PM Thaksin's prospects look much brighter

By Nopporn Wong-Anan

BANGKOK (Reuters): Thai Prime Minister Thaksin Shinawatra's chances of surviving a graft case and holding on to his job are looking much brighter.

Even if the Constitutional Court rules against him and he is forced from office, Thaksin is widely expected to influence policy from behind the scenes.

But while the financial markets have firmed at the prospect of continuity, the court is left with a delicate choice in a case that spotlights the independence of the country's institutions.

"The court is on the horns of a dilemma -- either way it rules, it can't please everyone," said Noppadon Kannika, chief pollster at Bangkok's Assumption University.

"Despite repeated assurance that the court won't be influenced by public opinion, they must bear in mind the strong popularity of the prime minister," he added.

The court is considering a ruling by the National Counter Corruption Commission (NCCC) that Thaksin failed to declare some of his wealth when he was a deputy premier in the 1990s.

Thaksin denies any wrongdoing and says he is confident of being cleared, but if the court rules against him he would be banned from political office for five years.

Analysts say he scored a courtroom victory this week when the Department of Revenue -- overseen by a minister from his Thai Rak Thai Party -- declared Thaksin and his wife Potjaman did not commit any tax evasion by transferring assets to nominees.

The NCCC says Thaksin transferred billions of baht in shares to family members and domestic staff -- including maids, a chauffeur and a security guard -- to evade tax and conceal illegal stock price manipulation.

The Department of Revenue said on Monday that five nominees who received share transfers from Thaksin's wife Potjaman paid all withholding taxes on revenues from share dividends.

"The ruling has weakened the accusation that Thaksin deliberately concealed his assets for tax evasion reasons or stock manipulation," Sommai Paritchart, senior editor at the Thai-language Matichon daily newspaper, told Reuters.

"The NCCC will now have to persuade the court to believe that Thaksin deliberately concealed his assets for other purposes."

Thailand's stock market has climbed around five percent this week, with foreign buyers returning.

Analysts and fund managers say the market believes the risk of Thaksin being removed from office is lessening.

"Clearly, if it looks like the risk of that has diminished, then yes, the confidence there has improved. I think that's part of the reason why the market has actually jumped through the last few days," said Douglas Cairns, chief investment officer at Schroder Asset Management Ltd.

Charoen Iampathanatham, analyst at Adkinson Securities, said investors were less worried about the political situation. "Thaksin's asset case is less worrying now as it's turning in favor of him," he said.

A poll conducted by Bangkok University on May 22-23 and released on Thursday showed 57.8 percent of 1,295 Bangkok residents believed Thaksin would not be found guilty.

Thaksin's lawyers have cut back on the number of witnesses they plan to call, so that the case can be wrapped up quickly.

The Constitutional Court has said its verdict will not be influenced by Thaksin's support. He won a landslide victory in a January general election despite the NCCC indictment and opinion polls suggest he remains popular.

But his lawyers have said the court should consider the wider political context. "I believe the court will not only rule strictly by the law, but will also consider political science principles," Deputy Commerce Minister Suvarn Valaisathien, one of Thaksin's lawyers, told reporters this month.

The court has not formally announced when it plans to reach a verdict but one of the judges told Reuters earlier this month a decision should be made by August.

Thaksin told the Bangkok Post last week that even though he expects the court to rule in his favor, if it rules against him his party would stay in power, minimizing any political impact.

Thai Rak Thai holds an absolute majority in parliament, the first time this has been achieved in Thailand.

Thaksin has not publicly named a successor but party sources and analysts believe that the two most likely replacements would be his closest aides -- Finance Minister Somkid Jatusripitak or Interior Minister Purachai Piumsombun.

Somkid, a U.S-trained marketing expert, helped Thaksin found Thai Rak Thai two years ago and deployed marketing tactics and populist pledges during the election campaign to help the party secure its landslide victory.

Purachai, a former police captain and ex-president of a Thai graduate university, has been close to Thaksin since they met while both were studying for a doctorate in the United States.

Analysts say that under either man, government policy would remain the same.