Thailand: AML laws used on small corrupt businesses

The Anti-Money Laundering police division in Phuket has flexed its muscles to seize cash from allegedly corrupt taxi and tuk-tuk firms around the island.

English: Thai students going to school by tuk ...

English: Thai students going to school by tuk tuk. Italiano: Studenti thailandesi che stanno andando a scuola con il tuk tuk. (Photo credit: Wikipedia)

The crack down on Phuket’s tuk-tuk ‘mafia’ began in earnest after the Thai army took control of the country in May when Phuket police, with the support of the Army, dismantled numerous illegal taxi stands in the province in response to the taxi drivers’ cartel-like grip over transport in Phuket. Taxi, tuk-tuk and motorbike drivers across Thailand should follow pricing guidelines issued to them by the regional authorities. Some even display them in their cabs and charge customers accordingly. Unfortunately, others see a foreigner approaching and immediately rack up the price.

Police in Phuket seized an estimated 200,000THB (6,300USD) from the bank account of a taxi and tuk-tuk cooperative in the Karon-Kata area of Phuket. Although this is small time compared to the estimated sums extorted from businesses and tourists annually across Thailand – you only have to spend a few months in country before you start hearing the same tales of protection payments and overcharging – it is a step in the right direction and should send out a warning shot to other travel and transport cartels.

Financial Crime Asia is surprised to find out that Phuket Police had its own AML department, but pleased to read that it is being used to root out corruption.

Source: Phuketwan


Thailand set to ramp up anti-graft laws

Thailand‘s anti-graft commission has proposed a raft of legal changes giving it the power to prosecute foreign officials and coordinate with foreign government’s on asset recovery.FCA - bribes

The National Anti-Corruption Commission (NACC) has submitted the proposed changes to the National Commission for Peace and Order (NCPO), the country‘s ruling body.

Amendments also include extending the statute of limitations on corruption to 30 years; several high profile offenders have fled Thailand to avoid criminal proceedings and remain in exile until the statute on the crime has run out. The legal changes will bring Thailand in line with the UN’s anti-bribery and corruption standards.

Although news may have died down in the political situation in Thailand, the country is still under Army control. In terms of anti-corruption measures, having the army in control could have positive ramifications. As mentioned here before, the NCPO has orchestrated payments of lapsed rice subsidies to millions of impoverished farmers, forged ahead with the investigation into mismanagement of the rice pledging scheme by former Prime Minister Yingluck Shinawatra and is tackling wide spread corruption in Phuket, one of Thailand’s greatest sources of tourism revenue. Read Financial Crime Asia’s report in more detail.

Now that the NACC is no longer hamstrung by political horse-trading which has dominated Thailand’s legal framework in the past, it may have a good chance of pushing through some serious and effective reforms that will go some way to clearing up corruption in the country.

Source: Bangkok Post

Thailand: PM hit with corruption charges and Gov banker resigns

Yesterday, impoverished rice farmers in Thailand warned the government that they will take action if they do not receive their promised rice subsidies. Without the subsidies, they have nothing to live on – they are desperate and their have been suicides among the farmers who see no hope for their future. The director of the Government Savings Bank resigned from office today, according to a message from Thai PBS, “to show responsibility for the interbank bank extension to the Bank for Agriculture and Agricultural Cooperatives.”

In the latest report, the National Anti-Corruption Council has filed charges against PM Yingluck “relating to irregularities in the government’s rice-buying scheme, and it summoned her to appear to face the charges on February 27.”

Jokes are already circulating about the PM being jailed. Today’s events are significant in Thailand’s future – and for the future of everyone who loves this country. We all hope it stays peaceful up there in the capital and that there are no more needless deaths.

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Why Thailand needs

Thailand is in turmoil. Anti-government whistle-blowers are still on the streets of the capital, the general elections of February 2nd FCA - YLdefacedwere peacefully disrupted. In many parts of Bangkok and in southern Thailand, where I live, the elections did not happen at all. I scoured this island for a polling station yet found nothing but a few defaced posters of PM Yingluck Shinawatra. The voting in south Thailand never happened because Post Office workers refused to release the ballot papers in time for voting.

Tourism numbers are officially down although all guest-houses on this island appear to be full. Foreign governments are issuing travel warnings to would be tourists. Few have issued a travel ban as yet, but it appears the medical tourists are steering clear, opting to put up with un-botoxed brows until the rallies stop. Even the once-loyal rice farmers have moved on Bangkok to express their anger at not receiving promised subsidies for their crops.

Anti-corruption civil sparks

The protests were sparked in November by a mass public action and social media campaign to stop the passing of an Amnesty Bill, which would have been a green light for exiled politicians – with Thaksin Shinawatra at their helm – to return to Thailand without fear of prosecution for electoral fraud. Thai people want to stop corruption in their country, as do the ex-patriot residents and business owners. Thai people have taken to the streets and to social media sites to do voice their opposition. Anti-bribery sentiment is strong among the foreign community, but uncoordinated and there are few outlets for publicising attempted bribes and blatant corruption. A Facebook group called Corruption and Business in Phuket is providing an excellent stream of news on anti-bribery efforts in the province. This week, Phuket citizens called for a public meeting on bribery and corruption, following a blockade of one of the islands busiest beaches in protest at an alleged TBH20,000 (USD609) paid to three Tourist Police Officers. The funds were allegedly returned to the briber by the officers during a “private meeting.”

Official channels

Although not well publicised, Thailand has a National Anti-Corruption Commission, staffed by more than  1,000 people dedicated to pursuing bribes made to state officials and government contracts; private bribery is beyond the commission’s remit. Led by Dr Sirilaksana Khoman, the commission is government funded but has autonomy in investigations and prosecutions. In an interview with The Big Chilli ex-pat magazine, Dr Sirilaksana outlines why she believes corruption has changed in Thailand since 1997, (the Asian economic crisis, the concentration of political power under a “charismatic” new leader and numerous allegations of large scale corruption), three “grand”corruption cases she has worked on since 2007 and the pre-emptive work NACC carries out by scrutinising the accounts of major infrastructure and technology projects as they happen.

The NACC does accept reports of bribery and corruption from the public, which must be signed by the complainant. The NACC uses a system to anonymise the letters once received, by cutting the names/signatures off and placing them in an envelope kept in a heavily guarded safe. It gave no figures on how many letters it receives annually. From the outside, this system looks less  than appealling to anyone who has just been stopped by a traffic cop and asked for a bribe to avoid getting a ticket. Accessibility and anonymity are two fundamentals of any whistle-blower scheme and, reporting on a state employee who has just tried to extort funds from you is blowing the whistle.

I am a huge fan and supporter of the Janaagraha led  I Paid A Bribe initiative, set up in 2010 initially to estimate the total amount paid in bribes each year  in India. In India, as in Thailand, there are fixed bribery rates for certain services.  For example, getting your passport processed, getting the stamp on the deeds of your house, getting the electricity company to turn on the supply are all covered by a recognised and regularised extra payment directly to the civil servant. The I Paid A Bribe portal collects information on bribes paid, bribes requested by not paid and incidents of meeting an “honest officer.” Those submitting stories can remain anonymous or publicise their names.

The IPAB intitiative has grown beyong india, and now has sites operating for 11 countries in Asia, Africa and Europe, with plans for portals in North and South America. Regrettably, Thailand is not yet part of the IPAB plans for Asia but this country could really benefit from this service.

This is a shout out to IPAB and anyone in Thailand, via Corruption and Business in Phuket, Eyes of Thailand and to Dr Sirilaksana herself to support the launch of in Thailand.  Let’s get this started.

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Passport for Lenin: Bangkok’s counterfeiting street market is thriving

The illegal trade in counterfeit documents that can be FCA - fake ID Khao San - The Big Chilliacquired in Bangkok‘s Khao San Road area seems to be still thriving. Anyone who needs a fake passport, drivers license, university degree or a fake student identity card can roll up to one of numerous temporary outlets in the backpacker haven, have their photos taken and be on their way to discounted travel fares, fraudulent insurance claims and the tools to open numerous bank accounts.

Any name will do

The authors of the report in The Big Chilli, an ex-pat focused magazine for people like me, living in a place like this, managed to get fake ID documents in the names of Ulrike Marie Meinhof, of the Baader Meinhof Gang who was jailed for terrorist acts in 1972, and one for Vladimir Illich Lenin, who needs no introduction.

The bad news is that even if well-known names are not questioned, then other high-risk but less famous identities could be duplicated. Politically Exposed Persons (PEPs) aside, the street front counterfeit markets existence means that anyone can get their hands on fake documents and use them to open a bank account or set up a company.

The good news is that, according to Steve Vickers, a security adviser, the documents are generally not good enough to pass an electronic examination, and this limits their use. That said, the serious counterfeiters do not hang out on the streets of Bangkok selling their wares; their services are still available at a high price to those in the know.

Depending on what country you happen to be in when opening a bank account, set up a company or even get a visa, you may not even need to show identification or proof of address. Opening a bank account in Thailand is pretty straightforward, as I found out last year.  And no matter where you are in Thailand,  you are never less than 50 metres away from someone who knows someone who knows a man at immigration who can help out with any visa woes.

Source: The Big Chilli


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Updated – V for Thailand – a red and yellow story

The streets of Bangkok are no stranger to political protests and this week activists are calling for 1m Thai people to join them  in black diamonda peaceful demonstration in the capital against the planned introduction of the so called Amnesty Bill. My Facebook page is filled with comments in Thai and English, from the humorous to the vitriolic. While some supporters hold up black diamond shaped placards, reminiscent of the anarchist’s black flag, with anti-bill slogans in silent protest and have changed their profile pictures to this symbol, others call for the Shinawatra family to leave the country and pages claiming support for former Prime Minister Abhisit are gaining popularity.

I have been visiting Thailand since 2009 and demonstrations by red shirt or yellow shirt protesters have flared up almost annually since then. The yellow shirts movement sprang up in opposition to former Prime Minister Thaksin Shinawatra; yellow is also the colour of the King. The red shirt movement supports Shinawatra and is populated by people from the North and North East of Thailand who have benefited from Shinawatra’s time in power. Since 2006, the two sides have been playing out a political battle in Bangkok and this month’s demonstrations are the latest twist.

Here’s a short retrospective of major events shaping politics in Thailand in the past eight years and how I saw them.

2013 – The ruling Puea Thai party‘s proposed Amnesty Bill would waive all charges against former members of parliament found guilty  of corruption in 2008 and who have been living in exile since then, including Thaksin . The Senate rejected the bill on November 11th but Peua Thai – led by Thaksin’s sister Prime Minister Yingluck Shinawatra – can reintroduce it to the Senate in six months. Opponents want Puea Thai to drop the bill entirely and they have taken to the streets in protest. By Sunday morning local time, the protesters had moved closer to Government House and threatened to cut off all water and electricity supplies to state offices and the Prime Minister’s residence, according to the Bangkok Post. By Tuesday protesters had surrounded the interior, tourism, transport and agriculture ministries, the BBC reported.

The government has responded by invoking the ominously sounding Internal Security Act in Bangkok and three other areas. The act allows authorities to impose curfews, operate checkpoints and restrict movements of protesters.

The national protest – dubbed V for Thailand – has gained momentum in the past month and spurred a series of regional VforThailand (courtesy of SMCP)demonstrations across the country and on-line campaigns. Photographs of former Prime Minister Abhisit Vejjajiva at the protests showing support for the anti-Amnesty Bill demonstrators indicate his support.

Protests in Thailand change governments and the future of this government will play out in the next few months. Governments in 16 countries have issued travel warnings, urging visitors not to go to protest areas, although none have advised against travelling to Thailand. Protests in recent years have ended in bloody clashes with the military. The Thai government is not afraid of using armed force to end public uprising.

2010 –  I arrived in Bangkok on a train from the south very early one morning in late April 2010. A British man on the train was in touch with a pal at the BBC and we were receiving updates straight from the reporters. He advised us to take a cab from the station to his apartment and not to leave until he sent word of the all clear. They were expecting the army to take to the streets. The atmosphere was tense to say the least, and as me and my fellow travellers headed to the safe-house in Bangkok, we scoured the streets for red shirts. We saw a handful of people with banners heading to the protest site, undeterred by official warnings.

Protesters set up camp in central Bangkok for ten weeks that year, calling for Prime Minister Abhisit Vejjajiva to stand aside. More BangkokRedShirtsSilom3than 1,800 people were wounded in clashes with the army, which sparked arson attacks in the capital which also destroyed a shopping mall. The city was placed under curfew for the first time in 15 years. A total of 91 people were killed during clashes between government forces and red shirt protesters in Bangkok in April and  May 2010. Abhisit’s Democrat Party lost the leadership in the 2011 parliamentary elections.

Later that day, I went to Suvarnabhumi airport to take a flight to Kathmandu. The cab passed through three army checkpoints – this government was not about to be hoist by one of its own supporter’s tricks. In May 2010, a different group of red shirts – the Maoists – closed down Kathmandu for seven days in a general strike. Rally posters featured the faces of Chairman Mao, Lenin and Stalin, although I was not convinced that the protesters could name them all.

2009 – My first trip to Thailand was in January 2009, a few weeks after a major protest had closed the airport and almost shut down the country. Blissfully unaware of the trouble brewing in Bangkok, I headed south to Krabi province. There is a lot of support for the yellow shirts in the south and also a lot of people who are occupied with making money from the tourism. Hoteliers and restaurateurs claimed tourist numbers had been affected that year due to the airport closure, but people came nonetheless, many arriving into south Thailand via Kuala Lumpur in Malaysia. While the holiday season was in full swing down south, red shirt protesters in the north were rallying support. Following several days of protests in the capital, red shirts clashed with riot police officers, forcing Abhisit to call a state of emergency, four months into his leadership.

2008 –   A Political crisis in Thailand saw six months of protests in 2008 – this time by the opposing yellow shirts – led to the take YellowSuvarnabhumover and closure of Bangkok’s Suvarnabhumi International Airport, leading to widespread national disruption. This time, the protesters wanted the military to depose the ruling party who it claimed had won the leadership  by electoral fraud. The Constitutional Court dissolved the ruling People Power Party, unofficially led by Thaksin in exile, and Parliament voted Abhisit into the PM’s seat.

2006 – Thaksin Shinawatra, then PM, was ousted by the army in a coup d’etat while he was in New York and coup leaders revoked his diplomatic passport and rewrote the constitution.  Thaksin was found guilty of corruption in absentia during a 2008 trial. He has been in exile since but has regularly communicated with voters and his supporters from afar, influencing much of Thai political life in the past eight years.

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Market fraud: Thai trader settles USD5.2m case with SEC

pork butts on in the smoker

A Thai stock market trader has agreed to settle a market fraud charge worth USD5.2m and the Thai Ministry of Finance had nothing to do with it. The man allegedly made a 3,400 per cent return based on insider information, which the US SEC spotted, swooped down on and froze within a week of the trades taking place.  This interesting story highlights both the US government’s willingness to pursue insider traders and how efficiently they do it.
Sniffing out processed pork trades
Badin Rungruangnavarat, a trader based in Bangkok, allegedly bought thousands of call options and single stock futures contracts in Smithfield Foods, a pork processing firm based in the US, via the Interactive Brokers LLC, also based in the US. The SEC accused Rungruangnavarat of making these purchases based upon a tip he gleaned from a Facebook comment, from a friend who happens to work at an investment bank and had material and non-public information about the potential acquisition of Smithfield.
Rungruangnavarat was accused of buying the contracts and options between May 21 and 28. On May 29th, Smithfield announced its acquisition for USD4.7bn by a Chinese company. Following the announcement, Smithfield’s share value increased by almost 25 per cent, resulting in the whopping 3,400 per cent return on investment. The Thai trader tried to withdraw more than USD3m in profits from his brokerage account on June 3rd, according to the SEC’s announcement on the matter.
Such a high return, based on aggressive trading and made just before an acquisition announcement would raise red flags for potential market abuse. Perhaps the trader thought being in Thailand would mean the US authorities might not notice his trades, or might not bother to pursue them.
He could not have been more wrong. The US managed to freeze his assets within one week of the trades and, three months later, the trader has agreed to give up the USD3.2m he allegedly made from the trades and pay a USD2m while not admitting or denying wrongdoing, according to a report in the why would anyone cough up the extra USD2m if they were innocent?
Rapid action
One week after the acquisition went public, the SEC in the US had managed to obtain an order which effectively hogtied Rungruangnavarat from the other side of the world. The order froze the proceeds of his securities purchases, granted the authorities expedited discovery and made it illegal for Rungruangnavarat to destroy any evidence. In short, he could not touch his money, had the SEC’s investigators crawling all over his account, and was facing charges if he attempts to hide the electronic or paper trail.
Rungruangnavarat breached  s 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, on Selective Disclosure and Insider Trading, according to the SEC.