SingTel faces legal action

The Singapore government has taken legal action against Singapore Telecommunications Ltd (SingTel) for failing to return S$388 million (US$215 million).

SINGAPORE--The Singapore government has taken legal action against Singapore Telecommunications Ltd (SingTel) for failing to return S$388 million (US$215 million).

According to an Info-communications Development Authority of Singapore (IDA) statement today, the amount was for a tax provision "mistakenly included in the S$1.5 billion (US$0.83 billion) compensation paid to SingTel".

The compensation was paid in March 1997 for damages caused by the loss of a seven-year monopoly from 2000 to 2007.

The IDA said that it had requested SingTel to return the S$388 million (US$215 million), and that the Inland Revenue Authority of Singapore had informed the telco last October that the compensation sum was not taxable.

However, SingTel has failed to pay back the amount, the regulator said today.

Meanwhile, SingTel stood firm. In a statement to the Singapore Exchange, the telco said it "disagrees with IDA on its entitlement to the S$388 million (US$215 million) and will be defending the claim".

Both parties declined to elaborate when contacted.

The government also paid an additional S$859 million (US$476 million) (excluding taxes) to SingTel last year for bringing forward the complete opening of the telco market to April 2000 from April 2002.

If not for the complete liberalization, SingTel would have a duopoly market with the country's second fixed line operator StarHub until 2002. The IDA also compensated StarHub S$1.082 billion (US$0.6 billion) for lost sales in the two years.

Interestingly, the Singapore government's investment arm Temasek Holdings Pte Ltd owns 78 percent of the telco. In addition, SingTel's president and CEO Lee Hsien Yang is the younger brother of Singapore's Deputy Prime Minister Lee Hsien Loong.

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