The Commerce Ministry has indefinitely delayed announcing the findings from a six-month inquiry into whether Kularb Kaew Co Ltd - which indirectly owns Shin Corp - is a nominee of Singapore investment giant Temasek Holdings, a source in the ministry said yesterday.

"It's a very complicated legal issue and it needs thorough investigation," the source said.

Commerce Ministry permanent secretary Karun Kittisataporn said he had not yet received a report from the Business Development Department about Kularb Kaew.

But when its investigation was complete, the department would handle the public announcement itself, he said.

The department was initially expected to announce the result of its investigation last month, but postponed it to the end of this week. Its director-general, Orajit Singkalavanich, could not be reached for comment yesterday.

But the source, when asked about reports that the ministry had concluded that Kularb Kaew was a nominee of Temasek, said the issue was so politically sensitive that the department had not dared yet to make its finding public.

Under Article 36 of the Alien Business Act BE 2542, Kularb Kaew's Thai shareholders are liable to jail terms and penalties if it is proved that they act as nominees for a foreign company or foreign investor.

They can also be ordered by a court to sell all their shares, or face penalties of between Bt10,000 and Bt50,000 per day during the violation period.

Kularb Kaew is a core company of Cedar Holdings Co Ltd, which in January this year acquired a 38.6 per cent stake in Shin Corp from the Shinawatra and Damapong families. Following a tender offer, Cedar raised its stake in Shin Corp to 51.98 per cent.

If it is proved that Kularb Kaew is an alien company, Shin Corp will also be considered an alien company.

Among other things, the law says a foreign company cannot own a television station. At present Shin owns 53 per cent of iTV Plc.

A finding that Kularb Kaew is a nominee of Temasek could effectively derail the Singapore company's Bt140-billion buy-out of Shin Corp.

Democrat Party leader Abhisit Vejjajiva has threatened to investigate and pursue Commerce officials if they fail to handle the nominee question surrounding Kularb Kaew appropriately.

"How long will they stall, when the Alien Business Act is there for reference? It is clearly specified in the law. The officials could be charged with malfeasance, for their failure to perform their duty," he told Nation Group editors yesterday.

Thai ownership law prohibits foreigners from holding more than 49 per cent in Shin Corp. Kularb Kaew was an integral part of Temasek's takeover and set up so that Shin would remain a Thai company after the deal. There were claims from the start it was a nominee of the Singapore investment giant because the voting rights of Thai shareholders were limited to 10 per cent, when their combined stake was 51 per cent. Cypress Holdings, on the other hand, had 90 per cent voting rights.

"Kularb Kaew is a Thai company, but its heart is Singaporean," said "25 Questions on the Shin Deal", a book published this year after an investigation into the takeover.

Amid a flood of criticism, Pong Sarasin and Suphadej Poonpipat, who originally held the 51 per cent stake in Kularb Kaew, diluted their shareholdings to just 4.25 per cent. Cypress Holdings' stake was also reduced, to 27.7 per cent. Then, Surin Upatkoon, a Thai businessman who has built a business empire in Malaysia, emerged as the major shareholder in the company, with a 68 per cent stake.

Asked if he represented Temasek, Surin said he had the ability to finance the share purchase himself and he made the investment for long-term gain.

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