Hard Graft - Corruption in Thailand

It is a word that has long been associated with Thailand; corruption. As Thailand has moved onto the international stage the spotlight has fallen on corrupt practices in the country on a more regular basis. However there is a long way to go before Thailand can rid itself of the image of under the table payments and kick-backs for local officials. Director’s Greg Lowe spoke with National Anti-Corruption Commissioner Professor Pakdee Pothisiri to discover how he is tackling the problem.

Professor Pakdee Pothisiri has his work cut out.

As one of Thailand's nine anti-corruption commissioners he is in the front line of the battle against graft in the country's political and public sectors. But he remains upbeat in the face of the Herculean task that lies in front of him and the National Anti-Corruption Commission (NACC): he is in for the long haul. The battle will not be won overnight. And much of the commission's success depends on getting the public behind its efforts.

"We are introducing a national strategy to call on people from all walks of life to join hands with us to fight corruption, and to inculcate a sense of moral integrity into society, starting with the younger generation," says the former Food and Drug Administration secretary-general. "We are also campaigning for good governance and good corporate governance, trying to lead the way for better practices in the various organisations and agencies in the public and private sectors."

Initial Role

The NACC was set up under the 1997 Constitution as one of Thailand's core constitutional checks and balances. The first commission was selected in 1999 after the promulgation of organic anti-corruption legislation. Its work covers three main areas: the suppression of corruption in the public sector, corruption prevention, and examination of the assets and liabilities of  political appointees and government officials.

The 2007 Constitution added another, more proactive role to the commission's remit, to "encourage the people’s role and participation in the government of the country and the actual check on the use of State power, and also to support honest and impartial functions of courts and other independent organisations."

Challenging Perceptions

While much of the NACC's work involves scrutinising the public sector, it also investigates allegations where private businesses have either instigated or been the victims of corruption involving state agencies and organisations. That corruption is an endemic, deeply entrenched problem is frequently underlined by local surveys on the matter.
 
A July Abac Poll revealed that almost 85% of 1,582 respondents surveyed nationwide saw corruption as normal. More than half, or 56.4%, said the practice was practically acceptable as it was a common feature of every government. More than 69% said corruption was present in both local and national government. Most people thought that those charged with corruption would ride out the charges, with 58% saying officials were too scared to lodge charges against high ranking politicians.

Transparency International's ‘2008 Global Corruption Perception Index’ ranked Thailand as 80th out of the 180 countries surveyed, with a confidence index of 3.5, where 10.0 indicates the lowest level of corruption.  This was a small but significant up-turn after three consecutive annual slides in the country’s rating. In its ‘Global Corruption Barometer 2009’, published in June, the organisation showed that 11% of Thais said they had paid a bribe in the last 12 months. Some 54% saw political parties as the local institutions most affected by corruption, followed by civil servants/public officials 22%, and business 9%.

Thailand and Indonesia were ranked as the most corrupt Asian economies by a Political and Economic Risk Consultancy poll, which surveyed 1,400 expatriate businessmen in the region last January and February. The corresponding impact of corruption and perceptions of corruption weigh heavily on the country's economic, social and political development, scaring off many foreign firms at the same time.

Limiting Progress

The Joint Foreign Chambers of Commerce in Thailand holds an Anti-Corruption Forum with  the NACC twice a year to provide an interactive channel for the exchange of ideas and the discussion of key issues, for example the  dealings of the JFCCT’s members with the Customs Department. But Professor Pakdee says the effect of Thailand's corruption severely limits foreign direct investment in the country.

The sheer size of the problem Thailand faces is reflected in the NACC's caseload.
On average some 2,000 new corruption cases land on its desk each year. When the current commission took up its position there was a backlog of more than two-and-a-half years - an additional 8,000 cases - pushing the total up to 10,000. Professor Pakdee says this pile has been halved and the commission has about 5,000 cases on its books.

More than 50% of cases involve the embezzlement of funds by state officials at the local, district and provincial level. Despite its pervasive nature, the commissioner says many Thais are perceived to be relatively unconcerned about such incidences, saving their ire for the more serious cases involving high-ranking officials, politicians and state enterprises. "Those cases involve a lot more money. The damage is quite large," he says. "For example, the cases concerning Suvarnabhumi Airport, financial institutions, or some of the government enterprises, like THAI. Or the leasing of buses and purchasing of fire trucks by the Bangkok Municipal Authority."

Political Block

In the past Dr Pakdee has criticised the effect of Thailand's cronyism and nepotism on corruption in business and politics. The culture of paying dues and giving favours to those who help grease the wheels of business is commonplace, he says. But a far more damaging scenario has developed over the years - the emergence of what he calls the "political economy of corruption."

"In our 'democratic' system politicians can find a way to get elected quite easily by paying money. They start from that end. When they become MPs they try to get hold of authority or power so they can give a 'yes' or 'no' to (control) all kinds of projects involving government money.

"This is the way that they're trying to plan to get hold of authority and abuse it to make a gain for personal interests. That is what is going on right now ... But it will be rather difficult to try to prevent this kind of corruption because the people who are supposed to be the representatives of the people are the ones initiating the corruption themselves." According to the 2007 Constitution, the NACC is responsible for ensuring that politicians are acting in accordance with the Code of Conduct to which they are now obliged to conform.

Risky Business

While catalysing the paradigm shift needed to weed out corruption at every level seems at times insurmountable for the commissioner, he says the NACC is gaining ground in some significant areas. A new direction has been given to corruption prevention by the support which the NACC now gives to the Bureau of the Budget for the new risk management requirement for all projects seeking government funding of more than THB 500 million. To put this in context, the government's THB 1.43 trillion investment programme will implement 6,000 development projects, covering areas such as infrastructure, public health, education and tourism. Whereas previously only the risk of a project failing had to be addressed, the new move is specifically designed to cover the risk of corruption.

"What is new is that we are going to introduce the concept of corruption risk management into project proposals. Starting from the next fiscal year, any agency proposing to use a government budget, particularly those [mega-projects] bigger than THB 500 million, will have to show how they will manage the risk of corruption and identify the risk associated with the project, from things like the outside influence from politicians to flaws in the procurement process, and then come up with measures to contain and prevent those risks."

Professor Pakdee says the initiative calls for the full backing of the Prime Minister's Office, with the office's Inspector General being responsible for follow up and monitoring of the project implementation, based on the corruption risk management measures adopted. This will be straight forward as it requires no legal or parliamentary changes, and the monitoring process will be made public domain so the public can see what is happening themselves, he says. "This will be a very effective preventive measure. It will be very tangible."

Corporate Ethics

The NACC has outlined another strategy to help small and medium-size enterprises (SMEs) prevent corruption. Thailand has about 2.8 million SMEs, which employ upwards of eight million people and contribute 40% to the economy, official figures show. While large private businesses have clear sets of rules and regulations to abide by and the Securities and Exchange Commission polices listed-firms, SMEs do not have this level of support.

Due to their smaller size and lower levels of financing, SMEs are generally more susceptible to the demands of corrupt officials and those with the power to grant new contracts. "SMEs are the biggest group of enterprises in Thailand. They employ more than 40% of the national workforce, and in many ways are the backbone of Thai industry, which is why we are placing more emphasis on them."

The NACC is pushing for SMEs to adopt an Asia-Pacific Economic Cooperation business code of conduct that covers good governance, ethics and corporate social responsibility. "While many people think the code of conduct is part of corporate governance, we are singling it out because it's a very important measure by which you can govern the behaviour of people in an organisation or business."

But the simple act of setting out new ethical codes of conduct will not cure the business environment of corruption. The incentive of knowing one's business operates ethically does not help pay the bills when other firms continue to break the rules. But Professor Pakdee says that no matter how hard the NACC pushes, the desire to act ethically must come from the companies and individuals themselves.

"It is a chicken and egg situation. Which comes first? You may lose business if you do not do that [pay a bribe or sweetener]," he says. "People always use that excuse. But if you start to have that kind of thinking it is already a total failure."