There was speculation that some of it might have been hidden in the luggage he carried with him on his trip to the United States to address the UN assembly last month: so many suitcases for just a few shirts?

There were rumours that the wily tycoon might have converted some of the Bt73.3 billion into foreign exchange and jewellery and carried it with him during his overseas trip shortly before the coup on September 19, but none of this has been substantiated.

Former governor of the Bank of Thailand MR Pridiyathorn Devakula earlier insisted the ex-premier had not sought permission to transfer money and the government had no plan to freeze his assets. Thus Thaksin was entitled to put the money wherever he wanted, but some people can't help wondering where it has all gone.

At a recent seminar, "Capital Flight and the Economic Crisis in Thailand and Asian countries", panellists exchanged views on how money could find its way abroad without attracting attention.

Thaksin would not have to be a genius if he really wanted to take his fortune out of the country without being noticed by the authorities. A number of exporters have carried dollar banknotes in their James Bond briefcases to avoid the complication of money-transfer procedures.

According to foreign-exchange control authorities, Thai investors can take up to US$10 million (Bt378 million) a year out of the country for direct investment or buy more than 10 per cent in a foreign company without seeking the central bank's approval.

A source from the central bank observed that Thaksin could have changed baht into other currencies gradually, without any public notice, and then carried it with him abroad.

Pornchai Chunhajinda, a lecturer from Thammasat University's Faculty of Commerce and Accountancy, revealed the methods and the impact on economic stability based on his many studies and statistical research.

People holding foreign currencies can take their money out of various countries as "capital flight" or normal capital outflow. Economists Cumby and Levich proposed that any legal capital outflow be considered normal capital outflow but any illegal capital outflow be considered capital flight.

Kindleberger and Walter, also economists, said that capital flight could happen in four ways: offshore banking, cash transfers, valuable treasures and false invoicing.

First, the money owners could transfer money out of the country via offshore banking procedures. They open a bank account abroad, in a jurisdiction where secrecy laws are strictly enforced, such as Switzerland or 30 other countries around the world, including the British Virgin Islands and the Cook Islands.

Secondly, those not so risk-averse could carry paper money in local and foreign currencies such as personal cheques, cashier's cheques or bearer securities. Gangs of money-launderers like to carry paper money, but this method can be probed by authorities and is prone to loss by accident or theft.

"Eurobonds are popular as paper money as they do not identify the holders and can be spent in any place around the world," Pornchai said.

Third, money-holders could buy gold, valuable metals, jewellery, diamonds, art, or collectable, portable items and carry them abroad when they cannot transfer their assets through the banking system due to strict controls and the risk of being found out by governments. They could sell the valuables abroad at good prices, because their value would be preserved despite any depreciation of the local currency.

Fourth, traders in strict exchange-control countries could incorrectly quote prices on their invoices, differing from the actual value of goods.

Importers may ask foreign traders to over-invoice, quoting prices higher than the real value. Later, the importers buy foreign currencies and pay the money to their foreign trading partners. Then the foreign traders transfer the money over the actual prices into bank accounts the importers have opened abroad.

"In contrast, exporters could under-invoice. For example, they declare $100 million as an export value, lower than the real value of $150 million. This means that the money flowing into the country is lower than the actual prices, and the rest runs into the exporters' accounts abroad," he said.

False invoicing distorts current accounts and balance-of-payment accounts and demand and supply for foreign currencies.

In addition, transfer pricing is a method which is popular among multinational companies and their affiliates because it can be done smoothly and is difficult to discover. The parent companies, which have the right to set the selling prices, may try to decorate their affiliates' bottom lines in line with tax rates. The affiliates located in high-tax countries are set to reap low profits, and those in low-tax countries obtain high profits.

Khunying Pojaman carried six pieces of luggage back into Thailand recently. Again, speculation was rife, with many hoping it was capital inflow.

Anoma Srisukkasem

The Nation