Somchai was speaking on the basis of initial findings by the State Audit Commission, which was dissolved upon an order by the Council for Democratic Reform (CDR).

The CDR staged a bloodless coup that overthrew the Thaksin-led administration. It also dissolved the State Audit Commission and established the Assets Examination Committee to probe corruption cases instead.

"GLO exploited legal loopholes by donating money to its GLO foundation, which then gave money generously to various projects [launched by politicians]," Somchai said.

An informed source at the Office of the Attorney-General added that there were grounds for a charge of irregularities in the use of funds.

"Evidence suggests that politicians pocketed some money when requesting funds for an agency," the source said.

Former senator Dr Nirun Pitakwatchara said the GLO had earned more than Bt10 billion profit from the government's two- and three-digit lotteries during the past three years but failed to pay the money to the state coffers.

"This is not right," Nirun said.

In a related development, Justice Ministry acting permanent secretary Charan Pakdithanakul yesterday pushed for the idea of using anti-money laundering laws against underground lottery-operators.

"If the government lists the underground lottery operations as an offence under anti-money laundering laws, underground operators will face asset seizures, and this will finally doom the underground lottery," Charan said.

On Thursday he suggested that the big jackpots - at least Bt20 million for each semi-monthly draw of the government's two- and three-digit lottery - should be abolished. The grand prizes were a vicious means to seduce people into buying more lottery tickets, he said.

The administration led by Thaksin Shinawatra failed to consult people and social activists when it launched the two- and three-digit lotteries together with the big jackpots as a counter-measure against organised lotteries three years ago, he said.

"We don't need the jackpot to crack down on underground lotteries. We can use anti-money laundering laws," Charan said yesterday.

The criminal code only imposed fines, which was not enough to slow the underground lottery-operators down, he added.

Under the previous government, a proposal to add gambling, including lotteries, to the list of offences under the Anti-Money Laundering Act of 1999 was shot down in Parliament.

Jaran believes some politicians with ties to illegal bookmaking syndicates were behind the move.