Anti-corruption is a hot topic of conversation in Thailand because of the reach of extra-territorial law such as America’s Foreign Corruption Practices Act (FCPA) and the UK’s Bribery Act and the military junta’s focus on the issue. However, observers believe that stricter enforcement and a change in the country’s libel laws would help more than anything to make the country’s patchwork of anti-corruption legislation more effective.
Transparency International’s 2016 report on Thailand ranked it 106th out of 176 countries, scoring 35 out of 100, a slight drop from the score of 38 in the previous two years. The closer the score is to 100, the less corrupt the country is. This year, important cases such as the Rolls Royce matter involving the bribery of regional intermediaries have brought attention to Thailand’s anti-corruption problem. Lawyers told Asialaw a number of laws have been put in place to combat anti-corruption but companies should implement robust internal compliance programmes to address the issue.
Thailand’s military junta has tried to addressing anti-corruption in the past few years for example, by amending the law and creating an anti-corruption court and commission. In 2015, the Organic Act on Anti-Corruption was updated to include new offences for bribery of government officials and international organisations, and harsher penalties on government officials. “Corporate criminal liability was introduced in the Act where associated persons in a bribe could expose companies to being guilty of a corrupt act,” says John Frangos, consultant at Tilleke & Gibbins. “However, if a company implements proper internal measures, the liability would be limited.” The standard to which these internal measures must meet is unclear, though.
The Licensing Facilitation Act came into force at the start of 2016 to address mid-level corruption. “The need to apply for licences with rules and processes often not being clearly set out giving officials broad discretionary power can create uncertainty and facilitate corruption,” says Peter Burke, co-founder of AXIS Legal. “For example, it could be applying for a licence to undertake a particular business or activity or an everyday application. The Facilitation Act applies to all government departments with limited exceptions and is aimed at creating a process for transparency, timetables and a complaints process through a hotline to address concerns and reduce discretionary powers. It is a positive move aimed at cutting through red tape and bureaucracy”
An anti-corruption court was also created in late 2016 where government officials can be prosecuted for corruption offences, a measure that did not exist before. And a new national anti-corruption commission has been created to encourage public reporting via a hotline, “There haven’t been many prosecutions, and there haven’t been a lot of publicly reported cases, so there’s little actual verifiable history of enforcement,” says Michael Ramirez, consultant at Tilleke & Gibbins.
Internal compliance programmes
A company’s internal compliance programmes need to address local needs, says Ramirez. “Clients have asked for advice in designing and implementing investigative plans where they would involve conducting interviews with vendors and employees,” he says. “These plans are especially important for companies with procurement contracts that could involve potential wrongdoings with vendors and middlemen that could include wrongful behaviour, fraud and misappropriation.”
“One of the weakest areas for companies when setting up internal compliance programmes is to prepare a programme that is localised,” adds Ramirez. “Some companies may be new to Thailand and have no idea how to ensure employees understand the programme and make sure systems apply to the reality of doing business, not just a broad, one-size-fits-all programme.”
“Companies need to consider the local and cultural aspects, such as language, mode of conducting business and differences in the jurisdictions they operate in,” says Frangos. “Companies should have codes of conduct and make sure that contracting third parties comply.”
More work to be done
Burke highlights Thailand’s restrictive libel laws as an obstacle in the campaign against anti-corruption. “Depending on the circumstances, criminal and civil complaints for defamation could be filed against a person reporting corruption to the authorities. It’s hard to try to fight against corruption if people are not willing to go record or report matters to the authorities or are concerned about the possibility of libel proceedings being instigated against them. If people don’t report matters it is often difficult in practice for the authorities or anyone else to uncover corrupt practices. That said the current government seems to acknowledge that corruption affects Thailand’s competitiveness and overall position in attracting investment and are taking positive steps to address the position particularly in the area of enforcement.”
Enforcement of anti-corruption legislation that goes beyond voluntary participation of companies in internal compliance programmes and more sensible libel laws that do not punish whistleblowers will go a long way in helping Thailand improve its record in combating anti-corruption.