THAI is no longer a state enterprise

I was saddened to read of the desperate action of a group of small shareholders of Thai Airways that has petitioned the SEC to investigate the board’s probity in firing the airline’s CEO, who was generally credited with doing a superb job. This story highlights the conflicts of interest inherent in Thailand’s failed experiment in the privatisation of state enterprises, whereby the state seeks to maintain absolute control in perpetuity over the businesses it has privatised.   At THAI this approach is at loggerheads with the interests of thousands of other shareholders who just want their airline to be run as efficiently as possible to enable it to compete effectively in a ruthlessly cutthroat global marketplace.

I would suggest two alternative solutions to this problem. The first would be for THAI to address the apparent failure of corporate governance by embarking on a series of reforms to enhance the rights of minority shareholders. The most important of these would be to adopt a cumulative voting system that would allow shareholders to concentrate their votes when electing board members. For example, when there is an election for five board seats, shareholders would be permitted to give all five votes to only one candidate if they wish, rather than one vote each to five different candidates, as at present. That would give minority shareholders a chance to elect one board member who would genuinely represent them, rather than the present system that ensures that all the directors, including the so-called “independent directors”, are effectively chosen by the majority shareholder.   

The other alternative would be for the government to offer a general tender for THAI’s shares at a fair price and de-list it from the stock exchange, thus permitting it to manage the business how it pleases without the encumbrance of minority shareholders.   

George Morgan

Bangkok