You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

April 18, 2012

Thailand: Strengthening Anti-Corruption Measures and the Public Procurement Process

Subscribe to Updates
TRACE International

Thailand’s ratification of the United Nations Convention Against Corruption (UNCAC) is further evidence the Kingdom intends to ramp up its anti-corruption measures in a bid to facilitate the prosecution of offenders and increase transparency in its public procurement process.

The ratification of the UNCAC on March 31, 2011, seven years after Thailand’s signing made it the 149th State Party of the UNCAC, has significantly led to the first amendment of the Organic Act on Counter-Corruption (OACC), which is the core anti-corruption legislation, in 10 years.

The UNCAC requires that national legislation be amended to comply with its principles, and the Thai government has moved towards implementing the required changes. One significant amendment has been to allow the National Anti-Corruption Commission (NACC), one of the country’s anti-corruption agencies, to set up conditions under which contractors of large public projects must provide detailed income and expenditure accounts, and submit such information to the Department of Revenue for checking, thereby raising the transparency levels of what had previously been opaque procurement contracts.

Thailand is renowned for its lack of transparency with respect to procurement contracts with government agencies, and numerous cases have been exposed over the past decade highlighting such fallibilities in its public procurement system. For example, the scandal surrounding the Suvarnabhumi Airport scanners is just one notable case.  In most instances, these scandals involved foreign companies or individuals, who were required to face charges in their home countries.

However, due to the involvement of numerous agencies, and the lack of enforcement in general, most alleged corrupt public servants in Thailand are still under investigation, and the foreign companies or individuals responsible for handing out the bribes have yet to face any legal action in Thailand.

An NACC study revealed that only 15 cases of allegedly corrupt activities were brought to court in Thailand between 2000 and 2011.

The most recent scandals, which were widely disclosed by Thai news organizations, involved a burglary at the house of the former Permanent Secretary of the Ministry of Transport, and the flood aid package scandal.

The first case involved the former Permanent Secretary of the Ministry of Transport, Supoth Sablom, who claimed on November 11, 2011, that his home had been burgled. Two of the burglars who were arrested claimed to have found THB 1 billion (around USD 34 million) in his house, although they had only been able to make off with THB 200 million (around USD 6.8 million). Sablom denied these claims, and the case remains under investigation. The NACC has frozen THB 18 million recovered from the burglars, and stated that connections had been found linking the money and some project contractors from the Ministry of Transport. As of today, however, the names of the foreign companies involved have still not been disclosed to the press.

With regard to the flood package scandal in November 2011, the Department of Special Investigation (equivalent to the FBI) claimed several officials from the Department of Disaster Prevention and Mitigation were involved in a number of suspicious procurements of aid packages from two private limited companies. This case has been forwarded to the NACC, and it joins the list of cases still pending further investigation.

The two above cases do not fall under the transparency requirements laid out by two recently adopted notifications that apply only to  government contracts executed from January 1, 2012:

  • The Notification re: Rules and Procedures Concerning the Preparation and Disclosure of Revenue and Expense Accounts of Projects in which Individuals or Juristic Entities Are Contractual Parties with Government Agencies.
  • The Notification re: Filing of Revenue and Expenditure Statements of Projects Owned by Individuals or Juristic Entities who are State Agencies’ Contractual Parties.

Under these notifications, private sector entities (including individuals, Thai companies, and foreign companies with a local presence) that enter into procurement contracts with government agencies (including state enterprises) are required to prepare, and electronically submit, annual revenue and expense accounts to the Revenue Department, as well as their Corporate Income Tax Returns for juristic entities.

The introduction of a relatively low threshold for reporting means that all government procurement contracts with a minimum value of THB 500,000 (around USD 17,050) will be subject to the disclosure requirement. Businesses will also be required to submit one revenue and expense account for each contract, and must retain supporting documents for at least five years.

The notifications also state that government agencies should set a condition requiring businesses that enter into procurement contracts to receive and make payment via a current account, with the exception of payments below THB 30,000 (around USD 1,020), which can be made in cash.

However, it remains questionable whether these new transparency requirements are sufficient to reduce corrupt procurement contract-related activities in Thailand, as the proliferation of laws to consider, and numerous enforcement agencies, render it difficult for forceful actions to be taken.

Download Full Article
Related Professionals

Practices

Compliance and Investigations

Location

RELATED INSIGHTS​ 

March 20, 2023
Thailand has enacted new legislation to counter cybercrime and scams. The Royal Decree on Measures for Protection and Suppression of Technology Crimes B.E. 2566 (2023) (“Cybercrime Decree”) was published in the Government Gazette on March 16, 2023, and took effect the following day. The Cybercrime Decree provides a new legal tool to interrupt the money-laundering process and aims to crack down on cybercrime perpetrators and scammers by providing stronger legal measures applying to certain types of offenders that had not been sufficiently covered by existing laws. This new legislation grants victims the right to have commercial banks and online payment platforms freeze suspicious transactions and obligates these banks and platforms to comply with such requests. It further requires these banks and platforms—as well as other service providers—to share data for the prompt prevention and suppression of cybercrime. The key rights, duties, and offenses established by the Cybercrime Decree are detailed below. Freezing Transactions The Cybercrime Decree requires commercial banks and online payment platforms to temporarily freeze (for 72 hours) any related transactions of their account holders upon receipt of an alert from the account holder that he or she is the victim of cybercrime. Victims can report these illicit transactions by phone or electronic means. If by phone, the relevant bank or platform must document the call. The victim must file a police complaint about the illicit transaction within 72 hours of the freeze being made. A police inquiry officer will then notify the bank or platform about the complaint, and the transaction freeze must be maintained for seven days from the filing of the complaint with the police. The police will then determine whether it is necessary to keep the transaction frozen for longer than seven days. If the seven days lapse without a further order to freeze the
Read More
February 13, 2023
Thailand’s Office of the Prime Minister has issued a new regulation titled Giving or Receiving Gifts of State Officials B.E. 2565 (2022). This regulation, which took effect on January 13, 2023, repeals the previous 2001 version and updates certain provisions to be in sync with Thailand’s primary anticorruption law, the Organic Act on Anti-Corruption B.E. 2561 (2018). The regulation prohibits state officials’ family members from receiving gifts from people who are dealing with the officials’ respective agencies. It also prohibits state officials from giving gifts to their supervisors and their supervisors’ family members. An exception, carried over from the previous version of the regulation, is provided for gifts on limited “customary occasions” valued at THB 3,000 or less. There are some notable revisions in the definitions of the new regulation. The term “gift” is now clearly defined to include “training” or “seminars.” In addition, the term “family members” now includes spouses living together “as husband and wife,” even if not legally married. For example, the common-law spouse of an officer considering a license application is not allowed to receive a gift from or attend an overseas seminar organized by the applicant. The regulation also provides: Guidelines for state officials to self-report in case of violation by a family member; Instructions on how to deal with the gifts received in violation; and Disciplinary actions for violation. Importantly, the regulation continues to prohibit the receipt of gifts by state officials’ family members but does not expressly criminalize the giving of gifts by private parties. However, all who deal with government officials should take note of the updated regulation to avoid creating a situation that might violate the rules.
Read More
November 3, 2022
On October 31, 2022, the Department of Trade in Myanmar’s Ministry of Commerce announced that payments for importation at the border are to be made via bank transaction. This announcement comes into force with Import/Export Newsletter No. 10/2022, dated October 31, 2022, issued by the Department of Trade, with the purpose of implementing a systematic payment system for import and export at the border, in accordance with a suggestion made by the Financial Action Task Force (FATF), an international financial watchdog. (This follows the recent news that the FATF has blacklisted Myanmar.) This requirement means that only bank transactions will be accepted for import payments in the border trade. Initially, this system will be applied to trade at the Myanmar-Thailand border only. The new requirement to pay for imports only via bank transaction states that export earnings and other types of foreign currency earnings (including salary and income remitted by Myanmar workers overseas) will be allowed to be used for imports. Importers are required to make the payments for import goods—using these earnings—via their banks. That is, Importers operating in the border trade must have foreign currency earnings received through official banking channels and must make import payments abroad through official banking channels using those earnings. In contrast to previous practices, they are unable to use other sources of income and are not able to make other payment arrangements that do not involve bank transactions. The procedures for importation at the Myanmar-Thailand border are as follows: Companies applying to the Department of Trade for an import license must produce credit advice and original bank statements that prove the receipt of export earnings or other earnings into their bank account. The Department of Trade will scrutinize the reported export earnings or other earnings, and approve the import license for an
Read More
April 8, 2022
As Thailand has paid more and closer attention to anticorruption issues, a number of measures have been introduced and implemented over the years, including the establishment of the Complaint Center for Foreign Investors (CCFI) in 2015. The CCFI was set up by the Office of Public Sector Anti-Corruption Commission (PACC) to promote transparency and integrity in the Thai public sector and enhance the confidence of foreign investors conducting business in Thailand. Though the CCFI has been in operation for many years, many foreign investors conducting business in Thailand have either remained unaware of it or have been reluctant to use it because of concerns that acting against Thai public officials could cause problems for their businesses or in their personal lives. However, recently the PACC has made a renewed push to promote the CCFI as a suitable channel for foreign investors to lodge complaints when they face unfair services or treatment, or face requests for benefits from Thai public officials. Lodging a Complaint with the CCFI The CCFI was established to administer the PACC’s responsibilities under Section 58/2 of the Executive Measures in Anti-Corruption Act B.E. 2551 (2008), which authorizes the PACC to notify the superior of any state agency appearing to have regulations or procedures that fail to comply with the Licensing Facilitation Act; are deemed by the PACC to cause a nuisance or damages to a public service clientele; or cause severe detriment to a government service. Practically, this means that when investors have a complaint that fits the scope described in the law, they can contact the CCFI, which will take action by getting the relevant agency or government authority to examine the issue. In cases concerning agency regulations and procedures, this will be the head of the relevant agency, but if the circumstances indicate malpractice
Read More