Thailand: Projects started under Thaksin government to be scrutinized
September 28, 2006
Thailand: Projects started under Thaksin government to be scrutinized. Check it out:(Thai Press Reports Via Thomson Dialog NewsEdge) Section: General News - The Thaksin government grandly approved a number of projects despite fears that they were riddled with corruption, The Nation reports.
Now, the Council for Democratic Reform under Constitutional Monarchy has appointed a panel to investigate controversial deals, though it has not yet revealed what will be looked into. It's likely the panel will check these 20 projects, which have been probed by the Office of the Auditor-General: 1 Rubber seedlings The OAG found that the Agriculture Ministry's tender for Bt1.435 billion worth of rubber seedlings was designed to benefit big companies, although the project was proposed to help small farmers.
Only three bidders passed the technical criteria - Charoen Pokphan Seeds Co Ltd, Resort Land Co Ltd, and Charoen Pokphan Engineering Co Ltd - which could have jointly invested, managed and colluded on the bid price. CP Seeds also inked deals with farmers who allowed it to grow seedlings on their land, apparently having information of the bidding in advance.
There was an advance payment of Bt209.65 million, without an appropriate reason and there was no clarity in terms of the place of delivery and the number of seedlings to be delivered. Senator Usanee Chidchob, who is Newin's elder sister, raised this issue.
2 THAI kitchen Bangkok Air Catering Joint Venture and LSG Sky Chefs - Siam Flight Services Joint Venture were awarded the project worth over Bt1 billion, despite complaints about qualifications. While the terms of reference (ToR) required the bidder to have experience in the production of at least 180,000 meals per month, the bid winner's document failed to produce a correlation of the number of meals and passengers at Xian Airport. Moreover, there is a conflict of interest between Bangkok Air Catering Joint Venture and the International Airline Food Co Ltd in Xian, China - as well as the city's airport authority. The transport minister was informed but there has been no action.
3 Suvarnabhumi warehouse projects Initial probe shows WFS-PG Cargo Joint Venture Co Ltd, the concession operator of free-zone warehouses, proposed an incomplete list of facilities as specified in the ToR. It also came up with an incomplete list for the supply of ground services and maintenance facilities. It proposed too-high revenue targets from both projects, which would push up service fees at the airport. Though each project's investment value is less than Bt1 billion, and does not have to come under the public procurement laws, both projects were approved by the Cabinet, despite the OAG's protest.
4 Up-Link project The OAG found the Public Relations Department's ToR for the supply of Bt30 million of satellite uplink equipment was designed to benefit a particular bidder. The OAG advised the PRD to cancel the bidding.
5 Bangchak's investment capital guarantee Under the financial and business restructuring plan of Bangchak Petroleum that specified the separation of the refining and retail businesses and a borrowing plan, Bangchak would refinance Bt19.5 billion of loans through a Bt12.5 billion bank loan, Bt4 billion bond issue and Bt3 billion rights issue. The Finance Ministry guaranteed the investment capital investors put into the convertible bonds and common shares.
The OAG questioned the ministry about the guarantee as Bangchak was no longer a state enterprise, but there has been no answer. The ministry now owns only 20 per cent in the company.
It questioned the ministry based on what law such a guarantee was extended, and when the obligation would end. How the ministry would ensure efficiency of Bangchak's operations and if the ministry has other obligations for Bangchak.
6 AMC land sale The OAG received complaints that a land plot - collateral for non-performing loans that Asset Management Corp managed - was sold at a very cheap price. The OAG launched an investigation but Pithaya Rungruangsiri (a Thai Rak Thai party-list MP) ordered it be stopped, claiming the Bank of Thailand had looked into the matter and the sale could not be reversed. The OAG was contacted again and informed that the Finance Ministry had probed the case and found nothing. The OAG then asked the ministry for a report and informed Pithaya that if the report could explain the case, the OAG would stop the investigation. Pithaya slammed the phone down. It was later discovered that Phumtham Wechayachai (TRT) called for a meeting with the PM's advisory team and resolved that the Auditor General be removed for interference with the "PM's wife's transaction". Newin, through his sister who was a senator, later contacted the OAG, saying that if the probe was not cancelled, it could lead to problems.
7 Alliance Retail Trade As deputy commerce minister, Newin proposed the company's establishment to tone down strong protests by small shops owners against multinational retail firms. It has invested Bt400 million, most of which has gone on advisory fees and meeting allowances. But an exe-cutive board has yet to set up.
8 Food lab The government invested Bt250 million to set up a central food laboratory, as a 49:51 joint venture between the Finance Ministry and the Office for Small and Medium Enterprise Promotion. The venture opened a bid for lab equipment worth Bt1.5 billion but there was a pre-determined specification. It was known after the formation that the venture would raise funds, paving way for politicians to buy shares. It was also known there would be a law to authorise the venture to have full control in regard to the meat and food trade. In 2004, the venture received investment privileges, exempting it from income tax.
9 Land plot Irregularities were detected in the purchase of a land plot for a water treatment plant project by the Hat Yai municipality in Songkhla, in which a former mayor was found to have benefited from an inflated price of Bt300 million over the actual project value. The mayor and his son were not elected in the next term as a result of the media coverage reporting the irregularities. They then filed a defamation lawsuit against the auditor-general, with a lawyer from the same office where Winai Thongtaeng, who defended PM Thaksin in the asset concealment case, was assigned to handle the case. The mayor later had the case accepted by a young and inexperienced judge.
10 Airport rail link The Siemens/Sino-Thai/B Grimm consortium inked a turnkey contract two weeks before the 2005 election. Al-though the investor would re-ceive all its investment back on completion, the government paid the consortium Bt1.67 billion. (This was unusual as the disbursement was done when the election drew near and there should have been no pay-out.) 11 Renovation works A number of spending plans relating to renovation works by Parliament House had been conducted through unusual processes and bid rigging in favour of some contractors. One of them was the renovation work at the Coin Minting plant off Pradiphat Road for which Bt119.42 million was approved - but the cost should have been around Bt30 million. When questioned by the OAG, then parliament president Uthai Pimchaichon asked Aram Lohweera to lobby the OAG to stop probing while offering a large amount of money in return. Uthai was found to have been involved in several spending irregularities but the OAG's probe into them had stopped after he chose not to order investigations into those irregularities.
12 New ambulances The Public Health Ministry aborted bidding to purchase 201 advanced ambulances worth more than Bt400 million after the OAG notified the permanent secretary of a possible violation of the process. The project later became the subject of conflicts between the minister and the permanent-secretary and resulted in the repeated scrapping and re-bidding as the permanent secretary learned that the OAG was closely following the project and could possibly detect wrongdoings attached with it.
13 Irrigation works A project in Phase II to oversee irrigation works by the Royal Irrigation Department worth more than Bt1 billion, in which equipment and machinery, which had cost Bt110 million, were under-utilised and a Bt5-million luxury car was bought for no apparent reason. The spending in both cases was regarded as unnecessary and not cost-effective. The OAG has notified the director-general of the Royal Irrigation Department of both cases along with providing him with suggestions to correct the problem.
14 Long-distance phones TOT Plc's long-distance public phone business is worth Bt16.5 billion.
The Auditor General found that TOT delays in completing long-distance public phone lines had cost the state agency around Bt44.2 million in contractual loan fees.
The Cabinet in 1996 approved a Bt16.5-billion budget for the TOT project, which was supposed to be finished in 1998. The project involved the TOT providing of 135,000 long-distance phone lines to 45,000 villages across the country.
Moreover, the Auditor General's Office (OAG) found that TOT's installation of satellite long-distance phone lines was added later in the project - but this was not in line with the Cabinet resolution.
In addition, the 10-year-term for each satellite signal-leasing contract that TOT signed with private companies was too long and too high, at more than Bt21 billion.
15 CEOs' budget On April 28 and May 6, 2003, the Finance Ministry approved a budget for all CEO governors, classified into two parts: Bt1.12 billion to be divided equally among all provinces at Bt15 million each, and Bt2.25 billion to be given to each province according to their own proposals.
The Auditor General found that the provinces needed to improve their administrative efficiency in terms of staff allocation, job descriptions and strategy mapping. The Auditor General found the chief executives were not given full authority and the assessment process was not complete - and opened the possibility of political interference.
It also found that there were risks in achieving goals, as the strategies were unclear and incompatible with real problems.
(Note: The 2004 budget allocation did not take into account the potential of each province.) 16 BAAC site procurement The Auditor General probed the Bank for Agriculture and Agricultural Cooperatives' (BAAC) procurement of land for a new headquarters. It found the bank bought the land for Bt137,997 per square wah, or a total of Bt894.8 million for the 6,493 square-wah plot. The price was high compared to the Bt70,000 per wah that the Highways Department paid for expropriated land nearby. In total, the bank paid Bt322 million above the department's price.
Moreover, the Auditor General found that Suay Sompon Co Ltd, in a separate transaction, paid an outsider Bt332 million. The BAAC was suspected of negligence and malfeasance. The person responsible for this matter should be ordered to reimburse the government the difference, it said. The Finance Ministry claimed later it was only a minor wrong-doing and that the matter had been settled.
17 SRT's asset management Several weak points were found in the way the State Railway of Thailand (SRT) managed its assets particularly land plots. It does not even know the combined area of land it owns. It does not know the amount of expropriated land or commercial areas and there is no proper diagram to show if the land was rented out or if the rental contracts were legal. The SRT thus can't estimate its rents, and realises only the rents under the contracts still in effect.
The OAG suggested that SRT should survey all rental land and the number of tenants to ensure better management and maximum benefits for the SRT. The Senate Committee on corruption, chaired by Pol General Pratin Santiprapop, has questioned this and found that a politician issued title land deeds in Buri Ram for land belonging to the SRT.
The deeds were pledged for loans from several banks worth a combined sum of hundreds of million baht, which could spark financial problems at banks, as in the case of the now-defunct Bangkok Bank of Commerce.
18 Laem Chabang Port project: Stage 2, phase I The Port Authority of Thailand's bid document in regard to the management of the C3 container port was not transparent and favoured the bid winner. The OAG said it violated the procurement law but the disciplinary committee, chaired by permanent secretary Yongyuth Sarasombat was of a different opinion.
19 Suvarnabhumi's power network Initial investigations found the tender terms for the power-grid supply system and conduit network were pre-determined to favour some bidders. That pushed up the investment too high. The OAG said that it violated the procurement law and the case was forwarded to the NCCC, which took no action.
20 Home Solar Cell project Solartron Co Ltd's bid was accepted, although its solar cell registration was cancelled by the Industry Ministry in 2003. The Energy Ministry is investigating this case, which was transferred from the Interior Ministry.
Copyright 2006 Thai Press Reports
Related Tags: auditor general, finance ministry, joint venture, general found, permanent secretary, million
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