Temasek Holdings may have gotten away with what seemed like a good buy at that time, paying only THB 73.3 bln (S$3.1 bln) for Thailand's telecommunications conglomerate Shin Corporation.

But the implications of the deal may come back to haunt Temasek.

The Thai military disposed of Shin Corp vendor and Prime Minister, Thaksin Shinawatra, from his post as prime minister last week and they are wasting no time in investigating his dealings.

Paramount on the list would be the sale of Shin Corp to Temasek, which saw Thaksin pocket a tax free capital gain of US$2 bln.

But the only thing is that Thaksin has left the picture and living in a cosy exile in London, not daring to return, lest he too be arrested like the rest of his allies back home.

The ones who would be left to face the music would be Temasek and according to Eric Ellis who wrote for the Sydney Morning Herald "could face fines of up to US$2 bln if its proved, as many suspect, that Thai licensing laws have been breached."

Temasek might well be able to defend itself if this debacle took place in Singapore, but this deal involves the Thais, which is a different kettle of fish altogether.

For its case, Temasek has said that it firmly believes that the deal was perfectly legal.

As Temasek managing director Jimmy Phoon told the Bangkok Post two weeks ago, "From our perspective, we are in compliance with all laws. We have cooperated fully with the Commerce Ministry, and are confident of a satisfactory review."

Temasek, if anything, has always been astute in making investments. However, in this case, the share price of Shin Corp has declined more than 37% and it is already facing a US$2 bln paper loss. Granted, the freefloat is now tiny: only 4% of the company is not owned by Temasek or related shareholders.

But when you consider the problematic nature of this purchase, the business had better deliver the promised cashflow.

Desiree Pakiam