Airports of Thailand's board of directors last night resolved to stand by the recent Council of State ruling that its two contracts with King Power International Group should be nullified, said AOT chairman Gen Saprang Kalayanamitr.

"We have thoroughly considered all the legal aspects with the Council of State and the Office of the Attorney General," Saprang said after the board meeting last night.

Director Tortrakul Yomnak said the board would next consider what to do with King Power.

"At this point, King Power has not breached any contract because there has been no contract [since the contracts were struck illegally]. King Power can come to talk with us, the entire board, not through a lobby, and tell us what it has to offer," he said.

King Power was awarded two contracts at Suvarnabhumi Airport, for the operation of the duty free area and the management of the commercial area.

The Council of State ruled on March 19 that the contracts' values were deliberately brought below Bt1 billion to avoid the necessity of complying to the Joint Venture Act. As such, they should be nullified.

While the first contract involving the duty free area showed that King Power's space allocation was to cover 5,000 square metres, the actual area as shown to the Customs Department covers 10,780 square metres. The project value is thus over Bt813.83 million as stated in the contract. The inventory value was also excluded to bring the project value down.

In the contract that involved the commercial areas, worth Bt846.62 million, King Power included a depreciation cost to bring down the project value.

Valued at over Bt1 billion each, they should have been struck under the Joint Venture Act. Then, the screening committee would have been comprised of representatives from several agencies, not just AOT.

Director and board spokesman Chirmsak Pinthong said the Office of the Attorney General would officially notify King Power of the board's decision and AOT would report it to the Transport Ministry, which would then forward the issue to the Cabinet.

"The board has not yet considered the next step, what we will do with King Power, or the possible damage from this decision. We have not yet discussed if we will open a bidding process to find a new duty free operator and a new manager for the commercial area," Chirmsak said.

"We're not afraid of a lawsuit from King Power, given that we have thoroughly consulted the legal teams," he added.

The contracts were struck between King Power and the former board of directors chaired by Srisook Chandrangsu.

At the meeting, four board members - AOT acting president Kulya Pakakrong, ACM Narongsak Sangapong, Vudhibhandhu Vichairatana and Arkhom Tempittayapaisith, who all sat on the former board - were asked to leave the room. However, last night's decision was considered unanimous, Chirmsak said.

Meanwhile, Chirmsak noted that the board could not approve 58 procurement contracts worth a total of Bt507.14 million.

"We can't endorse the contracts, given that they were not ordered by authorised persons. Still, we will consider them on a case by case basis and the value of the contracts will depend on the benefits to AOT, not on the nominal value of the contracts," he said.

The 58 procurement contracts were awarded to suppliers without bidding. Most of them were ordered by Srisook and were awarded as part of AOT's attempt to speed up the opening of the new airport.

According to Chirmsak, the next board meeting will review the contract with the security company, which involves a huge contractual sum.

Watcharapong Thongrung

 The Nation