Thailand's Airport authority denied 'fabricated' claims it colluded with King Power in corruption

business July 18, 2017

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Thailand's airport authority top official denied an allegation that King Power International, the company owning Leicester City, corruptly short-paid its airport concession fee and that such allegation is 'absolutely' groundless.

Dr. Nitinai Sirismatthakarn, President of the Airports of Thailand (AOT) clarifies the news report by the English media Guardian and Singaporean The Straits Times in his interview given to The Nation "The lawsuit filed against Airports of Thailand Plc ("AOT") concerned the airport pick-up counters for duty free merchandises which is one of the activities under the Commercial Areas Management Agreement operated by King Power Suvarnnabhumi Co Ltd (“King Power”). This does not relate to the airport duty free shop concession granted to King Power's affiliate at all.

The allegations that AOT and King Power have colluded to reduce concession fee percentage in respect of pick-up counters from 15% to 3% which caused Baht billions damages to the state are absolutely untrue.It is correct that the rate was reduced from 15% to 3% but the basis for calculation is totally different.

Under the management agreement AOT and King Power agreed the concession fee at 15% of commercial sales or service fees earned by King Power. The pick-up counters are considered as service activities and therefore concession fee is calculated at 15% of service fees for delivery of merchandises at such counters. The said service fees earned by King Power were 3% of delivered merchandise value. Therefore the concession fee payable to AOT was equal to 0.45% of delivered merchandise value (15% of 3% service fees).

In 2012 AOT proposed an adjustment of the concession fee for pick-up counters from 15% of the service fees to 3% of delivered merchandise value. This was nearly 7-time fee increase but King Power initially resisted. AOT and King Power had negotiated the proposed fee increase. During the negotiation period AOT temporarily implemented the new rate since October 2012 and if the negotiation resulted otherwise, fees earned by AOT would be re-adjusted by the final agreement of the parties. This clause was clearly for the state’s interest.

AOT and King Power finally reached a mutual agreement in November 2014 that the concession fee rate was permanently adjusted from then 15% of the service fees to 3% of delivered merchandise value. AOT achieved heavy benefits from this adjustment since though the rate was reduced, the basis of calculation was much greater. The adjustment gave AOT nearly 7-time income surge. This absolutely cannot be considered as damage to the state.

This lawsuit is not yet accepted by the court and no one is accused" said Dr.Nitinai