THE GHOST OF DEALS PAST: THAKSIN DEFENDS AGAINST

C O N F I D E N T I A L SECTION 01 OF 02 BANGKOK 005229

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E.O. 12958: DECL: 08/24/2016
TAGS: PGOV EINV PHUM TH
SUBJECT: THE GHOST OF DEALS PAST: THAKSIN DEFENDS AGAINST
PERJURY CHARGE FROM FORMER AMERICAN BUSINESS PARTNER

REF: A. BANGKOK 4525


B. BANGKOK 2425

Classified By: Ambassador Ralph L. Boyce reason 1.4 (b) (d)


1. (C) SUMMARY: Prime Minister Thaksin faces charges of
perjury brought by a former American business partner, in
connection with the establishment of the first cable TV
venture in Thailand in 1989. The American has already won
cases in civil court and been exonerated of embezzlement
charges brought about by Thaksin. This seems to demonstrate
that he has a fairly strong case. Preliminary hearings start
September 11, and the court is scheduled to rule October 16
on whether to take the case to trial or not. Thaksin
opponents and sympathizers alike see this case as a serious
threat to the PM. END SUMMARY.


2. (SBU) Thaksin faces yet another serious challenge, as he
will go to court next month to defend against charges of
perjury stemming from an old business deal gone wrong.
Thaksin's latest threat comes from an American businessman
who came to Thailand in 1982 to start up a cable TV business.
As is so often the case, the American ran into difficulties
with the regulatory structure. In September 1985, according
to William Monson, a official at the Mass Communications
Organization of Thailand (MCOT) suggested that he meet
someone "who could get his company the license:" Thaksin
Shinawatra. Thaksin at that time was building up his
business leasing IBM computers to government offices; he had
not yet landed the highly lucrative telecommunications
concessions on which his fortune is based.

BUSINESS DEAL GOES BAD
--------------


3. (SBU) According to Monson, he formed a joint venture with
Thaksin and tried for several years to get the required
license. Monson oversaw the import of necessary equipment.
Although Thaksin at one point wanted to pull out of the
partnership, he showed renewed enthusiasm for the cable TV
venture in early 1989, when the government approved cable TV
in principle. Thaksin made Monson an offer in mid-April of
that year to remain as a consultant while Thaksin would keep
the license and operate the cable TV system. Monson made a
counter-offer to buy Thaksin out. Thaksin said he would
consider the offer. Instead, however, on April 25, 1989
"Thaksin representatives and Police" broke into the offices
and seized the equipment. Monson and some of his Thai staff
were accused of embezzlement; one Thai official of the
company was actually jailed for several days. Thaksin went
on to get the license for IBC, the first major cable TV
provider in the country. Later that year, he got the
concession for paging services; in 1990, he got the cell
phone concession. He was on his way to being a millionaire.
Monson, by his own account, began a very long legal process
to defend himself and gain restitution.


4. (SBU) Polcouns met Monson on August 18, 2006 to discuss
the progress of his case. He explained that he had pursued
his case in both US and Thai courts. A US court in
Washington state eventually determined it did not have
jurisdiction. In the Thai courts, Monson was acquitted of
the embezzlement charges in 1994. Thaksin appealed but lost.
Monson sought damages in civil court against Thaksin in
1995, claiming that Thaksin had lied in his testimony in the
embezzlement case. Monson won that case last year; Thaksin's
appeal is still before the Supreme Court. (According to
Monson, the Supreme Court was supposed to decide the case
last December, but has continued to delay its ruling.) On May
2, Monson filed criminal perjury charges against Thaksin.
Thaksin's defense tried to delay the criminal trial until the
Supreme Court had ruled on the civil case, but court rejected
the request. The court will hold hearings starting on
September 11 to determine whether to accept the case for
trial. It will announce its decision on October 16;
normally, the Court would permit some weeks or even several
months for the two sides to prepare their cases before the
trial starts.


5. (C) Both Thaksin opponents and those sympathetic to him

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have come in recent weeks to see the case as a very serious
threat to the PM. The logic is pretty simple: Monson has
won each time so far that his case had come to trial. Monson
says that his legal team has tried to refine the case to its
most simple terms, to avoid allowing Thaksin's team to
confuse the issue. In 1989, he says, Thaksin told the court
that Monson was an employee of Thaksin's who took actions
with company resources that constituted embezzlement. Monson
says that will prove that he was, in fact a business partner
with significant investment in the company assets. He plans
to bring witnesses from the US who can testify to the
business relationship. He also said that, for the first
time, his Thai employees are prepared to testify.
(Previously, they had been too frightened, he said.)

THAKSIN'S MONSTERS
--------------


6. (C) Monson says that the timing of his case is
fortuitous: looking at the series of cases over the years,
that appears to be true. It could hardly come at a worse
time for the PM, however. The preliminary hearing will
provide a feast of anti-Thaksin reporting in a crucial period
in the run-up to the election. In addition to the actual
perjury charge, there may be other revelations about
Thaksin's business dealings in the mid-1980's that could be
bad press, or even open the doors to further investigation.
A few years ago, we would have predicted that the court would
find a way to duck this problem, perhaps by endlessly
stringing out each phase of the case. But it is Thaksin's
bad luck that the courts are newly invigorated as a result of
the King's charge to them (ref B). One business analyst we
spoke to, sympathetic to the PM, admitted that it doesn't
look good for Thaksin. A series of court decisions have
vindicated Monson; it would be hard for this court to say
that the case does not reach the level of credibility to
warrant a trial. The example of the three election
commissioners, whose swift conviction and brief imprisonment
forced them out of office, will certainly be on everyone's
mind (ref A). Our business analyst source says that the
actual trial might not take very long, since the evidence has
been examined by several courts already.


7. (C) If the court does not take the case, Thaksin's
reputation will take a hit anyway, with weeks of
Thaksin-basing during the pre-trial hearing. Monson is likely
to be a sympathetic protagonist: white-haired and
soft-spoken, formerly married to a Thai woman and with two
children here. He expresses no malice and tells the media
that he still considers Thaksin a friend, but "Thaksin has
created these monsters, and they will eat him."

COMMENT
--------------


8. (C) It's not the crime, it's the cover-up, that gets you.
We cannot assess the legal merits of Monson's perjury
charges, but he's won several times in Thai courts already,
and therefore appears to have a plausible case. Thaksin's
opponents, continuing to look for a way to beat a competitor
they cannot expect to out-poll, have seized on this case as
another stake to put through Thaksin's heart. With so many
threats against him -- party dissolution, investigation into
the Shin Corp sale, factionalism within Thai Rak Thai, maybe
even assassination -- it is ironic that one of his first
really big business successes from 17 years ago has come back
to haunt him at this stage, the most vulnerable point of his
political career.
BOYCE