Trouble ahead
December 4, 2007
Latest news (11:50 a.m.): Prachai Leophairatana announced his resignation from Matchimathipataya party on Tuesday, a day after he was found guilty of manipulating shares in TPI Polene Plc (TPIPL).Latest latest news: Mr Prachai has changed his mind and he says he will remain party leader.
Photo: Matchimathipataya leader Prachai
Leophairatana thanks his supporters before leaving the Criminal Court
after he was granted bail yesterday. Prachai was found guilty of
manipulating shares in TPI Polene Plc. He was sentenced to three years
in jail. SURAPHOL PROMSAKA NA SAKOLNAKORNFirst let's get organised. This is a rather long story, but it does have several parts to it, making it easier to read and understand. Since Prachai Leophairatana is the leader of Matchimathipataya, a party that has fielded candidates throughout the country in the upcoming election, the story begins by focusing on what yesterday's guilty verdict means to Mr Prachai's political future. In brief, he is no longer able to be a cabinet member, but he can be an MP and he can continue to lead his party. Read the first part of the story carefully to find out why.
The second part of the story details why Mr Prachai, his company TPI Polene Plc (TPIPL) and his business associates were taken to court. The charges stem from an attempt to sell shares in TPIPL to the public for the first time – an initial public offering or "IPO". Stock exchange authorities have very strict rules about how this is done. They want to be sure that investors have accurate information about the company offering its shares for sale. Otherwise, investors can quickly lose confidence in the stock market as a whole and take their money elsewhere.
Look carefully at the details given in this part of the story. Does it appear that investors were given the information they needed? Or does it appear that those involved with the company improperly gave out information that may have made company shares seem more attractive than they really were? (Note: Yesterday at the Stock Exchange of Thailand, shares of TPIPL ended at 13.20 baht – see today's business section, page 6, construction materials)
The third part of the story begins by explaining why the court deemed the actions of the defendants in the case to be illegal. It then describes the sentences they received. Are they going straight to jail? What is going to happen next? The story ends with comments from two members of Matchimathipataya who have differing opinions on how the verdict will affect the party.
Common sense tells us that this is very bad news politically for both Mr Prachai and his party. Watch to see how Matchimathipataya members react today. Watch also to see if Mr Prachai continues to give money to party members. Finally, watch the opinion polls to see if the popularity of the party falls.
granted bail – allowed to go free before a trial (in this case an appeal, i.e., a formal request that a decision by a lower court be changed, is considered by an appeals court) after putting up a sum of money with the court อนุญาตให้ประกันตัว
found guilty – decided by a court of law that someone committed a crime ตัดสินว่ามีความผิดจริง
manipulating shares – improperly and illegally influencing the price of a company's shares ปั่นหุ้น
verdict – a decision by a court of law คำตัดสิน พิพากษา
cabinet – the group of government ministers who oversee ministries and who make or approve government policy คณะรัฐมนตรี
stem from – came from; were caused by เกิดมาจาก ที่สาเหตุมาจาก
stock exchange – a place where people buy and sell shares in companies ตลาดหลักทรัพย์ หรือตลาดหุ้น
deemed – considered เชื่อว่า เข้าใจว่า ถือว่า
defendants – people who have been accused of a crime and are on trial
sentence – a punishment given by a court of law
common sense – the ability to use good judgment and make sensible decisions ความรู้ทั่วไป ความเข้าใจดี
Prachai guilty in shares case
TPI founder cannot hold a cabinet postPOST REPORTERS
Matchimathipataya party leader Prachai Leophairatana has lost the chance of taking any cabinet post after the election.
This is because he was sentenced to three years in jail by the Criminal Court yesterday over the manipulation of TPI Polene Plc’s (TPIPL) share price, Election Commissioner Praphan Naikowit said.
He said Prachai could be an MP if elected after the poll, but will be barred from being appointed as a cabinet minister in the next government as Article 182 of the constitution stipulates that people sentenced to a jail term cannot be a minister, regardless of whether the penalty is suspended or not.
Mr Praphan said Prachai, the founder of Thai Petrochemical Industry (TPI), was still qualified to run as a candidate in the Dec 23 general election and could engage in political activities as the court had granted him bail.
If he was elected to the House, he would be allowed to fight the case in higher courts while serving as an MP, Mr Praphan said.
Article 102 stipulates that a candidate will be disqualified when the case is settled in the Supreme Court and he is found guilty and eventually put in jail, Mr Praphan said.
The Criminal Court yesterday handed down a guilty verdict, sentencing Prachai to three years in jail and fining TPIPL 6.9 billion baht for share price manipulation. TPIPL is a subsidiary of TPI.
The prosecution for special litigation named TPIPL, Prachai as TPI’s rehabilitation plan administrator, Stern Stewart (Thailand) and Chianchuang Kalayanamitr, Stern Stewart’s executive, as defendants.
founder – someone who starts an organisation, a school, a business, or community
barred – officially not allowed to do something
stipulate – to say specifically what is allowed or what is necessary
suspended – (of a sentence) not carried out as long a person does not commit another crime within a certain period of time
engage in – to take part in
disqualified – not allowed to do something because of having done something wrong
settled – decided
eventually – at the end of a process or period of time
fining – making someone pay an amount of money as a punishment for breaking the law
subsidiary – a company that is owned by a larger company
litigation – the process of taking a case to a law court so that an official decision can be made; the use of the legal system to settle a disagreement
rehabilitation plan – a plan for bringing a financially troubled company back to a healthy condition
Before offering shares to the public, companies must file a registration statement detailing the planned floating of their shares and a draft prospectus to the SEC to give investors enough time to study such information, according to SEC regulations.
The court said that TPIPL submitted its first filing on Oct 3, 2001, but this lacked enough information regarding its financial status.
On Oct 3 the following year, TPIPL, which is the country’s third-largest cement producer, filed a second statement detailing a plan to float shares worth 714 million baht at 14 baht each to raise the money required under its debt restructuring plan and to buy cement manufacturing machinery, the court said.
However, the company cancelled the second filing as TPIPL’s share offering failed to draw enough subscribers to buy up all of them.
On Sept 30, 2003, the company submitted its third filing to the SEC, with an offering of 300 million shares for sale.
The SEC approved the shares and scheduled Jan 22, 2004, for the enforcement of its prospectus.
However, before the shares were issued to the public, TPIPL hired Kith & Kin Communication Co to publicise the information on the share sale on Sept 16, 2003, the court said.
The court said that on Oct 6, 2003, TPIPL hired Stern Stewart to conduct a corporate valuation for the company.
Stern Stewart reported that after the deduction of its liabilities, TPIPL’s estimated value of 91.3 billion baht was reduced to about 44 billion baht, representing a proper share price of 89 baht per share.
Kith & Kin was tasked with disseminating the information to the public through the media.
floating – selling shares on the stock market for the first time
prospectus – a document providing details about a business to people who are interested in investing in it
financial status – financial condition สถานภาพทางการเงิน
debt restructuring plan – a plan for repaying debts (especially debts that haven’t been repaid on schedule) that is changed from the original plan in order to make it easier or more possible to do so โครงการปรับโครงสร้างหนี้
subscribers – people who pay money in order to receive something
enforcement – the process of making sure that something happens, especially that people obey a rule or law การบังคับใช้
publicise – to make known to the public; to publish or broadcast information about someone or something ตีพิมพ์ หรือ เผยแพร่สู่สาธารณะชน
deduction – an amount or number taken away from a total, i.e., reducing a the total amount or number การลดจำนวนลง
liabilities – the amount of money a company owes ภาระหนี้ของบริษัท
tasked with – given the responsibility for doing มอบหมายให้
disseminating – making something (e.g., information or knowledge) available to a lot of people
The court ruled that the four defendants had breached the Securities Act and the Criminal Code.
Prachai and Chianchuang were sentenced to three years in jail each and TPIPL and Stern Stewart were fined 6.9 billion baht each. The defendants had caused extensive damage to the economy and therefore their penalties would not be suspended, the court said.
Prachai and Chianchuang were later freed on bail of 300,000 baht each.
After leaving the courtroom, Prachai said he would appeal against the sentence to the higher courts.
‘‘It is predictable I have to come under pressure because people of the old power group are still wielding influence,’’ said Prachai.
The court’s decision is likely to deal a blow to the Matchimathipataya party.
Maleerat Kaewka, a candidate for the party, said Prachai’s misfortune could spell trouble for election campaign funding for party candidates.
If its leader eventually lost the case in higher courts, he must pay a hefty fine of 6.9 billion baht. Many candidates had yet to receive campaign funding.
However, Anongwan Thepsuthin, the party’s secretary-general, insisted that the verdict against Prachai would not hurt the party.
The TPIPL case and the party’s political activities should be treated separately, she said, adding that Prachai would remain as the party leader.
witnesses – people who tell a court about what they know of a crime พยานในศาล
testified – made a statement about something that you saw, know or experienced, usually in a court of law ให้การ ใ้ห้ปากคำต่อศาล
due diligence – a detailed examination of all aspects of a company made for those who are considering buying the company or some of its shares
breached – broke a law, rule or agreement ละเมิดกฏหมาย
criminal code – a system of laws dealing with the punishment of crimes ประมวลกฎหมายอาญา
predictable – happening in the way you would expect ทำนายได้ คาดได้
wielding – having and being able to use power or influence ใช้อำนาจชี้นำ หรือชักจูง
deal a blow – causing damage, especially reducing your chances of success สร้างความเสียหาย ทำลายโอกาส
misfortune – something harmful or unpleasant that happens to someone; bad luck โชคร้าย
spell – to show that something is going to happen, usually something bad ร่ายมนตร์ คาถา สาบให้เกิดโชคร้าย
funding – money that is provided for a particular purpose ให้เงินสนับสนุน ให้ทุน
hefty – very large มหาศาล