Image: Wife of ousted Thai Prime Minister Thaksin Shinawatra
Apichart Weerawong  /  AP
Pojaman Shinawatra, wife of deposed Thai Prime Minister Thaksin Shinawatra, leaves criminal court in Bangkok, Thailand, on Thursday.
updated 7/31/2008 8:48:42 AM ET 2008-07-31T12:48:42

The wife of ousted Thai Prime Minister Thaksin Shinawatra was found guilty Thursday of evading millions of dollars in taxes and sentenced to three years in prison, dealing a staggering blow to a man who was once one of the richest and most powerful in Thailand.

The ruling against Pojaman Shinawatra is the first verdict in several corruption lawsuits against Thaksin and his inner circle. Thaksin, who was ousted in a 2006 military coup, denies all wrongdoing.

Pojaman, her adopted brother Bhanapot Damapong, and her secretary were convicted of colluding to evade millions of dollars in taxes in 1997 through a complicated transfer of shares in the family's flagship business that involved placing stocks in the name of one of the family's maids.

"The three defendants have high economic and social status," said Judge Pramote Pipatpramote, adding they should have aspired to set an example for society. "But, they were working together to avoid taxes, even though the taxes amounted to little compared to their assets."

The 51-year-old former first lady, in a pale blue suit and strand of pearls, looked stunned as the judge announced the verdict. She was promptly released on $149,000 bail and walked out of the Bangkok Criminal Court with her family into a waiting car.

Thaksin, who was ranked as Thailand's fourth-richest billionaire in 2006 prior to the coup, is now the 16th richest in the country, according to Forbes Asia Magazine. No longer a billionaire, he is now worth $400 million after Thai authorities froze more than $2 billion of his family's assets pending the corruption cases against him.

Appeal planned
Thaksin's spokesman, Pongthep Thepkanjana, said lawyers planned to appeal.

"Thaksin is not disheartened," he said. "They respect the court ruling but it is not the end. We will fight until the end."

The court sentenced Pojaman, her brother and secretary to two years in prison for fraud and conspiring to evade taxes. Pojaman and her brother were handed an additional one-year term for giving false testimony. All three had pleaded innocent.

"Today's ruling sends the message that this family was corrupt and cheating," said Prinya Thevanarumitkul, a political science professor at Bangkok's Thammasat University. "It is a major blow to the image of Thaksin's family. Thaksin's followers will begin to worry and lose confidence in Thaksin's future."

More than 1,000 supporters cheered as the family left the court. Some 300 police were deployed in the area amid concerns of possible protests by both Thaksin's supporters and opponents.

Corruption accusations
Thaksin, who remains highly popular among Thailand's rural poor for his populist policies, was ousted after being accused of massive corruption and abuse of power during his two terms as prime minister. Four corruption cases have been filed in the courts against Thaksin, two others against his wife, and three cases against two of his children. Many others are under investigation.

Thursday's case centered on a 1997 transfer of shares in Shinawatra Computer, the company that later became Shin Corp. — Thailand's biggest telecommunications company — which was sold in 2006 to a Singapore state-owned investment company for $2.2 billion.

The share transfer was valued at about $22.2 million at the current exchange rate and deemed tax-free. The family had listed the deal as a transfer of shares carried out within the stock market, which is exempt from capital gains taxes.

When tax authorities later questioned the transfer, the family changed its story. Pojaman's brother said the transfer was a wedding gift from Pojaman — an argument the court Thursday called "unconvincing" since it came a year after his 1996 marriage. Gifts are not taxed under Thai law.

Maid's check
Thailand's Assets Examination Committee also determined last year that a check issued to the maid was later deposited in a new bank account belonging to Thaksin's wife.

The committee said Pojaman and her brother had misrepresented the nature of the transaction to avoid paying taxes and should pay back taxes and penalties of about $16.4 million. Thaksin was not implicated in the tax evasion case.

Thaksin is known to have transferred shares in Shin Corp. to his maid, chauffeur, relatives and others to shed holdings before becoming prime minister in 2001 to skirt conflict of interest laws.

Thaksin was deposed after months of street demonstrations in Bangkok demanding he step down because of the allegations. He returned to Thailand earlier this year after his political allies in the People's Power Party set up a coalition government.

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