Douglas Mancill and Panpilai Issariyapruit
Corruption has much the same effect on the development of a nation that cancer has on the life of a biological organism. Recognizing this, Thailand has various laws criminalizing corruption, recently enacted new anti-corruption laws and plans to expand the scope of its anti-corruption laws. Thai laws aimed at combating corruption include the following:
The Thai Penal Code has long contained prohibitions on bribery and bribery related activity. The Thai Penal Code primarily imposes criminal penalties on parties paying or offering to pay bribes to public officials, intermediaries involved in the payment of a bribe and public officials who require, solicit or receive bribes.
The Penal Code does not provide a definition of ‘public official’. But the Thai Supreme Court, through a series of rulings, has held that a person will be regarded as a public official if he or she is appointed by the Thai government to perform governmental functions, on a regular or irregular basis, regardless of whether he or she is a Thai national, and regardless of whether he or she receives remuneration from the government. These Supreme Court decisions have set out these general principles when addressing the specific facts involving cases of real and purported corruption.
Some special laws specifically provide that positions in certain organizations make a person a public official under the Penal Code even though the person holding that position does not possess all the qualifications set out in the Thai Supreme Court’s rulings on this issue. For example, officials with the National Broadcasting and Telecommunications Commission are considered public officials subject to the Thai Penal Code’s prohibitions on bribery.
Organic Act on Counter Corruption
The Organic Act on Counter Corruption, B.E. 2542 (Anti-Corruption Act) prohibits any party from offering bribes to state officials – and, more recently – foreign and public international officials or “intermediaries” to solicit to use personal power to unlawfully perform their duties. The Anti-Corruption Act also prohibits state, foreign and public international officials from soliciting corrupt payments to perform their duties. These prohibitions also apply to officials of political parties.
The Anti-Corruption Act also requires a person holding a political position or a state official to declare their assets to the Office of the National Anti-Corruption Commission (NACC) and authorizes the NACC to investigate if state officials have accumulated “unusual wealth” in violation of Thai law.
More recently, amendments were adopted providing that fines can be imposed on companies when an a party “related to [that] company” (e.g., agent, associated company, etc.) engages in corrupt acts even if the offense is committed without the knowledge of the directors of the company. This appears to be based, at least in part on the U.K. Bribery Act. In other words, if, say, an agent of a company commits a corruption offense in the “interest” of a company, that company will be deemed liable of a corruption offence, unless that company can establish it had “appropriate internal control measures to prevent” the corrupt act. A new provision to the Anti-Corruption Act, found in section 123/5, provides that:
“in cases where an offense is committed by a party related to a juristic person and is committed in the interest of such juristic person, such juristic person shall be deemed guilty of the offence under this Section and shall be liable for a fine at the minimum equal to and at the maximum twice the amount of damages incurred or benefits gained, unless it can be proven that the juristic person has in place an appropriate internal control measures to prevent the offence.”
The goal here is to create incentives for Thai companies to develop and implement anti-corruption policies aimed at preventing corrupt practices before they occur. This is similar to the stated goals of the U.K. Anti-Bribery Act and the practices and policies of the U.S. Department of Justice and Securities and Exchange Commission in enforcing the U.S.’s Foreign Corrupt Practices Act (FCPA).
Other recent amendments to the Anti-Corruption Act add provisions that make it illegal to bribe or attempt to bribe a foreign official and criminalize a foreign official’s request for or acceptance of a bribe. In other words, an official for anti-corruption purposes now includes foreign officials, or officials of an international organizations, as defined by the Anti-Corruption Act. The Anti-Corruption Act provides the following definition
- ‘A foreign official’ is a person who holds a legislative, executive, administrative or judicial position for a foreign country or any other person who works for the government of a foreign country including an employee of a government agency or state enterprise, whether they are elected or appointed, hold a permanent or temporary position or receive salaries or any other benefit or not.
- An official of an international organization’ means a person who works for an international organization or who is appointed by an international organization to act on its behalf.
The “3,000 Baht Rule”
This “rule” is the source of a fair amount of confusion, and some private parties think it permits payments of 3,000 Baht or less to state officials irrespective of the purpose of the payment. In fact, this rule applies to ‘state officials’ (not private parties), and prohibits public officials from accepting property or benefits (other than property or benefits permitted by law or exemptions set out by the NACC) without disclosure and approval. This rule prohibits state officials from receiving property or any other benefit from any person other than a relative if the price or value of the thing or benefit received from each person and on each occasion exceeds 3,000 baht. Further, violation of this rule constitutes a dishonest discharge or non-discharge of duties (a bribe) under the Penal Code as well.
Income & Expense Statements for Government Contractors
The NACC has begun enforcing a notification that requires private parties with a contract with a state agency or state owned enterprise (SOE) to submit an income and expense statement with the NACC if that contract has a value of two million Baht or more. This requirement applies to Thai companies and some foreign companies, although the scope of its application to foreign companies is not entirely clear, and this is causing The notification does not require submission of its official reporting form if:
- both parties are state agencies, except for state agencies which have the duty to submit a corporate income tax return; or
- the party is a juristic person established under the law of a foreign country and has no agent or representative in Thailand, but has delivered or provided services in Thailand and the state agency or SOE has made the payment to the party under the Contract directly to the foreign country. This aspect of the Notification has proven problematic because of the uncertainty and wide scope of Thai tax laws.
The NACC is empowered to consult with the Revenue Department and the income and expense statement itself must be filed with the Revenue Department. There is also a danger of the government “black listing” a contractor if the NACC contends a foreign company was supposed to file an income and expense statement, but failed to do so.
Prohibition on Officials Engaging in Commercial Activities with Government
The Anti-Corruption Act empowers the NACC to issue notifications prohibiting certain state officials and their spouses from participating in commercial activities with the government. These notifications can apply to a person for two years after that person has left office as a state official. However, the NACC so far has issued only one such notification. That notification prohibits the prime minister and ministers from participating in commercial activities with the government.
State Organization Staff Act
The State Staff Act, B.E. 2502 (State Staff Act), imposes criminal penalties on state organization staff who require, solicit or receive bribes as well as convert state organization’s property for themselves or to others unlawfully. The State Staff Act covers publics officials, executives, chairmen, vice-chairmen, directors, employees and anyone who works in state enterprises or an organization, limited company, registered partnership or any other agency where more than 50 per cent of its capital is held by the Thai government.
Anti-Money Laundering Act
The Anti-Money Laundering Act, B.E. 2542, is the main Thai law aimed at the laundering of money or property derived from the commission of “predicate offenses”, which include crimes relating to narcotics, public corruption and terrorism. There has been an international press to more robustly enforce and expand this law. The Thai government largely relies on the private sector to assist it in enforcing anti-money laundering laws.
Civil Service Act
The Civil Service Act, B.E. 2551 (Civil Service Act), law generally prohibits public officials from acting as a managing director, manager, or equivalent position in a company or partnership or improperly performing or refraining to perform official duties. A violation of the Civil Act may result dismissal or expulsion.
Management of Partnership States and Shares of Minister Act
The Management of Partnership States and Shares of Minister Act, B.E. 2543, generally prohibits ministers from holding shares or any kind of interest exceeding five percent of capital in any type of profit‐making entity.
Act Governing Liability for Wrongful Acts of Competent Officers
The Act Governing Liability for Wrongful Acts of Competent Officers, B.E. 2539, imposes penalties on government entity and public officials who tolerate corruption.
The Accounting Act, B.E. 2543 (“Accounting Act”) requires Thai private limited companies to file audited financial statements with the Ministry of Commerce within one month after their financial statements are approved at the annual shareholders’ meeting. These financial records are available for public review. The Accounting Act also requires private limited companies to keep accounts, and those accounts must be accurate and in comply with the accounting standards of the Accounting Act.
Any person who “damages, destroys, hides or renders lost or useless the accounts or the documents relevant thereto…shall be liable to imprisonment for a term not exceeding one year, or to a fine not exceeding twenty thousand Baht, or to both”. If the person has a “duty to keep accounts”, “liable to imprisonment for a term not exceeding two years, or to a fine not exceeding forty thousand Baht, or to both.” The false entry, alterations or neglects to make entry in the accounts or financial statement, or alteration in the documents is subject to similar penalties, and these penalties apply to “a managing director, a managing partner, a representative of the juristic person, or any person responsible for the operations of [a] juristic person” that violates the Accounting Act.
In some ways, this law is similar to the books and records provisions of the FCPA, except that it is more expansive than the FCPA since it is not limited to listed companies. According to the American Bar Association, books and records violations are becoming increasingly important in anti-corruption investigations and play a critical role in FCPA prosecutions. This will likely prove true in the Thai compliance environment where books and records can often provide solid evidence of tax evasion, corruption and other illegal acts.
Corruption – Defined
The basic concepts of what constitutes a corrupt act (e.g., bribe), etc., in Thai law do not differ significantly, if at all, from the concepts of the anti-corruption laws of other countries. For example, the term ‘benefit’ offered to, requested or accepted in violation of Thailand’s anti-corruption laws above is defined very broadly. It is not limited to tangible assets and a benefit does not have to be calculable in monetary terms. If assets are sold or offered for sale at a price that varies from the price that would be obtained in arm’s length negotiations, a benefit has been conferred. This could therefore cover a private party selling an asset at less than its arm’s length value to an official or an official receiving more than the arm’s length value when that official sells an asset. The asset does not need to be ‘tangible’, meaning it could be, for example, a job offer or service of some kind. The benefit must be provided or offered with the motive to cause an official to discharge or fail to discharge an official duty.
A public official is guilty even if a bribe is not paid to have that official discharge duties that official is already required to perform. For example, if a customs official requires a bribe to perform an obligation that the customs official is required to perform, the customs official has violated Thai anti-bribery laws. On the other hand, a party paying or offering a benefit will be guilty only if she or he pays the bribe to motivate a public official to illegally discharge or illegally fail to discharge that public official’s duties. Intermediaries will be guilty for request or receipt of benefits in return for their dishonestly inducing an official to discharge or fail to discharge official duty. The actual payment or provision of a benefit to an official is not required.
Penalties for violation of Thailand’s anti-corruption laws are strong. They include substantial fines, imprisonment and the death penalty. The death penalty can be imposed against Thai state, foreign and international public officials who receive bribes.