Tycoon Politics Return to Thailand

With Thailand’s first election since last year’s coup less than two months away, the wild card looks to be Prachai Leophairatana, the man who oversaw Thailand’s biggest corporate bankruptcy and then fought a 10-year battle to get his failed company, once known as Thai Petrochemical Industry, or TPI, back in his grasp.

The long-time businessman is spending millions, if not billions, of baht, on the upcoming election and is borrowing a page from the playbook of deposed Prime Minister Thaksin Shinawatra by promising the world to the poor. He is spreading a message of compassion and government welfare that will “take care of people from the cradle to the grave,” in his words.

So what are his abundant, seemingly unrealistic, promises all about? Many analysts say Prachai simply wants to buy back the company, now known as IRPC, which he founded in 1978. TPI fell into a river of red ink on Prachai’s misguided expansion plans and was the subject of a spectacular battle between the tycoon and national and international creditors who lost as much as US$$3.5 billion.

“Winning back his company is an open secret,” Thitinan Pongsudhirak, a political scientist at Chulalongkorn University, said of Prachai's foray into politics. “That’s the objective and it’s blatant.”

Local news reports say Prachai wants the company returned at 3.3 baht per share – the same price state-run oil firm PTT paid when it took a majority stake two years ago in a court-approved buyout. IRPC shares are now trading for twice that.

But Prachai denies that he wants to buy IRPC. He says he is simply joining the political fray “because everyone else did such a bad job running the country.”

“The TPI matter compared with national interests is very small,” he told a small group of reporters in a wide-ranging interview on Tuesday. “The TPI case is in the courts already…. I have no more debt burden. TPI was robbed by the Thaksin government, but the past is the past.”

In a political world where money equals power, Prachai has suddenly become a force. He is one of the few major money men among the hodgepodge of parties that sit somewhere between the country’s two more prominent political ones: The neo-liberal Democrats and the populist People’s Power Party, which is comprised of loyalists to deposed prime minister Thaksin Shinawatra.

Four parties – Prachai’s Matchimatippatai (Middle Path Democracy), Pua Paendin (For the Motherland), Ruamjai Thai Chat Pattana (United Thai Developing the Nation) and Pracharaj (Citizen) – have sprung up from lawmakers who formerly sat under the giant umbrella of Thaksin’s Thai Rak Thai party, which was dissolved by a military-run court in May.

Prachai has had a hand in the composition of all of them, and is just now starting to take a more overt role as leader of Matchimatippatai after lurking behind the scenes over the past two years.

After finally losing TPI to PTT in July 2005 following nearly a decade of court battles, Prachai started funding anti-Thaksin protests led by outspoken publisher Sondhi Limthongkul. (“I helped a little bit” with funding Sondhi’s protests, Prachai said with a laugh.) The protests peaked after Thaksin’s family sold its stake in Shin Corp to Singapore’s Temasek Holdings for US$2 billion in a largely tax-free deal, which forced the premier to call an early election.

After a court nullified the April 2006 election, the protests never really gained momentum again. On August 3 of that year, Prachai joined veteran politician Sanoh Thienthong, a renowned kingmaker during the time of weak coalition governments in the 1990s, for the launch of the Pracharaj party.

“Originally nobody dared to fight Thaksin,” Prachai said of why he joined up with Sanoh.

But Prachai’s stint as party secretary-general didn’t last long. After the coup, which Prachai says was all “pre-arranged,” he announced he was stepping down from his position in Pracharaj to go back into business, saying that his mission to topple Thaksin had been accomplished.

“At the time, I expected [appointed Prime Minister] Surayud [Chulanont] to do his job properly, but he ran the economy into the ground,” Prachai said.

News reports trickled out that said Surayud resisted calls from Prachai’s allies in the military and the National Legislative Assembly to offer the industrial tycoon his company back at 3.3 baht per share. Prachai said the reports were false: “The government didn’t want to do anything [with IRPC], and I don’t care.”

Neo-Welfare State

Since the election date was announced, Prachai has come back to the political arena in force. In the interview, he spoke bluntly about the tumultuous world of Thai politics and his own aspirations. His own party has laid out an ambitious agenda that makes Thaksin’s populist efforts look meager by comparison. Matchimatippatai plans to offer many things for free, including elementary and secondary education, university, school lunches, uniforms, textbooks, health care and medicine. It also plans to lower taxes – a move Prachai says would widen the tax base and increase state revenues – and immediately increase civil servant wages by 5,000 baht ($143) per month in a bid to stamp out corruption.

“Thaksin’s populism is totally different from my policies,” Prachai said. “Populism is just temporary to get votes while our policy is more long term.”

To pay for the policies, Prachai intends to strip out spending on mass transit projects from the government’s 400 billion baht ($11.76 billion) annual investment budget and amortize the cost over 30 years. This, he says, would free up capital for the government to spend directly on the public.

“Everyone thought of populism, but nobody thought of the welfare state,” he boasted. “Right now we have no welfare state and people are so poor. But we won’t go to the extreme where it creates unemployment.”

“We will be in the government”

Matchimatippatai comprises a unique mix of lawmakers that is typical of fickle post-Thaksin politics. About half of the group comprises members of Somsak Thepsutin’s Matchima faction that used to join with Thaksin, and the other half consists of former members of publisher Sondhi Limthongkul’s People’s Alliance of Democracy that fought against Thaksin.

“Most of our party members are from Thaksin’s party,” Prachai said. “All the grassroots people [in the Northeast] belong to us. We’ve just changed the head.”

The outspoken Prachai still has strong words for both the Democrats and Thaksin. He called former Democrat finance minister Tarrin Nimmanhaeminda a “traitor” for helping to enact tough financial laws after the 1997 crisis, and said Thaksin “tried to nationalize my property and then tried to privatize it to line his own pockets.”

Nonetheless, he said, those past grievances would not prevent him from joining up with the Democrats, PPP or any other party to form the next coalition government. Prachai believed his party could win 120 seats in the 480-seat legislature, putting him in a position to potentially be prime minister in the unlikely scenario that he beats both the Democrats and PPP on December 23. Either way, he plans to join with the winners.

“I don’t want to be in opposition,” Prachai said. “We’ll be in the government…. I will join with the Democrats, Pua Paendin, PPP or anyone else. You can never tell in politics.”

If his party doesn’t win the largest number of votes, Prachai is hoping he can come in second with enough weight to win the finance portfolio. That would put him in charge of the largest shareholder of PTT, which is in turn the largest shareholder in Prachai’s former company.

“I need to be finance minister to push through our policies,” he said.

Not just an ATM

Just as Thaksin did when he formed Thai Rak Thai, Prachai has used cash to quickly form alliances. He freely admits that the election may end up costing him a few billion baht (at least US$58.8 million), but insists he’s not simply an automated teller machine for politicians.

“I will pay for what is proper,” said Prachai, adding that 1.5 million baht (about $44,000) is enough to finance the campaign of one lawmaker.

“Anymore than that they just put in their pocket,” he said, referring to MPs who constantly switch parties looking for the highest payout. “Why should I pay for that? I also love my money. If they don’t like me, I don’t care.”

Prachai, who declined to reveal his net worth, recently terminated his relationship with Pracharaj’s Sanoh after he asked the veteran politician to step down as party leader.

“I asked Sanoh to step down, but he refused,” said the 63-year-old Prachai. “I cannot sell him to the public as the head of the party. I don’t want to invest in someone who I cannot sell.”

At one point, Pua Paendin nearly managed to rope in Pracharaj and Matchimatippatai into one large party, but Prachai said he wouldn’t finance all the members and the potential merger fell through.

Despite saying he would join a coalition with either the Democrats or Pua Paendin, Prachai also took jabs at the rival parties. He called Democrat leader Abhisit Vejjajiva “a young kid” and claimed the party was receiving help from Privy Council President General Prem Tinsulanonda, a former prime minister who commands wide respect among the Thai public.

“The Democrats are controlling the game,” Prachai said. “The unofficial head of the party is Prem Tinsulanonda, who ordered everyone to take care of them.”

Prachai also claimed the military was forcing leading Thai companies to fund the Pua Paendin party.

“Pua Paendin belongs to the military so we cannot afford to merge with them,” Prachai said. “Thai people don’t want military people running the country.”

Sondhi Limthongkul is still a “very good” friend, Prachai said, adding that he now has a good relationship with Somkid Jatusripitak, a key leader in the Ruam Jai Thai Chat Pattana party who headed Thaksin’s economic team when PTT took over TPI.

He even signaled that he could set aside his differences with Thaksin.

“What’s past is past and I look only to the future,” Prachai said. “If we need to fight we will fight, but after the fighting we need to forgive the past.”

“Singapore is the best model”

So what would a Prachai Leophairatana administration look like? In what may come as a surprise given the anti-Singaporean overtones of the anti-Thaksin protests last year, Prachai sees the island nation as an ideal model for Thailand—not unlike the deposed Thaksin.

“Singapore is the best model,” Prachai said. “If we follow that model, Thailand will be a very powerful country.”

“If [Singapore founder] Mr. Lee Kuan Yew could do it, so could Mr. Prachai Leophairatana,” he added.

Prachai hopes higher civil servant wages will lead to an efficient, corruption-free government that is similar to that in Singapore. Meanwhile, his new “welfare state” would increase the standard of living among Thais, he claims.

Human rights workers may be wary not only of Prachai’s fondness of Singapore, but also for how he would deal with the military junta in neighboring Burma that brutally shot down peaceful protestors about a month ago in the largest pro-democracy demonstrations since 1988.

“I don’t want Myanmar to interfere in Thailand’s business,” he said. “Myanmar has some very clever people with wealth. They can solve their own problems.”

The petrochemicals entrepreneur added that Thailand, which receives about a third of the country’s gas from Burma, is not overly dependent on the rogue state.

“Myanmar depends on us because we are the consumer,” Prachai said. “We can cooperate. They are happy and we are also happy.”

Prachai is also against privatization of state enterprises, a stance that’s not surprising given what happened with TPI. In a veiled reference to his former company, he said: “If we are a capitalist country then we have to return private assets to the private sector. We are not a communist country.”

Along those lines, he said his party is not “against foreigners.”

“We’ll encourage foreigners to invest in Thailand but to come clean and not use nominees,” Prachai said. “We’ll try to make everybody happy.”

Indeed, making everyone happy seems to be Prachai’s strategy as he heads into the election. It remains to be seen whether he is simply a paper tiger or if he can muster up enough votes in two months to become a political heavyweight.

“We’ll wait to see which party gets the most votes and then form the government very fast,” Prachai said. “It can be done overnight. Everyone knows each other; everybody should be happy.”