It’s not enough to have competition these days – you must be seen to have competition.

This, at least, is one interpretation of a weird court case going on in Singapore, where the government is effectively suing itself for a mix-up over tax payments.

The actual entities involved are the government telecommunication regulator Infocomm Development Authority (IDA) and the majority government-owned former monopoly carrier Singapore Telecommunications Ltd. (SingTel). In the old pre-deregulation days, these two entities would have been the best of friends, indeed hardly distinguishable from one another. But times change.

When Singapore announced the deregulation of its telecommunication market in 1998, the regulator (in its former guise of TAS, or Telecommunication Authority of Singapore) originally said there would be a single competitor to SingTel for two years after formal deregulation on April 1, 2000, namely the newly-formed StarHub Pte. Ltd.

Before StarHub was launched, TAS noted the rapid changes in the worldwide telecommunication environment, decided to throw the telecommunication market open to all comers beginning on the StarHub launch date, and offered SingTel S$1.5 billion (US$830 million) by way of compensation.

It is this money — or rather its tax component of S$388 million — which is in dispute. SingTel says the compensation agreement with TAS represents a binding contract and that therefore it need not repay any money. IDA contends that the S$388 million is a tax element that SingTel should return as the government tax authority later declared the compensation tax-free.

The case is now being haggled over in court, where the intertwined nature of the argument grows.

Lead counsel for the IDA is prominent lawyer Davinder Singh, who also acts as lawyer for Singapore’s patriarch and Senior Minister Lee Kuan Yew, and who has been for 14 years a member of parliament for the ruling PAP party which Lee founded.

Sitting in the witness box, being badgered by Singh for hours on end, is SingTel CEO Lee Hsien Yang, Lee Kuan Yew’s younger son.

A little bit bizarre, even given that Singh is, like any lawyer, an independent gun for hire who is prepared to work for any client without fear or favor.

The spat has even been described as “unusual” by the local (government-linked) Straits Times newspaper, a publication so anodyne that an American commentator once called it “a geometric anomaly, following a straight line without containing any points.”

But this is Asia, where what is seen to happen is more important that what actually does happen, where the cosmetics are more important than the substance, and the unappealing can be made to disappear by simply not thinking about it.

If SingTel loses, all that happens is that one chunk of the government will win several hundred million dollars from another chunk – or a 69 per cent-owned chunk, anyway.

Still, analysts ask, will this unseemly squabble benefit SingTel’s main competitor, StarHub?

Possibly. Which is more good news for the Singapore government, since just over 75 per cent of StarHub is owned by Singapore Technologies Telemedia, Media Corporation of Singapore and Singapore Press Holdings, all government-owned or government-linked companies.