The corruption glacier I

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.

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