SingTel deal could end up in the trash

Former British prime minister Harold Wilson once said that a week is a long time in politics.

Perhaps former Singapore Prime Minister Lee Kuan Yew is thinking nowadays that if a week is a long time, how come nobody's forgotten something he said 30 years ago?

That something came during a famous speech he gave in Australia in the 1970s, when he warned the Australians that if they didn't wake up and pay attention to becoming a more competitive economy, they risked becoming "the poor white trash of Asia."

Forthright and bold? Or tactless and insulting?

Whichever view you take, the fact remains that those comments -- almost archaeological deposits by now -- are continuing to throw a shadow over a new Singapore-Australia venture, the proposed US$8 billion acquisition of Australia's second-largest carrier Cable & Wireless Optus Ltd. (CWO) by the Singapore government-owned Singapore Telecommunications Ltd. (SingTel).

It doesn't help that SingTel's chief executive officer, Lee Hsien Yang, is the number two son of the elder Lee. The fact that the two men share a surname, like most fathers and sons, confused one Australian commentator completely.

"SingTel's current CEO once commented that 'Australians would become the poor white trash of Asia'," analyst Paul Budde wrote in March. "Who knows -- this may have stimulated the drive to acquire and 'master' an Australian company."

Wrong Lee, of course. The current CEO was a kid of 15 at the time of the white trash speech, and nobody would have taken any notice, beyond giving him a clip behind the ear and telling him not to be cheeky.

But the anti-Singapore sentiment, in some quarters, has bridged the generations.

Budde continues: "Furthermore, SingTel's owner, the Singaporean government, doesn't have a good track record in terms of democracy and it is well-known that they have used the SingTel telephone network in ways that would not be sanctioned in Australia."

Budde is not the only commentator whipping up these kind of views. Local media mogul Kerry Stokes recently added his own twist to SingTel's failed bids last year for Pacific Century Cyberworks Ltd. (PCCW) and Time Engineering Bhd.

"Both Malaysia and China have recently rejected SingTel bids for substantial stakes in their countries' telecommunications carriers," he said recently. "Decisions (that were) made on the basis that it was not acceptable to have a foreign government effectively in control of such strategically important communications infrastructure."

Stokes -- the great thinker who gave the world the Home and Away sitcom -- made the comments as part of a submission to Australia's Foreign Investment Review Board (FIRB) urging FIRB to reject the SingTel takeover bid.

And it is at FIRB where the buck will stop. Barriers to the deal have been removed by Australia's Defense Department, the Australian Stock Exchange and the Australian Securities and Investment Commission.

But FIRB -- and in particular its treasurer, Peter Costello -- can still kill the deal at a stroke. Costello has said on the radio that all such deals are treated "on a case-by-case basis."

The unspoken subtext to this is the feeling that ordinary Australian voters are angry at foreign companies buying up their country -- as instanced by the long-time bumper sticker "Queensland: Beautiful One Day, Japanese The Next." That feeling, in turn, could place pressure on Costello to play the "Australia First" card to drum up the votes his party needs in a federal election to be held later this year.

If the deal is considered on purely economic grounds, it will surely go through. But forget the ideals of globalization and free trade; politics is not -- and probably never will be -- dissociated from business, especially a business like telecommunication.

SingTel wants the deal badly -- it needs a large advanced market into which to sell its corporate products and build a credible regional strategy. Despite its anxiety, throughout this episode SingTel management has done no more than to quietly repeat its statement that there are no insurmountable problems with the deal.

Perhaps things might have been easier if Lee Kuan Yew had maintained a similar dignified reserve all those years ago.