Former head of troubled Agri Trading stands to gain anew from rice politics

Corporate October 15, 2012 00:00


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The recent gain by Siam Indiga to become the country's biggest rice exporter has been questioned - as Apichart Chansakulporn, former managing director of the troubled President Agri Trading, is now positioned to control the biggest lot of the government's

Apichart always thinks big. About 10 years ago, he had the initiative to set up an integrated rice-silo operation, involving a huge investment of Bt650 million. The silo was established in Phichit and was meant to be a rice-trading centre in the lower North with the biggest capacity for drying and warehousing rice in Thailand at that time, the company claimed.

But, after operating for some years, the company announced the shutdown of its integrated rice-silo operation because of accumulated debts of billions of baht. On January 12, 2010, the company filed for bankruptcy, as it owed a combined debt of Bt12 billion to nine commercial banks, both Thai and foreign, including Bangkok Bank, Krung Thai Bank, and TMB Bank.

President Agri was also sued by the Public Warehouse Organisation for Bt6 billion in compensation for defaulting on bidding orders in past years.

The company monopolised the government’s rice stockpile from 2003 to 2005, distributing rice to traders through a variety of methods including bidding, ex-warehouse sales and the secret release of stockpiles to specific exporters.

Political backing allowed President Agri Trading to grow rapidly during the time that Thaksin Shinawatra was prime minister. Apichart, a former executive of President Agri and the real top manager of both President Agri Trading and Siam Indiga, has close relations with Thaksin.

Under commerce minister Wattana Muangsook in 2004, the company won the biggest lot in the rice-stockpile auction, 1.7 million tonnes. Its total winning bids with the Commerce Ministry that year amounted to 2.3 million tonnes.

President Agri Trading had to pay the ministry Bt14 billion for the lot of 1.7 million tonnes. However, the ministry lost Bt2 billion when the company failed to remove the rice from government stockpiles.

After President Agri Trading ran into trouble, Siam Indiga, which had close ties to the bankrupt firm’s principals, was set up and has participated in many of the ministry’s rice auctions.

Early this year, Siam Indiga looked set to win an allocation of 2 million tonnes of government rice, which would have opened the door to massive corruption by politicians, a rice-trading source alleged at the time.

The government would have lost billions of baht from this deal, which would have allowed the company to monopolise the government’s rice stocks through its close connections with politicians, the source said.

A rice-trading source said the Commerce Ministry would soon allocate 2 million tonnes of government rice to Siam Indiga. The company would then export the rice to Indonesia and Africa under the government’s stock-release plan.

At that time, Siam Indiga would have paid only Bt11-Bt12 per kilogram compared with the market price of Bt15. The government would claim that the lower price was fair, as the stock was old rice.

Siam Indiga also won part of the government stockpile under the silent-releasing method with total volume of 300,000 tonnes. The rice was set for export under a government-to-government deal to Indonesia only. The bid was Bt11-12 per kilogram compared with the government cost of Bt21-Bt23 per kilo while the market price was Bt15. With this lot alone, the government lost Bt3.3 billion. However, Siam Indiga enjoyed a profit of Bt900 million.

Kittiratt Na-Ranong, commerce minister at the time, immediately came up with an explanation, saying the government had to allow only two firms, including Siam Indiga, to export to the Indonesian government because the company was specially named by Jakarta.

However, another rice-trader source, whose main export market is Indonesia, said the Thai government had offered a list with the companies’ names for exporting rice to Indonesia.

There was widespread criticism that the low price given to Siam Indiga would allow the company and some politicians to make a killing from the gaping spread between the cost and the high overseas price.

Last week, the Thai Rice Exporters Association reported that the Kingdom’s rice export volume had dropped by a significant 44.6 per cent to 5.04 million tonnes during the first nine months of this year. Export value plunged by 34 per cent to Bt93 billion, or by 35.7 per cent in dollar terms to US$3 billion, during the first eight months.

Meanwhile, the ranking of the country’s biggest exporters has been reshuffled. The list now stands at Siam Indiga (480,000 tonnes), Chaiyaporn Rice (420,000 tonnes), Capital Rice (350,000 tonnes), Asia Golden Rice (330,000 tonnes) and CP Intertrade. Siam Indiga’s export volume grew sharply while overall rice exports were dropping.

Previously, the country’s top five exporters were, in order, Capital Rice, Asia Golden Rice, Siam Indiga, Chaiyaporn Rice and CP Intertrade.

President Agri Trading was once a member of the Thai Rice Exporters Association but its membership expired and was not renewed. Moreover, the subsequently established company Siam Indiga has not shown any intention to join the association. As a result, it is very difficult to monitor the company’s export prices and shipping volume.

It is also very difficult to contact Apichart. But it was reported by a politician, who asked not to be named, that Apichart met with Thaksin in Dubai early this year.

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