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Anti-Corruption Regulation in Thailand.

25 February, 2012

 

 

1 What are the main bodies responsible for investigating and combating corruption, money laundering and terrorist financing?
 
These are:
 
• the National Anti-Corruption Commission (the “NACC”) www.nacc.go.th;
• the Public Sector Anti-Corruption Commission (the “PACC”) www.pacc.go.th;
• the Anti-Money Laundering Office (the “AMLO”) www.amlo.go.th; and
• the Office of the Auditor General of Thailand (the “OAG”) www.oag.go.th.
 
2 What does each of these bodies investigate?
 
The duties and responsibilities of the NACC include prevention and suppression of corruption involving public and state officials, and monitoring and investigating the assets and liabilities of persons in political positions.
 
The PACC was established in 2008 to focus particularly on corruption by certain categories of public officials. Its jurisdiction thus forms part of the broader jurisdiction of the NACC, and within that area the NACC will generally refer cases to the PACC.
 
The AMLO has primary responsibility for implementing the anti-money laundering law and suppression of terrorist financing. It collects and analyses reports from financial institutions and other sources to identify subjects for investigation, and it is responsible for conducting investigations leading to the seizure and forfeiture of assets acquired with the proceeds of offences under the relevant laws.
 
The OAG has primary responsibility for auditing state agencies.
 
3 What is the source of anti-corruption regulations in Thailand?
 
The primary sources of anti-corruption laws and regulations include:
 
• the Constitution of the Kingdom of Thailand 2007, which provides for the establishment of the NACC and the enactment of anti-corruption and other relevant laws;
• the Organic Act on Counter Corruption 1999 (as amended in 2011), which provides for the establishment and operation of the NACC; the inspection of assets and liabilities of persons holding political positions and state officials; the creation of criminal offences relating to conflicts of interest and corruption by state officials (see Q4 below); and the investigation and prosecution of such offences and of allegations of unusual wealth;
• the Penal Code of Thailand, which creates a number of general criminal offences relating to corruption of public officials (see Q4 below); and
• the Act Concerning Offences Relating to the Submission of Bids to State Agencies 1999, which creates a series of criminal offences relating to corruption and other improprieties in the context of public procurement (see Q4 below).
 
Numerous other laws and regulations are relevant to aspects of anti-corruption. For example the Civil Service Act 2008 (providing for ethical codes and standards for civil servants), election laws (prohibiting poll fraud and corruption) and the laws governing partnership shares and securities held by government ministers etc.
 
The primary source of anti-money laundering law is the Anti-Money Laundering Act 1999 as amended in 2008 and 2009. The Act creates money laundering offences and a reporting regime for financial institutions and certain others.
 
The role, powers, duties and responsibilities of the OAG are prescribed in the Constitution and in the Organic Act on State Audit 1999.
 
4 What constitutes a bribery/corruption offence under the anti-corruption regulations in Thailand?
 
The primary offences of bribery/corruption are (in summary terms):
 
• demanding, accepting or agreeing to accept property or other benefits in return for inducing an official, by dishonest or unlawful means or by using influence, to exercise or not to exercise his functions to the advantage or disadvantage of any person (s.143, Penal Code);
• giving, offering or agreeing to give property or other benefit to any official in order to induce him to act or not to act or to delay an act, contrary to his functions (s.144, Penal Code);
• coercion or inducement of any person by an official, in wrongful exercise of his functions, in order to procure a property or other benefit for himself or any other person (s.148, Penal Code);
• wrongfully demanding, accepting or agreeing to accept any property or other benefit in return for exercising or not exercising any functions, whether or not such exercise or non-exercise is itself wrongful (s.149, Penal Code); and
• receipt by a state official (current and for two years after ceasing to hold office) of property or any other benefit, except for:
 
o legitimate property or other benefits derived under and in accordance with the law; and
o property or other benefits accepted “on an ethical basis” in accordance with rules prescribed by the NACC (see Q6 below and the Notification of NACC concerning acceptance of property and other benefits on an ethical basis by state officials 2000) (s.103, Organic Act on Counter Corruption).
 
The Act Concerning Offences Relating to the Submission of Bids to State Agencies 1999 creates offences relating to: bid collusion aimed at restricting price competition or otherwise taking advantage of state agencies contrary to normal business practice (s.4); giving or requesting property or any other benefit in order to induce the award of a contract or the submission of an inflated or under-priced bid or a withdrawal from bidding (s.5); threat or use of force in connection with submission or withdrawal of bids (s.6); deceitful or other acts which deprive another of an opportunity for fair submission of bids (s.7); submission of under-priced bids or bids offering artificially high returns, in order to prevent fair competition (s.8).
 
Do local anti-corruption regulations have extra-territorial effect?
 
Offences under the Penal Code may be prosecuted in Thailand even if committed wholly or partly outside Thailand, subject to various limitations and conditions set out in the Penal Code. Thai law does not criminalise bribery of foreign public officials.
 
Are there any statutory defences provided under the relevant legislation, eg, de minimis exceptions, payments that are legal in the country in which they are offered etc?
 
See Q4 above with regard to exemptions from the prohibitions on acceptance of property or other benefits by state officials.
 
Under the supplemental “Rules on Accepting Property or Any Other Benefit by Public Officials on an Ethical Basis” issued by the NACC, property or other benefits received from persons other than relatives and which have a value that does not exceed THB3,000 would be deemed to have been received on an ethical basis and not corrupt.
 
If the gift or benefit is of a higher value, and is not received from a relative or is not a benefit given to people generally where it is necessary to accept such a gift to maintain friendship, goodwill, or personal relationship, the official may keep the gift only if approved by his superior officer after being notified. Otherwise the gift must be returned.
 
Save as provided above, no other general defences are provided.
 
7 What powers of investigation do the NACC, PACC and AMLO have and what are the consequences of non-compliance?
 
The Organic Act confers wide-ranging powers of investigation on the NACC. The NACC is also empowered to conduct inquiries under the Offences Relating to the Submission of Bids to State Agencies Act 1999. The powers of the PACC are similar to those of the NACC. 
 
In the course of an investigation, the NACC and the PACC are empowered to:
 
• order any state official or employee of a state official to perform all such acts as necessary for the performance of the NACC/PACC’s duties;
• require the production of relevant documents or evidence by any person;
• summon any person to give a statement or testimony for the purpose of an inquiry;
• seek from the competent Court a warrant permitting entry into a dwelling-place, place of business or any other place for the purposes of inspecting, searching, seizing, or attaching documents, property or other evidence related to the matter under inquiry;
• request a state agency or private agency to carry out any act for the purpose of the NACC/PACC’s inquiry; and
• request any financial institution to provide access to information concerning the accused or any other person involved in the enquiry.
 
Where the NACC cannot access such information, it can request the court to order that such access be granted to it.
 
A person who fails to comply with any such order or summons may be imprisoned for up to six months and/or fined up to THB10,000. A person who destroys, conceals or otherwise renders useless any property, documents, evidence etc seized or demanded by the NACC may be imprisoned for up to three years and/or fined up to THB60,000.
 
Neither the NACC nor the PACC has the power to intercept communications. However, they are empowered to request assistance from other agencies, which may include agencies that do have such powers.
 
Under the Anti-Money Laundering Act 1999, the AMLO is empowered to:
 
• temporarily restrain any transaction where there is evidence or probable cause to believe it may involve the commission of a money laundering offence;
• order any financial institution, public agency or other person to testify or to submit a written explanation, account, document or other evidence for examination or consideration;
• enter any residence, place of business or vehicle in order to search for, trace, monitor, seize or attach any asset or evidence suspected of being involved in the commission of a money laundering offence, if (a) there is probable cause to suspect that such asset or evidence is there, and (b) it is too late to obtain a search warrant and the asset or evidence may be moved, concealed, destroyed, or altered;
• petition the Court for a warrant granting access to information concerning a customer’s account at a financial institution, or to access/intercept communications data or computer files, where there is probable cause to believe that the account, equipment, device or computer has been used or may be used for the commission of a money laundering offence; and
• where there is probable cause to believe that there may be a transfer, distribution, placement, layering or concealment of any asset related to the commission of an offence, to restrain or seize that asset for a period of up to 90 days during the course of an investigation and/or where there is evidence to believe that an asset is related to the commission of an offence, to petition the Court to forfeit that asset to the state.
 
A person who fails to appear or refuses to testify or to submit a required explanation or other evidence, or who obstructs or fails to cooperate with any entry to premises, may be imprisoned for up to one year and/or fined up to THB20,000.
 
8 What are the powers of arrest and detention of the NACC, PACC and AMLO?
 
The NACC and the PACC have no powers of arrest or detention, although they are empowered to petition the Court to issue an arrest warrant where they find a prima facie case. The AMLO does have the power to arrest and take a preliminary statement but it must transfer the suspect to the police within 24 hours. In such case of arrest and detention, the Criminal Procedure Code is applied mutatis mutandis.
 
Do the relevant bodies have powers to freeze properties which may be proceeds of a bribery/corruption offence pending conclusion of their investigation?
 
See the answer to question 7 above.
 
10 Are there any provisions requiring investigations or information disclosed during the course of investigations to be kept quiet?
 
Both the Organic Act on Counter Corruption and the Anti-Money Laundering Act create offences for wrongfully disclosing information obtained during the course of investigations under those Acts.
 
11 Are there protections available when responding to investigations by the NACC, PACC or AMLO, eg, right to legal representation at interviews, privilege against self-incrimination and legal professional privilege?
 
The Organic Act on Counter Corruption provides (s.47) that a person under investigation by the NACC is entitled to have a lawyer or other trusted person present “for hearing the explanations or testimonies”. There is no similar provision in the Anti-Money Laundering Act. However, under the Criminal Procedure Code a suspect is entitled to have an attorney present during an interview by an enquiry official and it may be argued that this also applies to interviews by 
the AMLO.
 
There are no specific protections against self-incrimination in relation to NACC, PACC or AMLO investigations. However, the Constitution provides a general right to refuse to testify against oneself.
 
Thai law does not recognise any substantive rule of attorney-client privilege. Instead, material passing between lawyer and client is protected (in part) by provisions in the Civil and Criminal Procedure Codes for a lawyer to refuse to produce evidence acquired or made known to him in his capacity as a lawyer. This is subject to the right of the court to compel production if it concludes that the refusal is not well-grounded. In practice, the confidentiality of communications between lawyer and client appears to be widely accepted.
 
12 Do the relevant anti-corruption measures relate only to the bribery of “public” individuals and/or bodies?
 
The anti-corruption measures under the Penal Code and the Organic Act on Counter Corruption relate only to the bribery of persons holding political positions, and officials in public administration and the Courts (including judges, public prosecutors and officials in the counter-corruption agencies). The Organic Act on Counter Corruption contains an extensive list of persons falling into those categories, including employees of government agencies, state enterprises, and other state agencies. Neither the Penal Code nor the Organic Act on Counter Corruption criminalises corruption involving the private sector.
 
The Offences Relating to the Submission of Bids to State Agencies Act 1999 is broader in scope in that it prohibits certain behaviour by and between private individuals and/or bodies in bidding for Government contracts.
 
13 What sanctions/sentences may the relevant authorities impose?
 
The NACC, PACC and AMLO are not empowered to impose sanctions or sentences. Criminal proceedings must be referred to the Public Prosecutor to bring proceedings. The NACC, PACC and AMLO may also recommend disciplinary action against an official but, again, are not themselves empowered to carry this out.
 
Sentences for corruption-related and money laundering offences vary but may include imprisonment, a fine or both; seizure of property; and disciplinary action against state officials.
 
14 Is it possible to enter into a settlement to resolve any enforcement action/prosecution by the NACC, PACC or AMLO?
 
Under the Criminal Procedure Code (section 37), offences punishable only by a fine may be settled by payment of the maximum fine before trial. Other relevant offences may only be settled by agreement with competent officials if the law creating the offence so provides. Neither the Organic Act on Counter Corruption nor the Anti-Money Laundering Act provides for settlement in this context.
 
15 Are there provisions for persons to appeal against any enforcement action/prosecution taken against them?
 
Under the Criminal Procedure Code, there is a right to appeal to the Appeal Court against the great majority of convictions on questions of both fact and law, though the right to appeal on questions of fact is restricted in some situations. There is a further right of appeal to the Supreme Court, though appeals on questions of fact are more restricted. The Anti-Money Laundering Act provides a right to petition the court to challenge any restraint or seizure of assets by the AMLO.
 
16 Do the police and other local regulatory authorities assist the relevant bodies in their investigations?
 
The NACC/PACC can seek facts/evidence themselves as outlined above, undertake investigations jointly with the police, or to notify the police to undertake such investigations.
 
17 How do the relevant authorities interact with overseas regulators?
 
Under the Mutual Legal Assistance in Criminal Matters Act 1992, Thailand has signed bilateral agreements for mutual legal assistance in criminal matters with the UK, US, France, Canada, Norway, the People’s Republic of China, Korea, Peru, Poland, India and Sri Lanka. In Thailand, the Attorney General’s Office is the entity responsible for coordinating requests for assistance. The AMLO has also signed separate Memoranda of Understanding with more than 30 countries for the exchange of financial information related to money laundering.
 
Countries which have not signed bilateral agreements with Thailand for mutual legal assistance may seek such assistance through diplomatic channels.
 
18 Are there any laws or regulations imposing obligations on persons to “whistleblow” or disclose suspected corruption or money laundering within an organisation?
 
The Anti-Money Laundering Act imposes a duty on a prescribed list of persons (in general, certain financial institutions and advisers, and certain categories of traders) to report to the AMLO in respect of suspicious transactions, cash transactions exceeding THB2,000,000 and other transactions exceeding THB5,000,000 in asset value, with certain categories of transactions being exempted. The penalty for failure to report is a fine not exceeding THB500,000 and an additional amount not exceeding THB5,000 for each day that the violation is not corrected.
 
There is no broader or general “whistle-blower” obligation, although draft whistleblower legislation has been prepared.Guide to Anti-corruption Regulation in Asia 2012/2013 78
 
19 What is the impact of overseas anti-corruption laws such as FCPA and the UK Bribery Act on companies and/or individuals in Thailand?
 
The US Foreign Corrupt Practices Act (the “FCPA”) prohibits the bribery of “foreign officials”. It is extra-territorial in effect and impacts all US companies and persons as well as foreign companies and persons if they issue securities on a US Exchange or otherwise engage in activities in furtherance of a bribe in US territory. Importantly, in pursuing potentially unlawful acts under the FCPA, the US Department of Justice has adopted an expansive definition of what it means to be committing an act of bribery in the US and has interpreted it to catch the transfer of money through US bank accounts including, potentially, all US dollar transactions that are cleared through bank accounts in the US.
 
The FCPA also contains a books and records provision requiring issuers to make and keep accurate books, records and accounts, which, in reasonable detail, accurately and fairly reflect the issuer’s transactions and disposition of assets. In addition, the FCPA’s internal controls provision requires issuers to devise and maintain reasonable internal accounting controls aimed at preventing and detecting FCPA violations. These provisions apply to all companies, both US and non-US, that have their securities issued on a US exchange. They are expansive provisions and have been used to prosecute companies in cases where bribes have been paid to private individuals.
 
The UK Bribery Act 2010 (the “Bribery Act”) covers bribery of private persons as well as public officials. It also has extra-territorial application. For example, the Bribery Act prohibits offering or accepting a bribe outside the UK provided that the offender has a close connection with the UK. Persons with a “close connection” include British citizens and organisations incorporated in any part of the UK. Similarly, the Bribery Act’s corporate offence – which occurs when an organisation fails to prevent those performing services on its behalf from paying bribes – applies not only to organisations incorporated under UK law, but also to any other company carrying on a business, or part of a business, in the UK, regardless of where the act of bribery takes place.
 
The fact that conduct may not constitute an offence under local law does not necessarily mean it is permitted under the FCPA or the Bribery Act. Companies doing business in Thailand are advised not only to comply with domestic legislation, but should also be fully aware of the far-reaching extra-territorial effect of both the FCPA and the Bribery Act.
 
 
For further information, please contact:
 
Alastair Henderson, Partner, Hebert Smith
 
Surapol Srangsomwong, Herbert Smith
 

 

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