Documents have recently emerged revealing bribery scandals over the past two decades at various Thai state enterprises, which have failed to take action against the culprits despite clear evidence and even confessions of wrongdoing from agents in the US and UK.
Britain’s Rolls-Royce has admitted its agents paid bribes to officials to secure sales of jet-engines to Thai Airways between 1991 and 2005. Britain’s Serious Fraud Office has identified three dubious deals involving payments totalling more than $36 million during that period. A deputy minister reportedly had knowledge of the deals.
Meanwhile an inquiry by the US Department of Justice found that employees of PTT and its subsidiary PTT Exploration and Production were involved in accepting bribes from Rolls-Royce of more than Bt385 million.
Last month also saw the launch of an investigation into alleged bribery at the Metropolitan Electricity Authority, Provincial Electricity Authority and TOT. The investigation follows legal action taken by the US Department of Justice against Kentucky-based General Cable Corporation, which sold cable and wire to Thailand.
Now, a further bombshell has been dropped. This time it concerns a major global alcohol firm paying lobbyists for access to top levels of government, allegedly including the Thai prime minister, to obtain favourable deals.
In July, 2011, the US Securities and Exchange Commission (SEC) ordered “cease-and-desist proceedings” against Diageo Moet Hennessy Thailand (DT), based in Bangkok, which was found to have violated the Foreign Corrupt Practices Act.
Diageo is one of the world’s largest producers of premium alcoholic beverages.
“Over more than six years, Diageo, through its subsidiaries, paid over $2.7 million to various government officials in India, Thailand and South Korea in separate efforts to obtain lucrative sales and tax benefits,” the SEC reported.
The US commission went on to offer some very revealing details:
In the case of Thailand, the official SEC document notes that between 2004 and mid-2008, Diageo paid about $12,000 per month – totalling nearly $600,000 – to retain the consulting services of a Thai government and political party official who “lobbied extensively on Diageo’s behalf” in connection with multimillion-dollar tax and customs disputes, contributing to Diageo’s receipt of certain favourable dispositions by the Thai government.
“At various times, the Thai official served as deputy secretary to the Prime Minister, Adviser to the Deputy Prime Minister and Adviser to the Ministry of Agriculture and Cooperatives,” it added.
The Thai official also served on a committee of the ruling Thai Rak Thai Party – and as a member and/or adviser to several state-owned or state-controlled industrial and utility boards.
DT’s senior management knew that the Thai official was a government officer during its engagement with the consulting firm. The Thai official was the brother of one of DT’s senior officers at that time.
The official coordinated and attended numerous meetings between senior Thai government officials and senior Diageo and DT management, including two meetings in April and May 2005 with the prime minister.
In May 2005, shortly after those meetings, the prime minister made a radio address publicly endorsing Diageo’s position on calculating excise taxes based on quantity rather than on price.
On Diageo’s behalf, the Thai official also met repeatedly with senior commerce, finance and customs authorities in charge of the transfer pricing and import tax disputes, as well as with members of the Thai parliament.
The Thai official’s services contributed to Diageo’s successful resolution of several components of these disputes.
For example, during 2004 and 2005, Diageo and DT were actively engaged in a dispute with the Thai government over the appropriate transfer pricing formula for one-litre bottles of Johnnie Walker Red Label and Black Label Scotch Whisky.
Based in part on the official’s lobbying efforts, the government accepted important aspects of DT’s transfer pricing method and released over $7 million in bank guarantees that DT had been required to post while the tax dispute was pending.
DT improperly accounted for the monthly retainer that it paid to the Thai official through his consulting firm. The bulk of the payments assumed the form of monthly disbursements of $11,989 to the consulting firm for advisory fees and out-of-pocket expenditures.
Approximately $15,169 of the payments was for reimbursement of entertainment expenses, including those incurred on behalf of government officials.
DT recorded the payments under generically labelled accounts such as “Outside Services”, “Corporate Social Responsibility”, Corporate Communications”, “EA [External Affairs] Project” and “Stakeholder Engagement”.
Typically, DT charged payments to the consulting firm against the same account for a period of time, and then switched to another account without any discernible rationale for the change.
DT’s books and records did not reflect the fact that the company was paying a Thai government and party official to lobby in connection with multimillion-dollar tax and customs disputes.
Aren’t all these facts and related information clear enough for Thai anti-corruption agencies to identify all those involved in this case? Why hasn’t action been taken locally despite the fact that the US SEC’s documents have been in the public domain since July 2011?
Why are concerned officials still talking about “seeking cooperation from abroad to gain more information?” What has become of their professional duty to investigate responsibly, promptly and with competence?