trusted favorites on its board. The table below shows the board before and after the change. THe sources are the 2016 Annual Report by the CPB (it can be downloaded) and the Thai version of the CPB’s webpage on the Board of Directors:

As can be seen, those added are all former or current military and police officers, all of whom have been close to the prince-now-king and have seen promotions under his new reign.

We can return to Marshall’s comments. He says that the king “seems determined to reassert the rule of monarchy and he doesn’t want all these rules and regulations … he wants everyone to know that he controls the money…”. He’s got that. He also notes that the “king is notoriously spendthrift.” That’s true and he now has a huge pile of loot to use.

We recall that the monarchy and state were almost bankrupted when King Vajiravudh governed through cronies and was spendthrift. It remains to be seen whether Vajiralongkorn will cause the same level of disquiet that was seen under Vajiravudh and which inexorably led to the 1932 Revolution.





A feudal king

26 07 2017

One of the themes of the new reign has been the accumulation of power to the king. Since his December 2016 accession, King Vajiralongkorn has managed a rapid unwinding of arrangements regarding the relationship between crown and state that were put in place following the 1932 Revolution.

That process has seen constitutional change demanded and received, control of formerly state offices associated with the palace handed over to the king and the king gain unfettered control of the Crown Property Bureau and its great wealth.

It has also seen a large reorganization of palace staff as Vajiralongkorn purged masses of people including many formerly considered close to him. These purges seemed to begin with his third wife, Srirasmi.

A further step in the king’s massing of wealth and power in his palace has been a refeudalization of the king’s relations with those in the palace. The most recent example of this has been revealed by exiled historian Somsak Jeamteerasakul. He shows that at least 11 women have been royally granted the family สิริวชิรภักดิ์ /Sirivajirabhakdi.

This royal attention to young women seems to indicate that a return to 19th century  concubinage and a royal harem will be another retrogression introduced in this reign.