30 July, 2012
Overview
Corruption, both in the private and public sectors, has long been a frustration for companies doing business in Thailand. However, international and Thai enforcement agencies are increasingly holding companies accountable for corrupt activity.
A number of major international companies have found themselves the subject of corruption-related investigations, often facing severe penalties for their misconduct. On the domestic front, the Thai government has recently introduced a series of reforms aimed at strengthening anti-corruption enforcement in Thailand. These reforms, coupled with the growing pressure from the private sector in Thailand to clean up business practices, indicate that Thailand’s stance against corruption is gradually hardening.
Recent international corruption cases
A UK-based drinks company
In July 2011, the SEC brought charges against a UK-based drinks company, for allegedly paying over US$2.7 million to foreign government officials through its subsidiaries to secure lucrative sales and tax benefits. According to the SEC, from 2004 to mid-2008, the company allegedly paid almost US$600,000 (about US$12,000 per month) to a Thai government and political party official, who successfully lobbied the Thai government to resolve the company’s multi-million dollar tax and customs disputes in its favour. The company settled with the SEC for US$16 million without admitting or denying the SEC’s allegations.
Alliance One International, Inc and Universal Corporation
In August 2010, two tobacco companies, Alliance One International, Inc. and Universal Corporation, settled allegations of FCPA violations in Thailand with the SEC and DOJ. The allegations concerned alleged payments to Thai government officials to secure contracts with the state-owned Thailand Tobacco Monopoly for the sale of tobacco leaf. Without admitting or denying the SEC’s allegations made against them, the companies agreed to pay US$13.8 million in criminal penalties and to disgorge an additional US$14.5 million of profits. Alliance One also agreed to cooperate with the ongoing investigation, and to retain an independent compliance monitor for a minimum of three years to oversee the implementation of an anti-bribery and anti-corruption compliance program and to report periodically to the DOJ.
The Greens and the Siriwans
In 2009, Gerald and Patricia Green, two Hollywood producers, were found guilty of a conspiracy to violate the FCPA and to commit money laundering offences following a criminal trial. The charges laid against them concerned payments allegedly made to the former Governor of the Tourism Authority of Thailand, Ms Juthamas Siriwan. The payments were allegedly made in order to obtain a series of Thai government contracts, including the contract to manage and operate Thailand’s yearly film festival. The Greens were subsequently sentenced to imprisonment in 2010.
Following from the conviction of the Greens, an indictment was unsealed against Ms Siriwan and her daughter, Ms Jittisopa Siriwan in January 2010. The DOJ has charged the Siriwans with violating the Money Laundering Control Act by, among other things, transmitting funds to promote unlawful activity, namely the violation of the FCPA and the violation of Thailand’s Penal Code, which prohibits the bribery of public officials.
The charges against the Siriwans are relatively novel. The Siriwans have not been charged with violations of the FCPA per se because the FCPA does not criminalise the conduct of foreign officials receiving bribes. By framing the offences as money laundering charges, the DOJ has circumvented this apparent limitation in the FCPA. The progress of the case since unsealing of the indictment has been limited, but is being carefully watched, opening as it does the prospect of similar charges being brought in the US courts in the future against other foreign public officials.
Recent domestic corruption cases
The Siriwans, who are currently residing in Thailand, are facing possible corruption charges at home as well. The National Anti-Corruption Commission (“NACC”) has recommended that the Siriwans be prosecuted for allegedly taking bribes from the Greens.
Recent developments in domestic anti-corruption legislation
In April 2011, Thailand amended its Organic Act on Counter Corruption. The amendments provided, among other matters, rules for the protection of key witnesses, an extension of time for filing complaints and additional powers for the NACC. As a direct result of the amendments, the NACC issued a notification stipulating that private sector entities entering into procurement contracts with government agencies are required to prepare an annual review of their expense accounts for the Revenue Department.
