The corruption glacier I

14 02 2017

In a recent post, PPT commented on the many failures of the National Anti-Corruption Commission: it is politicized, biased and just plain slow. Glacially slow.

Two stories today emphasize these points. The first seems like a story of stalling, inertia and perhaps incompetence. Yet is also illustrates the politicization of corruption and bias. We only cover that story in this post and will follow up with a second but related post on the other story.

At the Bangkok Post, former academic and former NACC commissioner Medhi Krongkaew raised questions “over the slow progress of the investigation into alleged bribery payments made by a British alcoholic beverage giant [Diageo] to Thai officials in 2011.” Back then, Diageo “agreed to pay the US Securities and Exchange Commission more than US$16 million (561 million baht) to resolve Foreign and Corrupt Practices Act offences involving bribes to foreign officials in India, Thailand, and South Korea between 2003 and 2009.”

In this case, the official/political figure is pretty well identified, but not in the Bangkok Post story, which kind of fades away. Medhi lets himself off the hook by saying “he was not responsible for probing the case, all he could do was forward the information received from the US to the other NACC members who were directly responsible for the investigation…”. He said, “I don’t know what has been hindering them…”.

It’s not a bad question for both Medhi and the NACC are anti-Thaksin Shinawatra, and this case is about people close to him. Part of the story is here. But the more detailed account is a PDF. This is a bit long, but worth reading through:

From April 2004 through July 2008, DT [Diageo Thailand], retained the services of a Thai government and foreign political party official … to lobby other Thai officials to adopt Diageo’s position in several multi-million dollar tax and customs disputes. For this … DT paid approximately … $599,322. DT compensated the Thai Official through 49 direct payments to a political consulting firm … for which the Thai Official acted as a principal. Most, if not all, of the $599,322 paid to the Consulting Firm was for the Thai Official’s services and accrued to his benefit.

The Thai Official served as a Thai government and/or political party official throughout the relevant period…. At various times the Thai Official served as Deputy Secretary to the Prime Minister, Advisor to the Deputy Prime Minister, and Advisor to the Ministry of Agriculture and Cooperatives. The Thai Official also served on a committee of the ruling Thai Rak Thai political party, and as a member and/or advisor to several state-owned or state-controlled industrial and utility boards.… The Thai Official was the brother of one of DT’s senior officers at that time. Several members of Diageo’s global and regional management attended meetings with the Thai Official and senior members of the Thai government.

The Thai Official provided extensive lobbying services on behalf of Diageo and DT in connection with several important tax and customs disputes that were pending between Diageo and the Thai government. For example, with respect to excise taxes, the Thai Official coordinated and attended numerous meetings between senior Thai government officials and senior Diageo and DT management, including two meetings in April and May 2005 with Thailand’s then Prime Minister. In May 2005, shortly following the meetings arranged by the Thai Official, the Prime Minister made a radio address publicly endorsing Diageo’s position in … calculating excise taxes.

On Diageo’s behalf, the Thai Official also met repeatedly with senior commerce, finance, and customs authorities in charge of the transfer pricing and import tax disputes, as well as with members of the Thai parliament. The Thai Official’s services contributed to Diageo’s successful resolution of several components of these disputes…. Based in part on the Thai Official’s lobbying efforts, the Thai government accepted important aspects of DT’s transfer pricing method and released over $7 million in bank guarantees that DT had been required to post while the tax dispute was pending.

DT improperly accounted for the monthly retainer that it paid to the Thai Official through his Consulting Firm….

Diageo essentially made “improper payments to government officials…”.

Anyone familiar with the NACC and the political nature of its work would think this is a home run. They can get the easily identified TRT official and send some barbs Thaksin’s way as well.

Or can they? After all, back in December, it was revealed that metropolitan police chief Pol. Lt. Gen. Sanit Mahathavorn was on the payroll of the giant alcohol and beverage producer Thai Beverage Plc. The top cop was, and we assume, still is getting 600,000 baht a year as an “adviser” to the alcohol firm.

That seemed like a conflict of interest to many, but not to the police force. The Bangkok Post reported that the Royal Thai Police “confirmed that metropolitan police chief … is not violating police rules by holding an advisory role with a major alcohol conglomerate.”

If it’s “good” enough for the police, then presumably an official/adviser/deputy secretary to a premier/committee member of a political party/member and/or adviser to state-owned/state-controlled boards/consultant is in the clear as well?

Medhi’s raising an opportunity for political point scoring. Why hasn’t it and isn’t it being hit out of the park? Corruption Park?

We say more in our next post.





Busy “adviser”

8 02 2017

Perhaps if the Office of the Ombudsman paid Metropolitan Police chief Pol Lt Gen Sanit Mahathavorn 50,000 baht a month, he might have been able to supply it with the documentation on his monthly payment from Charoen Sirivadhanabhakdi’s ThaiBev.

Instead, the “busy” General “has asked the Ombudsman for another month to explain his paid advisory role with giant alcoholic drinks producer Thai Beverage Plc.”

How complicated can explaining a 50,000 baht payment for being an “adviser” be? The report states that “Thai Beverage had submitted a written explanation, but details could not be disclosed until the city police chief submitted his clarification.”

More complicated might be explaining the curious math in his assets declaration. He might like to explain how a policeman with a yearly salary of 1.4 million baht (and that’s now, not earlier in his career) can accumulate cash deposits worth about 44 million baht (with his spouse). Throw in other assets held like land and houses, and the policeman and his wife are worth more than 93 million baht.





Planes, trains and beer

5 02 2017

What do planes, trains and beer have in common? The answer is they are all great money spinners.

On planes, despite the junta having ordered that only one agency deal with the poor, confused British Serious Fraud Office, multiple agencies are still trying to appear that they are doing something about money-spinning corruption.

The Bangkok Post reports that “Rolls-Royce has refused to supply information about its bribery admission involving Thai Airways International (THAI) with the national flag carrier’s probe panel.”thai-rr

Refused! Wow! Thai Airways really want to find out! Who did get “kickbacks totalling 1.28 billion baht, which were allegedly paid to help the British firm secure deals with the carrier”?

So they went to RR, not the SFO. The carrier’s president “revealed” that “a request for information linked to the graft, Rolls-Royce refused to share it with THAI’s probe panel, saying the information it gave to the SFO was confidential…”.

Just to confuse the SFO, the president said his company “had also asked the SFO for relevant information on Jan 24 and the British anti-graft authority replied it would respond to the request within 20 days…”.

He added that “the national carrier stood ready to supply all related information to state agencies tasked with probing the case.” He finally came around and said: “As for the inquiry into who received the bribes, the NACC will play a key role in investigating the matter. So results of the NACC’s probe, which is gathering information from all sides, must first be concluded…”.

Finally, he “conceded it is unlikely that THAI would be able to receive information from other parties apart from what has already been publicised.”

So what was the point of the story? And why go to RR? We assume its to confuse things. After all, commissions are lucrative and running interference may maintain that source of wealth.

Another Bangkok Post story tells readers about trains and some other forms of transport. It says that the junta’s “raft of big-ticket infrastructure projects has grown to 2.2 trillion baht in value…”. That seems to us math-challenged dopes to be $68 billion. Agents, contractors, top bureaucrats, not to say Chinese state transport and engineering firms, must be counting the money in their dreams. And this is only the big ticket items.trains

Finance Minister Apisak Tantivorawong says these projects are meant to power the economy. All other sectors, apart from tourism, seem to have tanked. The problem with this “infrastructure Keynsianism” is that the wealth created is mostly captured by the royalist elite and Sino-Thai tycoons.

So how does beer fit the pattern?

Yet another Bangkok Post account asks, in an editorial, why people are fined for producing “craft beers.” It cites Prime Minister, Dictator, General and expert on everything, Prayuth Chan-ocha and why it it so problematic to make “craft beers and microbrews to go on sale legally.” He babbled about “[c]onsumer safety, fair trade and an ability by producers to maintain standards and take responsibility if things go wrong…”.

Odd, we thought, aren’t there microbreweries all over the place? Even in the provinces, and for decades past.

Why the sudden worrying about these? The story gives a hint:

The news report [on the fining of a craft brewer] sparked outrage online as many people questioned whether it was time the government recognised the increasing demand from consumers for diverse kinds of beer instead of relying on a few well-established brands.

They also believe that opening up the monopolised beer market will nurture innovation, create equal opportunities for aspiring brewers and foster fairer competition which will benefit consumers in the end.

… One notable question that has come up during the craft beer debacle is whether it is necessary for the government to only give licences to beer producers on an industrial scale.

Under the finance minister’s order in 2000, only two types of licences are available for beer production. The first is for large-scale industries with a capacity of no less than one million litres a year. The second is for brew pubs, which have to produce at least 100,000 litres a year for sale onsite with no bottling.

beersWho is being protected? Of course, its royalists and the astoundingly rich who operated with huge profits. Boonrawd Breweries and ThaiBev.

The former goes back to the period before 1932 and the company and the scions of the Bhirombhakdi family have long supported royalist and, more recently, anti-democrat causes.

The latter has managed to establish one of the largest alcohol and land empires in the country. It, too has allegedly funded anti-democrats and is a big donor to the palace.

It has recently been in the news, getting a contract approved by the junta without competition to run a huge convention facility for another 25 years as nominal rent. And, of course, it’s been in the news over why it pays a top cop as an adviser? Perhaps the answer is in The Dictator’s comments?





Corruption, nepotism and impunity

4 02 2017

In an op-ed at the Bangkok Post, Thitinan Pongsudhirak says this of corruption:

The reason corruption is not forcefully addressed in Thailand is because we don’t know where to start with the powerful few involved. Those at the top who are supposed to eliminate corruption must be clean and willing to confront and prosecute culprits in a networked society where the degrees of social separation are very small. Going after corruption means going after crooks you and your friends and family may know.

We could read this as suggesting there’s a cultural element to corruption, but we’d prefer to think of it as suggestive of nepotism.

PPT is sure that nepotism plays a role. Indeed, the royalist elite and Sino-Thai tycoons are a relatively small ruling class and there are plenty of kinship links. The military and royalist state has also spent a considerable time seeking to make and reinforce such links.

Tucked away in an academic book (Pasuk Phongpaichit and Chris Baker, eds, Unequal Thailand: Aspects of Income, Wealth and Power, Singapore: NUS Press, 2016) is a chapter by Nualnoi Treerat and Parkpume Vanichaka on elite networking through “special executive courses.” As one reviewer explains:

The interviews with course attendees are of great value for understanding how it is that specific policies benefiting the oligarchy come to fruition. The inclusion of members of “billion families” into the courses brings to light some of the behind-the-scene mechanics of how an oligarch can connect with those in the parliament, military, bureaucracy, university sector, or the media.

Public-sector courses have been offered by the National Security Academy for Government and Private Sector (Po Ro Or), the Office of the Judiciary, the King Prajadhipok Institute, and the Election Commission. Two private-sector courses include the Capital Market Academy by the Stock Exchange of Thailand one by the Chamber of Commerce….

Throw in marriage, sucking up to the monarchy, elite schooling and all of the other things covered by Thailand Tatler and a coherent and connected ruling class is constructed and maintained.

All this lubricates and normalizes elite corruption as part of the process of entitlement. These people believe that they are Thailand.

At the same time, there’s a lot more than nepotism and entitlement at work. At least two other elements of corruption deserve attention. They are impunity and the nature of the “corruption system.”

Ruling class corruption and “unusual wealth” – in some cases, stupendous wealth – these people are also immensely powerful. This means they can literally get away with murder (the “connections” that display power are visible). The ruling class share impunity among themselves and their flunkies.

That’s why no one investigates the “unusual wealth” of those associated with the military junta. That’s why “both the chief of Bangkok police and the nation’s largest beverage company failed to respond to a state watchdog’s demand they clarify their financial relationship.” This refers to Police Lt Gen Sanit Mahathavorn and ThaiBev controlled by the Sirivadhanabhakdi family and the “adviser’s” allowance paid by the company to the cop.

(By the way, we think Khaosod is misreading the documents it links to on the General’s monthly salary; we think his annual salary is 1,425,600 baht, not his monthly salary.)

In addition to nepotism, entitlement and impunity, the mainstay of corruption is that it is a system. Business people, politicians, military and police and bureaucrats know what the system is, and they all benefit from it. The system channels corrupt funds from every level of the organizational hierarchies to the top.

That’s why, for example, cops and military brass are willing to literally pay for positions that see the greatest flows of funds. Think here of being permanent secretary at the Ministry of Transport and chairman of the State Railways of Thailand or police chief in Pattaya; the money flows like a giant river. Of course, shares taken at lower levels are the cement that holds the corruption system.





Corruption, ethics and the police (not a joke post)

27 01 2017

A couple of days ago we posted on the contract for the Queen Sirikit National Convention Center which went, without going to a bid or to any significant renegotiation to N.C.C. Management & Development Co., a company in the gargantuan business empire of Charoen Sirivadhanabhakdi. Charoen is one of Thailand’s richest worth almost $14 billion (naturally, he’s also close to the palace.)

Back in December, Charoen’s companies also came up when it was revealed that metropolitan police chief Pol. Lt. Gen. Sanit Mahathavorn was on the payroll of the giant alcohol and beverage producer Thai Beverage Plc. The top cop is getting 600,000 baht a year as an “adviser.”

That seemed whiffy to many. But not to the cops. The Bangkok Post reports that the Royal Thai Police – we imagine that “royal” bit in its moniker is significant – “has confirmed that metropolitan police chief … is not violating police rules by holding an advisory role with a major alcohol conglomerate.”

Nope, nothing wrong with that at all. It is a conflict of interest for sure, but who cares about that these days?

A police deputy spokesman has said that the Royal Thai Police’s rules do not prohibit officers “from holding an advisory role in a company.”

That’s got to be true because working with companies, helping them, bending rules for them and doing the odd bit of protection is one way that top cops become wealthy beyond their salaries. Remember how fabulously wealthy the odious police chief Somyos Pumpanmuang was. He got bucket loads of loot from companies and others.

The police deputy spokesman then dumped ethics into the trash. He said that “it is up to Pol Lt Gen Sanit himself to explain whether advising an alcohol beverage producer could be seen as a breach of ethics…”.

No police officer could possibly judge ethics simply because they a pretty much absent from the force. After all, those who seek bribes, torture, murder and manage multiple conflicts of interest will have difficulty identifying this thing called “ethics.”

We guess there are decent cops, but the whole force is lubricated by corruption and crime, so it’s  hard for any cop to avoid the systemic nature of these things.

Sanit, though, is also a member of the National Legislative Assembly (NLA), so perhaps that puppet non-parliament has some kind of code that mentions ethics? They may have, but then most of the members are police and military men wealthy in quite unusual proportions.

We expect the “clean as a whistle” verdict in another case of junta-related corruption allegations.





More “commissions” and corruption

25 01 2017

The Bangkok Post today is a broadsheet of corruption and potential corruption. The stories range from a person identified as a senior official stealing cheap hotel art work in Japan to yet another admission of bribe-commissions in Thailand.

We can only think that the official forgot which country he was in. In Thailand, the great and powerful can do what they like. However, the latest story on a U.S. firm, General Cable Corporation, that has entered another agreement to avoid prosecution over commissions paid, continues to define business practice in Thailand.

General Cable “has agreed to pay $82.3 million to halt the U.S. government’s investigation into inappropriate payments to government officials in Egypt, Angola, Bangladesh, China, Indonesia and Thailand.” The U.S. Department of Justice has stated that:money

… [b]etween 2002 and 2013, General Cable subsidiaries paid approximately $13 million to third-party agents and distributors, a portion of which was used to make unlawful payments to obtain business, ultimately netting the company approximately $51 million in profits.

In Thailand, this scandal “involves the Metropolitan Electricity Authority (MEA), the Provincial Electricity Authority (PEA) and TOT Plc.”

In the usual way, the agencies have “set up a panel to look into the case.” In the Rolls Royce cases, everyone is running for cover and the agencies who are investigating themselves reckon that they may not be able to get names and details to allow a result to “investigations.”

We feel a cover being thrown over the allegations. And no one has said much about how the payments began under the military regime led by General Suchinda Kraprayoon and recognized great and good former unelected premier Anand Punyarachun. The good people always seem to have a cover of teflon.moneybags

Another story is about the military junta’s decision to buy submarines from the Chinese. Billions of baht. Who is getting the commissions on this deal? As we’ve said many times, commissions is normal, so we can’t help but wonder.

Yet another story is about a whiffy deal by the military junta to extend a “contract to manage a landmark convention centre [Queen Sirikit National Convention Center] in Bangkok by another 25 years instead of calling a new bid has drawn criticism it favoured a liquor tycoon.” The junta agreed to a state contract “with N.C.C. Management & Development Co (NCC), a company under the business empire of Charoen Sirivadhanabhakdi.”

The original contract was handed out in 1991, expired last year, and is now handed over for another 25 years. It is stated that “the renewal of the contract without calling a bid was stipulated in the previous contract.” Hmm, 1991. General Suchinda again or Anand?

Of course, Charoen is not only one of Thailand’s richest and its biggest landowner, but also a great royalist and with great links with the military. As a big donor to the palace, he’s surely great and good. But this quote seems to say it all:

Sumet Sudasna, president of the Thailand Incentive and Convention Association, said the failure to call a bid blocked the chance for other companies to compete with NCC and for the government to maximise its income from the property.

“The estimated return of 100 million baht a year or less than 10 million per month on average is too low, given the prime location of the QSNCC…”.

 

 





Updated: Mutual back-scratching

12 12 2016

It is not a secret that companies that do well in Thailand have tended to be big “donors.” Most conspicuously, they fork out millions each year to various royal things, including charities, projects and just handing over bags of money for unspecified royal use. In the giving season, there is an endless parade of donors handing over the loot. Most recently, it has been Princess Sirindhorn doing the receiving on behalf of the world’s richest monarchy. A red royal garuda outside the company head office is one marker of these Sino-Thai tycoons having gained royal approval and acknowledgement.

These companies give less conspicuously to state events and projects. Least conspicuous of all is the myriad of payments that are made to military officers, police top brass and senior bureaucrats. This can involve positions on boards. Think of General Prem Tinsulanonda’s long chairmanship of the Bangkok Bank and all that carried with it for the company and its owners. the marvelous and still unexplained wealth of former police chief Police General Somyos Pumpanmuang, who now heads the casino known as the Thailand Football Association.

Another strategy is the creation of advisory positions, paying nice monthly stipends but where little advising is required unless their is some trouble that needs to be ironed out. And then there are the payments to those officials who are required to do favors, bend rules, overlook things and so on.

This is oiling the wheels of their commerce and trade through a hierarchy of corruption. Yet a blind eye is turned because this is the great and the good scratching each others’ broad backs.

Sometimes, though, through arrogance, forgetting that this is shady dealing and knowing that everyone does it, a revelation is made. The mutual back-scratching is visible and confirmed as in a recent report at the Bangkok Post.

Perhaps believing that revealing unexplained wealth and extra income is okay because so many others have done it with impunity, city police chief Pol Lt Gen Sanit Mahathavorn declared that the giant alcohol and beverage producer Thai Beverage Plc pays him 600,000 baht a year as an “adviser.” ThaiBev is a company controlled by one of Thailand’s richest, Charoen Sirivadhanabhakdi, worth almost $14 billion (naturally, he’s also close to the palace.) The Post story continues:

The payment is shown in Pol Lt Gen Sanit’s list of assets and liabilities that he recently declared to the National Anti-Corruption Committee (NACC) as a member of the National legislative Assembly (NLA). The record shows he began receiving the monthly stipend last year.

The news from the NACC was released in the middle of a long holiday weekend, when it is guaranteed to attract the least possible notice.

It seems the senior policeman thinks receiving loot from the country’s wealthiest – meaning they must be great and good – is normal despite the fact that one aspect of his job is to implement a range of laws that govern the operations of the beer kings, who also have huge land and property investments in Bangkok (and beyond). This senior cop can’t see any conflict of interest, but can see his bank balance doing very nicely. This senior policeman probably also thinks that 600,000 is something of a pittance when compared with all the other illicit funds that funnel up to him. This strategy of corruption in the police is well-documented, and that’s why senior police are so wealthy. When the NLA was put in place by the junta, the top cops averaged a whopping 258 million baht in assets. And, moonlighting by doing favors for the rich and powerful is widely believed to be “legal.”

The criticism has been muted. After all, this corrupt cop has just been appointed by the junta to the NLA, so criticis have to be careful or they could end up in jail, harassed or worse. Somchai Armin, the chairman of something called the Lawyers Association for Rights and Environment Protection, has demanded Sanit give up his job as adviser to ThaiBev. That’s it? Even the Post wonders: “Somchai provided no reason for failing to call for Pol Lt Gen Sanit to resign from the police.”

Of course, Sanit is laying low: he “was not available for comment as of the press time Sunday and it is not clear what advice he has offered to the firm.”

Update: Serial petitioner Srisuwan Janya, secretary-general of the Association for the Protection of the Constitution, has filed a petition on this case with the Office of the Ombudsman.  Srisuwan argues that the Police Lt General “might have violated the Royal Thai Police code of conduct and ethics of 2008, the Prime Minister’s Office regulation of 2008 regarding ethics of political office holders, and the National Anti-Corruption Act of 1989.” The Office of the Ombudsman now has to decide if it will do anything. The military junta has apparently done nothing.