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Published on October 9, 2007

The interim Surayud administration has disappointingly taken the easy way out on the crucial question of how to improve the administrative efficiency and corporate governance of the Social Security Office by leaving the current corruption-prone organisational set-up largely unchanged. Politicians at the Labour Ministry will continue to hold great influence over the appointment of SSO administrators rather than selection being based on a meritocracy whereby the most competent candidates are chosen from a pool of public-sector executives, or high-calibre private sector fund-managers. Instead of transforming the SSO into an autonomous public agency that must meet the highest standards of sound governance and transparent decision-making, the Surayud government has chosen the path of least resistance by turning only the SSO's investment arm into a public agency with a high degree of autonomous power.

The organisation remains under the thumb of politicians.

As things stand, the long-term sustainability of the SSO Fund of over Bt400 billion, on which some nine million workers depend for a wide range of welfare benefits, will remain uncertain. Past experience has proven many times that SSO administrators appointed by politicians cannot be trusted to serve the best interests of insured workers. Apparently, the Surayud government does not consider the SSO's future prospects a matter of urgency.

There are at least three glaring corruption scandals from the Thaksin era that have already done or will do serious damage to the SSO's finances which the Surayud government has neglected to act on. These include the procurement of a Bt2.8-billion computer system, the purchase of the over-priced Wattajak office building, and the Bt10-billion loan project for SSO's low-cost housing programme.

The Council of State, the government's legal advisory body, has already ruled that the computer procurement and loan projects were unlawful because they contradicted the Social Security Act BE 2533. Now the SSO must scrap the project and the contractor engaged to install the computer system will likely sue the SSO to seek compensation for loss of business.

The loan project for low-cost housing has already been cancelled.

The Wattajak building, purchased by the SSO for Bt389 million, was found to have cost Bt100 million more than its market value.

No one among top SSO administrators or senior officials at the Labour Ministry, which has administrative purview of the SSO, has been taken to task over these cases.

It was obvious for everyone to see that there must have been collusion among top SSO executives and Labour Ministry officials who served under the Thaksin government to implement the projects in violation of the SSO Act. Certainly the SSO's deviation from good stewardship of the Social Security Fund was no accident. Rather it is symptomatic of the ingrained corruption that continues to persist even as the Surayud government vows to clean up politics and reform the bureaucracy before putting the country back on track to the full restoration of democracy. All of the anti-corruption efforts by the Surayud government now sound like empty promises.

Some past and present administrators have been accused of introducing new, wasteful services that mimic the previous government's populist policies or of favouring certain interest groups at the expense of insured workers. The Surayud government did not push for a thorough investigation into these cases to find out who was responsible for any wrongdoing.

The Social Security Fund may grow to become the single biggest fund in the country with Bt1 trillion in assets in 10 years. However, that is no cause for SSO-insured workers or the government to be lulled into complacency. At some point in the foreseeable future, the fund's intake of contributions from workers, employers and the government and the huge outflow in the form of pension annuities will require meticulous management to ensure long-term sustainability.

Corruption must be nipped in the bud now and not allowed to undermine the future of the SSO. It is still not too late for the government to do the right thing because it has a few more months to go before handing power to the new democratically elected government to emerge from the general election scheduled for December.

The Nation