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April 7, 2016

Tailoring Compliance Programs to Country-Specific Risks: Challenges in Thailand

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TRACE Trends – A Compliance Conversation

The content below was first published on TRACE Trends – A Compliance Conversation, a blog published by TRACE International. Tilleke & Gibbins is the TRACE Partner Law Firm for Thailand.

Companies doing business in Thailand should be wary of corruption risks. While Thailand has made substantial recent progress in its efforts to combat corruption, the practice nonetheless persists in many aspects of business. As in other jurisdictions, companies that commonly utilize government contracts or regularly interact with officials are at special risk. Companies may be at risk for not only running afoul of Thailand’s recently updated anti-corruption laws, but also under foreign anti-corruption laws, such as the FCPA and UK Bribery Act.

Thailand has extensive anti-bribery legislation in place. In 2015, the government issued the latest amendment to the Thai Organic Act on Counter Corruption (OACC). The Amendments to the OACC provide that a company can be criminally liable for the bribery offenses of its employees, agents, and others acting on behalf of the company, even if the bribe-giver acted without the company’s authorization. Importantly, the OACC Amendments also state that if the company implements “proper internal measures” (i.e. a compliance program) to prevent the bribe, this would be a mitigating factor to limit or exclude liability. 

Thailand’s current government has made anti-corruption a core policy focus. Numerous investigations have been brought against public officials. For example, the former president and chairman of a state-owned bank was recently sentenced to 18 years in prison for various corruption-related offenses. While there have not yet been major anti-corruption investigations initiated against foreign companies in Thailand, this is likely to change, particularly given the current government’s stated commitment to more aggressive anti-corruption enforcement.

To minimize risks, companies should tailor internal compliance programs for the local Thai environment. One aspect of a tailored program is having controls in place to vet third-party agents and consultants, and to identify improper or potentially illegal behavior. Foreign-invested companies often rely on third-parties to liaise with officials for everything from securing contracts to dealing with law enforcement officials. A good local compliance program would ensure that those third-parties are properly vetted. The program would also red flag situations warranting further review, such as higher-than-expected official fees, entertainment expenses, questionable charitable contributions, and other similar payments.

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