State Railway Thailand may have found a Bt12-bn loophole in Hopewell debacle

Construction News

State Railway Thailand may have found a Bt12-bn loophole in Hopewell debacle

Fresh evidence in the costly Hopewell-versus State Railway affair of the 1990s has the Office of the Attorney General trying to reopen the vexing case in the Supreme Administrative Court.

New Transport Minister Saksayam Chidchob said on July 26 that his predecessor, Akom Termpittayapaisit, had two weeks earlier granted the Attorney General power of attorney in the Hopewell case on his behalf.

Saksayam said new evidence had emerged that could convince the court to reopen the case and ultimately rule in favour of the State Railway of Thailand (SRT).

If it did, there could be a windfall in the form of a Bt12-billion compensation charge being waived.

Saksayam arrived in office on July 10 vowing to review the matter. “I think if the new evidence gives the government a fighting chance, we might as well fight as hard as we can,” he said.

The Supreme Administrative Court on April 23 upheld an arbitration committee’s ruling in favour of Hong Kong-based Hopewell Co, whose Bt80-billion elevated road-and-train project in Bangkok was scrapped by the government in 1998.

Most of the concrete support structures have remained in place ever since, ghostly reminders of a plan gone wrong, the line never to be completed.

The court ordered the SRT, which had signed a 30-year concession contract with Hopewell (Thailand) Co, to pay Bt11.88 billion in compensation plus 7.5 per cent interest per annum.

The fresh evidence hints at an irregularity on Hopewell’s list of shareholders.

The original contract signed on November 9, 1990, dictated that Hopewell Holding Ltd (Hong Kong) must have shares in Hopewell (Thailand) worth at least 30 per cent of its registered capital throughout the period of the contract.

However, the shareholders list submitted by Hopewell (Thailand) to the Department of Business Development indicates that Hopewell Holding and Gordon Wu, the businessman who pitched the project to the Thai government, were shareholders in Hopewell (Thailand) only until December 6, 1991.

The minutes of a 2005 shareholders’ meeting do not mention Hopewell Holding or Wu as shareholders.

Mauritius-based United Success Ltd, listed as a service provider, was at that time the majority shareholder with 1.49 billion out of 1.5 billion shares.

The latest shareholders’ meeting, held last September 30, showed United Success maintaining the majority, followed by Malaysia-based FSN Consulting Co with 50 million shares. Five individuals of Thai nationality held five shares.

If it could be proved in court that Hopewell violated the terms of the contract, the SRT might not have to pay the Bt12 billion in compensation.

The Office of the Attorney General submitted the argument to the court on July 19 and the court is expected to take 30 days to announce whether the matter will be reopened or that the evidence is rejected.