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Foreign Corrupt Practices Act and Thailand Film Festival
by Mark Beales

19 March 2010

Thailand ranks low in corruption table

The case is intriguing, as while offering bribes may be seen as a dishonest and underhanded crime in the West, in Thailand they are often seen as the oil that greases the wheels of industry. Many Thais would be surprised to hear that Green faces the rest of his life in jail because of the payments he made.

In general, the country has a poor reputation for corruption. The 2006 military coup to oust then Prime Minister Thaksin Shinawatra from office was supposedly done to crackdown on underhand activity. But old habits die hard, according to some statistics. Global Integrity is an independent information provider that analysis the usefulness of anti-corruption mechanisms in many countries. In its latest report it gave Thailand a ‘weak’ overall score of 65. Its lowest marks were for voting and citizen participation, where it was given a mere 23 points, and media freedom, where it scored just 52 points.

The report added: “Root causes of corruption, however, remain unaddressed. Nepotism is a key factor in the process of civil service appointments. Anti corruption agencies are not free from political interference either, since one third of all the National Counter Corruption Commission members are political party representatives.”
 The table gave Thailand a ‘good’ rating of 89 for its anti-corruption laws, but the anti-corruption agency that enforces the rules was ranked ‘weak’ with just 63 points.

A recent alleged example of the problems came in the beach resort of Pattaya. Pol Lt Gen Kriangsak Suriyo was unceremoniously ousted from his position as the city’s police chief and sent to an inactive post following claims that he took kickbacks from other officers in order to secure their promotions.

Acting national police chief Pateep Tanprasert  also cancelled the promotion of some officers in the area while the case was being investigated. There were also claims that some top policeman had paid vast millions of baht to land their chosen jobs, which prompted Prime Minister Abhisit Vejjajiva to revoke any promotions that were tainted by corruption.

A recent report from The Nation newspaper said the number of incidents involving abuses of power was on the rise. Most of the complaints sent to the National Anti-Corruption Commission involved the police and local administrations.

FCPA: Stopping Dirty Deals?

So while America may want to stamp out corruption across the world, it is obvious that such ambitions may be hard to fulfill on a global scale. Nevertheless, the FCPA was introduced in the 1970s to try and do just that. It was created after an investigation showed hundreds of US companies had made suspect payments to foreign officials. Some estimate more than US$300 million had been handed over. Some of this money had been out-and-out bribes while other gifts were to ensure certain duties were carried out as they were supposed to be.

The US Congress decided to create the FCPA to put a halt to this and then President Jimmy Carter signed it into law in 1977. The relevant part of the act in terms of the Thai scandal is that it bans any US citizen from paying a foreign official in return for favors. The term foreign official is quite wide and prosecutors argued would include positions such as TAT governor.

The FCPA was amended in 1998 to include any American offering bribes to foreign officials. Importantly, it also allows the US Attorney General to take action against non-US citizens that are thought to have broken the FCPA’s rules.

Bribing foreign officials has been illegal in the US since 1977, but the Act has been amended several times to give it extra strength and powers. The Act is made up of two parts: one is to do with any actual bribery, while the second ensures that companies that have publicly-traded stock must maintain detailed records which show all payments and transactions. Essentially, US companies don’t have to just be clean; they have to show that they are clean.

In Thailand, bribery is illegal but prosecutions are far less common. Offering a ‘gift’ to a figure in authority can often mean things proceed a little more smoothly. Not offering gifts can mean things grind to a halt and papers gather dust in an ever-growing pile of documents.

That isn’t much of a defense though, and this isn’t the first time Thai officials have been at the centre of an FCPA investigation.

In December 2009, telecoms equipment maker UTStarcom Inc (UTSI) had to pay US$1.5 million to the US Justice Department following payments made to Chinese and Thai officials.

The company, which is based in California, paid workers at Chinese state-owned telecommunications firms to visit tourist hot-spots such as New York and Hawaii. This was meant to be part of a training program, but no training ever took place. The real aim was to secure and keep major telecommunications contracts.

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