AOT’s support of King Power

The Airports Authority of Thailand was formed in 1979 and, controlled by senior Royal Thai Air Force officers, and is rumored to have provided an endless flow of money into their pockets and into the RTAF. The official history of the AOT reads like a royalist history and is odd in that it jumps from 1914 to 2006 (there’s more in the Annual Report). It became a publicly-traded company in 2002.

Often the subject of complaints about airport problems, it has hit the headlines in a big way in recent days when its opaque dealings became public.

The Nation reported that “[a]lmost Bt80 billion was wiped off the value of … AOT … today when its stock price dropped 8.7 per cent to Bt49.75 per share following the board’s move to assist King Power Duty Free (KPD) without first consulting shareholders.”

The report states that “AOT’s board of directors approved King Power’s minimum guaranteed payment method based on the number of passengers at Suvarnabhumi Airport, which remains lower than the estimate of the duty free giant.” It also “extended the duty free area renovation period from September 28 this year to March 31, 2022, because KPD and its Suvarnabhumi operation were unable to contact trade partners to prepare for reopening of duty free outlets.”

In other words, the AOT board agreed to subsidize King Power without consulting shareholders.

A stock analyst said AOT’s actions meant “his brokerage would change its investment recommendations…”. It was added: “We advise investors to sell AOT stocks…”.

The Thai Enquirer looked at the issue and suggested that “SET-listed, state enterprise Airports of Thailand drew shades of the 1997 economic crisis this week by asking Kasikorn Securities to withdraw an unfavourable analysis on AOT’s stock and calling in the author for clarification.”

Kasikorn Securities “had argued that the accommodating moves made by the AOT toward King Power would cost the company up to 130 billion baht.”

The report noted that “industry insiders” said that AOT’s behavior towards Kasikorn Securities was highly unusual.

Of course, all of this comes when “[b]oth the AOT and King Power have experience unprecedented losses in recent months due to the pandemic, with both companies heavily reliant on incoming tourists from abroad.”

What kind of public company is AOT? PPT looked at its website and Annual Report for 2019 for more information. In fact, while publicly-listed, AOT is essentially a state-owned company. While it has a registered capital of 14,285,700,000 Baht, the “Ministry of Finance is the major shareholder with a 70% stake…”. The next largest shareholders are institutional investors. The Board of Directors, despite having people listed as “independent director,” this is a nonsense as almost all currently work as Ministry officials or are recently retired or serving military officers or senior bureaucrats. The Chairman of the Board is Permanent Secretary of the Ministry of Finance. For those directors who attended all meetings, the Annual Report 2019 lists salaries and allowances of 825,000 to over 1.3 million baht. Each director received a bonus payment of 1.5 million baht. Then there are “Remunerations of Directors of Subsidiaries and Associated Companies,” which add a further 1-2 million baht to directors’ remuneration.

These are not huge corporate salaries, but nice little earners for bureaucrats. We can only wonder if there are other payments that might top up salaries even more.

So if the AOT is essentially a state enterprise, can we assume that the regime – government – approved of the subsidy to King Power?

 

Gorging on state funds

Reading the media the past couple of days and we feel like the regime, its ministers and its buddies are engaging in gluttony, seemingly gorging on state coffers.

One deal we posted on them recently got more press coverage:

The Eastern Economic Corridor (EEC) Office’s Eastern Special Development Zone Policy Committee yesterday signed the [290-billion-baht] deal with winning concessionaire, U-Tapao International Aviation Co, an offshoot of the BBS Joint Venture that won the bid to develop the “aeropolis” in Ban Chang district of Rayong Province….

…[T]he BBS Joint Venture comprises Bangkok Airways, which owns 45% of the shares, BTS Group Holdings which owns 35%, and Sino-Thai Engineering and Construction (STEC) which owns 20%.

So we can identify two conglomerates involving two of the countries wealthiest Sino-Thai tycoons – the Prasarttong-Osoth family at Bangkok Airways and the Kanjanapas clan at BTS. It was Forbes lister Prasert Prasattong-Osoth giving advice to Gen Prayuth Chan-ocha recently. It seems advice doesn’t come cheap. Then we have Sino-Thai Engineering and Construction:

Interesting. But what can we expect from people who are used to having with state officials in their pockets.

Then we saw that idea from convicted heroin smuggler and Deputy Agriculture Minister Thammanat Prompao for seizing land  illegally occupied by resorts and hotels, and then renting it back to them. Brilliant! Thammanat is already a baht billionaire and this looks like a surefire way to double money and pay for more of his big brother’s parliamentary seats and maybe even some watches. A Bangkok Post editorial commented that the scheme “is so outrageous that it should be dropped immediately…”.

And what about the news that the “Finance Ministry is ready to consider retail operators’ proposal for tax breaks on shopping to stimulate domestic spending…” with 50,000 baht per shopper! Now, who could that help most? We suggest it would throw shiploads of money into the big retailers, like the Chirathivat and Umpujh clans who are also Forbes listers.

It also potentially helps out the royal family and specifically Princess Sirindhorn, a member of the country’s wealthiest family that already scoops up billions in taxpayer funds. It was Chadatip Chutrakul, chief executive of majority royal-owned Siam Piwat Co, the operator of Siam Paragon, Siam Center and Iconsiam, that “said the government should come up with measures to compel people to leave the house and spend more.”

Happy to grab more loot

An academic once calculated that Princess Sirindhorn’s shareholding in Siam Piwat provided more than US$55 million per year from her property in the Siam-Ratchaprasong alone. She may be a bit short this year, so the state purse becomes a surrogate source of wealth.

Such “private” deals seem to be gathering pace under the virus crisis and rehabilitation plans. Recall how just a few weeks ago, the biggest of the business whales, multi-billionaire Dhanin Chearavanont was urging the regime to turn the country into a ‘safe haven’ for wealthy visitors.” His wish seems to be the regime’s command, with Tourism Minister Phiphat Ratchakitprakarn declaring that the “government’s tourism-revival strategy is to target big spenders seeking privacy and social distancing in the Covid-19 era, rather than try to attract a large number of visitors…. He added that the virus “provides an opportunity to reset the sector, which had become reliant on Chinese groups and backpackers…”. With 11 million Chinese tourists in 2019 and a total of almost 40 million, it seems there’s a determination to crush most of the industry and all that flows from it to every other part of the service sector, which before the virus accounted 46% of total employment and 57% of GDP.

And, these “private” deals are being institutionalized, with the regime reviving a Prem Tinsulanonda-era idea, agreeing with the private sector “to revive the Joint Public-Private Consultative Committee (JPPCC) as a core forum for the two to work together on solutions for the country’s social and economic rehabilitation after the pandemic.” That was first suggested a year ago but looks increasingly likely to become a processing terminal for turning state funds into private gains.

Finally, we may have missed the announcements, but it seems that the long-delayed contracts for the Sino-Thai high (probably medium) speed railway are being doled out. If the reporting is right, it suggests smoke-filled rooms and cosy deals. We quote the Bangkok Post:

SRT governor Niruj Maneepun yesterday told the media that Contract 2.3 is worth 50.6 billion baht, which includes funds for the railway system, rolling stocks and staff training….

The signing of the contract will be carried out in October as planned, Mr Niruj said.

Contract 2.3 is one of seven railway contracts worth a total of 179.4 billion baht for the Bangkok-Nong Khai High-Speed Train Project. Contract 2.3 would cover the project’s first phase, which is a 253-kilometre stretch from Bangkok to Nakhon Ratchasima….

The construction for the whole project has been ongoing since 2018 and it is expected to finish in 2023. [In fact, very little construction has occurred, apart from a very short section near Nakhon Ratchasima.]

So far, the SRT has said the project is making progress, noting it is finding contractors to develop all seven phases. It said a few have already agreed and signed some of the contracts.

That doesn’t look like open tendering, not that such systems stand in the way of the transfer of funds to private sector cronies and giant corporations.

Updated: More changes at the CPB

There have been more changes announced for the Crown Property Bureau, the largest privately-held conglomerate and investment business in Thailand, owned by King Vajiralongkorn.

Back in July 2017 the junta’s National Legislative Assembly met in secret session to change the law on the CPB, giving the king complete control.

At that time, the legislation provided the king with sole authority over royal assets. Whereas the Ministry of Finance and its minister previously had nominal roles in managing the CPB and its board of directors, the legislation gave the king the power to appoint a board of directors for the CPB.

Since then, there have been a series of changes for the CPB, with directors sacked and other brought in as the CPB became populated by the king’s men (rather than his father’s men), CPB shares became the king’s, large tracts of urban land being taken by the CPB, and the king becoming the final arbiter in disputes over what is considered royal property.

The latest change to the board of directors is fascinating. As the Bangkok Post reports, the king appointed Privy Councilor Ampon Kittiampon and current Army commander Gen Apirat Kongsompong to the CPB.

Ampon was appointed to the Privy Council in October last year and came from the junta NLA. A few days ago, The Economist stated:

King Vajiralongkorn has also put his stamp on the privy council, a body which has a role in naming the heir to the throne, among other things. It once contained individuals who opposed his becoming king at all. Now it is stuffed with loyal military men.

Ampon is not military, but he’s loyal.

The Economist also commented on Gen Apirat: “The army, too, is receiving a royal makeover. The commander-in-chief appointed in September, Apirat Kongsompong, is the king’s man.”

Gen Apirat’s appointment seems unusual. We can’t recall serving officers being appointed to the CPB’s board. If any readers can recall a similar appointment, let us know.

What is clear is that the CPB is now the king’s CPB. It is also stuffed with military personnel – 8 of the 11 directors carry military and police ranks – with several of them having served the military junta.

Update: A reader passed this on to us. It is a statement by a military watcher: “The appointment of Wongthewan faction leader and Army Chief Apirat to the Crown Property Bureau board offers the latest indication of the Traditional Institution’s preference for Apirat over Prayut/Prawit. Growing army fissures could give rise to a counter-coup by Apirat against the junta.” PPT has no idea if this guess is correct but we would note that there are plenty of junta loyalists in the palace’s boards and that Apirat is secretary for the junta. Even so, the king is certainly punting on the future.

Further updated: No law for the junta’s party I

The junta’s main devil party, Palang Pracharath, held a big bash for “supporters” to give it hundreds of millions of baht. The Nation reports that the fund-raising bash “featured 200 banquet tables and was aimed at raising around Bt600 million for the pro-junta party.” In fact, the party’s deputy leader Nattapol Teepsuwan said the “actual take was nearly Bt650 million, against an outlay of Bt3 million.”

The whole event had a dubious legal status, but as we know, law doesn’t bother the military junta and its acolytes.

As pointed out by two other party hierarchies, even holding the event seems illegal. Puea Thai’s Phumtham Wechayachai pointed out that his party cannot “organise a fundraising event in that fashion because the organic law governing political parties does not permit fundraising [until] after a royal decree announcing the election takes effect.” He noted that the decree is not expected until 2 January.

Phumtham suggested that the Election Commission and the National Anti-Corruption Commission “investigate the feast following reports that government officials and political office holders contributed to the campaign.”

His position was supported by Democrat Party leader Abhisit Vejjajiva who “called on the PPRP [Palang Pracharath] to disclose the names of its supporters at the fundraising banquet for the sake of transparency and in compliance with the law.” He observed that “people who donate 100,000 baht or more to a campaign are legally required to disclose their identities. Those who paid for the tables [at the Palang Pracharath shindig] are considered to be the party’s financial contributors.”

One of the legal questions relates to “how Cabinet ministers and civil servants were able to afford seats at an extravagant fundraising dinner run by the pro-junta Phalang Pracharat Party on Wednesday.” Well, maybe not how they could afford tables but where the money came from. In addition, the “law on political parties prohibits state agencies from giving them donations of any kind or participating in their activities.”

The devil party and the junta needs to “explain” how tables that cost Bt3 million each “were reserved in the names of the Finance Ministry and state agencies including the Tourism Authority of Thailand (TAT).” Twenty tables were reserved for the Finance Ministry (60 million baht) and three for TAT (9 million baht), meaning that just these two state agencies poured 69 million baht into the junta’s political party.

Finance permanent secretary Prasong Poonthanet “insisted yesterday that no state funds had been expended.” He did not explain how the Ministry had and paid for 20 tables.

In addition, “[f]our tables, worth a combined Bt12 million, were reserved in the name of Phalang Pracharat secretary-general Sonthirat Sonthijirawong, who is commerce minister in the military-led government.”

Reacting to this obvious breach of rules, “activist Veera Somkwamkid said yesterday the National Anti-Corruption Commission should determine how many active civil servants attended the fund-raiser and how they obtained tickets.” He added to the legal mire by pointing out that if civil servants had seats given to them, “they should be scrutinised for illegally receiving a gift worth more than Bt3,000. And if they paid for themselves, they should be scrutinised for being ‘unusually rich’…”.

Because this is the junta’s party and enjoys reflected impunity and because the EC and NACC are essentially puppets of the junta, we would be surprised if they did anything much at all.

Update 1: For more information on who reserved tables at 3 million baht a pop, see the Thai-language ISRA News site. It lists names and numbers of tables. One important omission from the above news stories is the Bangkok Administration with 10 table (30 million baht). Naturally enough, the governor of Bangkok is a junta appointee and other senior members of that administration are deep yellow junta supporters.

Update 2: The Nation reports that the TAT has said it is “impossible” that “it spent Bt9 million on banquet tables at a fundraising dinner for pro-junta party Phalang Pracharat.” TAT director Yuthasak Supakorn declared his “agency had nothing to do with the dinner” adding that he “might take legal action against those reporting the false news for defaming the agency.” A Palang Pracharath official concurred and “rejected the report that the finance ministry and TAT had made donations and joined the fundraising dinner on Wednesday.” He added that “the fundraising process was transparent and the party would disclose the names of the donors in a couple of weeks.” We are pleased that’s sorted out then. Or that it will be fudged “in a couple of weeks.”

Juxtaposed outcomes

For those seeking double standards, two reports in the Bangkok Post could provide further confirmation. PPT doesn’t know any more than is in the reports, but the juxtaposition of them makes for interesting reading:

17 July 2010: “Watchdog says Thaksin culpable in TPI scheme.” The report states that arch-Thaksin Shinawatra enemy Klanarong Chanthik “said yesterday an NACC inquiry panel found that in 2003 Thaksin, then prime minister, endorsed the Finance Ministry’s bid to apply to be an administrator for TPI’s rehabilitation plan.” The essence of the story is that the Ministry of Finance stepped into the festering sore of corruption and double-dealing at TPI. Wrong it seems, so Thaksin gets another charge on a 6-2 vote in the National Anti-Corruption Commission.

19 July 2010: “DSI drops case against TPI.” The highly politicized Department of Special Investigation that operates hand-in-glove with the Abhisit Vejjajiva regime in all of its political machinations has dropped the case against “TPI Polene Plc – alleged to have violated the Securities and Exchange Commission (SEC) Act of 1992 by giving 258 million baht to the Democrat Party through an advertising company – for lack of evidence, DSI chief Tharit Pengdit said on Monday.” Tharit has been a real beaver in digging up all kinds of “evidence” against red shirts and against “anti-monarchists,” but not against the bosses in the Democrat Party. His evidence this time: “TPI’s annual report and a contract made with Messiah Business and Creation Co…”. Recall that this is the same “investigator” who used a government sketch map to bring in all kinds of people he says are part of the anti-monarchy movement.

One could easily conclude that there is something rotten in the state of Abhisit’s Thailand.

Finance Ministry to give more

In the Bangkok Post business section for 17 February 2010, a short note appeared with a picture of a couple of celebrities and Finance Minister Korn Chatikavanij, showing off pink plastic wristbands. The note states that the wristbands have been “produced in honour of the 82nd birthday of His Majesty the King. The Finance Ministry will produce 999,999 wristbands to be sold for 99 baht each through branches of Krung Thai Bank, the Government Savings Bank, the Government Housing Bank and the Bank for Agnculture and Agricultural Co-operatives. All proceeds will be donated to His Majesty.”

To save readers the effort, this amounts to 98,999,901 baht. This is just one of many ways that the government supports the royals and their “projects.” These kinds of activities are seldom questioned and the use of the donated funds is not subject to any scrutiny.