Bma May Have To Fork Out Small Fortune At International Court

[webfact]

FIRETRUCK SCANDAL

BMA may have to fork out small fortune at International Court

By Jeerawan Prasomsap

The Nation

Published on September 24, 2009

Bangkok Metropolitan Administration (BMA) may have to shell out up to Bt1 billion to settle its dispute over fire vehicles at the International Arbitration Court in Paris.

"This is in addition to fees for lawyers and air tickets during the court's hearings," an informed source revealed yesterday.

At present, the BMA wants to annul the contract for the Bt6.69-billion purchase of fire vehicles from Austrian supplier Steyr-Daimler-Puch because the deal was mired with corruption.

The supplier has already received many instalments of the payment. Many of the fire vehicles have also been delivered to Thailand.

The purchase contract says that any dispute from the deal would have to be settled at the International Court of Arbitration.

"The BMA is consulting the National Anti-Corruption Commission (NACC) as to whether it should bring the case to the International Court of Arbitration," the same source said.

The BMA hoped to be able to petition the Court before the end of this year.

"A committee is already established to study similar cases and to consider hiring good lawyers for this case," the source said.

As the dispute has dragged on, fire vehicles sent in from the Austrian supplier were left to gather dust at Thailand's Laem Chabang Port.

The Customs Department is now threatening to seize these vehicles and auction them off in line with applicable rules.

BMA is now talking to the Finance Ministry to request that the fire vehicles be exempted from such rules.

-- The Nation 2009/09/24

[Xangsamhua]

Isn't this the case that caught up both Samakh and Apirak? If so, how did they both manage to get involved? If it started in Samakh's time, what did Apirak have to do with it?

[brahmburgers]

Isn't this the case that caught up both Samakh and Apirak? If so, how did they both manage to get involved? If it started in Samakh's time, what did Apirak have to do with it?

I don't know the intricacies, but I recall that Samak and his people set up the deal, and left it to Apirak to do the final signature when he first showed up at the gov's office.

Unfortunate, especially for Bkk's people, that excess of 1 Billion is going to have to be paid in fines and legal fees fo mistakes made by their gov't. That's 1 Bn+ that could have been spent on useful things, like a campaign to clean up the city, teaching people how to drive and how to conserve energy resources. Bkk has a paucity of park space, what's being done about that? If Lumpini Park (its biggest park) is "The Lungs of Bangkok", then Bkk is like a bloated man with lungs as big as his pinkie finger.

[RKASA]

Were the trucks not bought because they were needed?  The price is agreed to and contracts signed and some delivered.  Keep the deal and save 1B in a law suite your most likely to lose anyway, and get the trucks out of the port and put them to work.  

These two things should be done first.  

Locking up the trucks and reneging a contract does not undue any wrong acts and they can still be prosecuted with out the anal activity of locking everything up.  If you need them for evidence take a stupid picture of the truck and let the truck go. 

Its this type of mindset just proves how power hungry and controlling everyone in Thai authority can get in every department.

If there was any wrong doing the purchase of the trucks the evidence  is in the contract and witnesses can be called.  My guess is, its become just another political witch hunt at public expense and the fire services are being held to ransom.  

One should be asking which is the greater crime.

[scorecard]

Were the trucks not bought because they were needed? The price is agreed to and contracts signed and some delivered. Keep the deal and save 1B in a law suite your most likely to lose anyway, and get the trucks out of the port and put them to work.

These two things should be done first.

Locking up the trucks and reneging a contract does not undue any wrong acts and they can still be prosecuted with out the anal activity of locking everything up. If you need them for evidence take a stupid picture of the truck and let the truck go.

Its this type of mindset just proves how power hungry and controlling everyone in Thai authority can get in every department.

If there was any wrong doing the purchase of the trucks the evidence is in the contract and witnesses can be called. My guess is, its become just another political witch hunt at public expense and the fire services are being held to ransom.

One should be asking which is the greater crime.

Good points. And it's obviously true that Thailand / Bangkok needs better equipment overall.

But let's not forget that the deal agreed was massively overpriced and smells very strongly of corruption/collusion or whatver label you wish to use.

Billions of taxpayers funds (funds which are the property of all Thais) over and above what was necessary were agreed, and this cannot be left unaddressed. To do so is setting a wrong precedent

Ultimately there should be accountability / there should be redress including punishment for those involved in the 'spoils', and this rightly or wrongly includes the best possible attempts to put the whole thing right, including somehow stopping the payout of billions of unnecessary funds.

If we say 'just let it proceed' then this a a signal to the corrupt in our society that they can get on more corruption with ease.

Two wrongs don't make a right.

[hammered]

Lets hope some sense comes from what could be a rude awakening. The truth is that everty government/local municipality introduces projects of its own and cancels those of past administrations and the whole poltical game of oh we found your corruption we must cancel it and replace it with our own goes on and on. And in the end nothign is ever purchased. It happens with central gobvernment too especially with military or other large ticket expenditure. Of course this cant exactly be good for relations with companies who get jerked around all over in the game of fill our pockets while holier than thoughing you. At some point this has top stop and what is needed for community and country needs to be put first hopefully without trousering stacks of dodgy dollars but if that must continue at least with consensus among parties to get what is needed.

Bangkok needs fire trucks

Bangkok needs buses

The military need APVs down south

etc

None of this is in doubt it is just a bunch of games for fianacial and politcal advantage stymying everything.

[RKASA]

They can and should be prosecuted the evidence is in the contract not the trucks.

If they paid a higher price to cover the cost of a pay off then file criminal charges to those that got the money.  If you don't know who that may be you don't have much of a case anyway.  At any rate still, you don't need to let the trucks set.   If the price gets adjusted because you made a bad deal your going to be buying them anyway.   If they paid far to much for the equipment they can get a refund perhaps, but that does not mean they can't put the trucks to work. 

Here is the way it will end up anyway.  You have a valid contract and you don't like the price after the fact, buyer beware.  Next time make a better deal.  

Just how far out of line are the prices of these trucks.  Its amazing just how much these kind of trucks can cost and it would seem a crime to pay it even when its a fair and going price.  Its not like buying a mass production car from a dealer.

[Plus]

Rkasa, I understand that your point is - pay the money first, then try to retrieve it from those who steal it.

What if it can't be retrieved? That is an almost sure possibility - the scam has been stopped, the money will end in Austrian firm accounts.

Now they can pay a billion in fees, or six billions on the invoice.

And who is "they", btw? Abhirak has been indicted precisely for that - trying to get the trucks first and sort the mess later. Who's the next "they" who wants to face a lawsuit?

[slimdog]

Basically we seem to have a bad situation, which at each turn gets even worse.

Samak made a decission to purchase the firetrucks and fireboats. This was actually the first time that the BMA had ever had to do this as previously all Firefighting equipment was purchased by the Police who had been in charge of the fire and accident department in Bangkok. The original contract was a government to government contract signed between Austria and Thailand and was a barter deal, exchanging cooked chickens for firetrucks. This may explain slightly why the BMA cost was slightly higher than a cash purchase, but is not an unsual practice, and does eliminate foreign exchange risks plus of course gives a Thai company business.

The government to government contract was made void when Steyr was purchased by General Dynamics, which has meant that Thailand has had to pay for the equipment in cash.

Samak did make one big mistake though, when he presented the contract to the cabinet for endorsement, he made no provision for import duty, assuming that as before, all firefighting equipment was exempt from duty (This only applies to equipment purchased by the Police and armed forces), so when the first trucks started to arrive, the BMA had no budget to pay the duty. The actual cost of the equipment is already agreed, with the BMA paying 40% and the Interior Ministry 60%.

So before any of this equiment can be used, a very large import duty fee must first be paid (Or waved), plus the equipemt has been stored by the customs department, partly at the port, partly in Nonthaburi, and the full cost of storage must also be paid. Just on the port storage, we are looking at well over 100 million baht (and rising). Someone is going to have to pay this at it is being stored by a private company.

Apirak is also mentioned. This is because his signiture was required in order to turn a MOU, into an actual deal. One of the things that Apirak failed to do, was that even though he had misgivings over the contract, he relied on advise from the BMA and Democrat Party legal teams without consulting the Council of State, which could have given him an actual ruling on the contract.

Secondly, according to the contract, steyr had to manufacture one of each type of equipment for inspection prior to the start of production, and if the equipment failed to meet any of the specifications, then the contract was void. The BMA failed to send anyone to inspect the vehicles.

There is also the small question of where the fireboats actually are. When the TRT sent a team down to investigate (Both Samak and Apirak were linked either directly or indirectly to the Democrat Party at that time) they found that only one of the boats was actually left in storage, there should have been 30.

Final note.

Steyr's name has been dragged through the mud on this contract. Three years ago they sent a letter to the BMA saying that they would no longer tolerate their reputation being smeared.

http://thaksinbook.tripod.com/PDF/Apirak.pdf

It's time someone actually sorted this matter out and find out what is real and what is political posturing...

[Donnyboy]

nice summation

[webfact]

<snip>

Secondly, according to the contract, steyr had to manufacture one of each type of equipment for inspection prior to the start of production, and if the equipment failed to meet any of the specifications, then the contract was void. The BMA failed to send anyone to inspect the vehicles.

<snip>

Som Nam Na

[Plus]

It's time someone actually sorted this matter out and find out what is real and what is political posturing...

You could say that about the whole country.

There will be no knights in shining armor, though. There's no "they" who can just come and solve everything.

[RKASA]

Its a war on corruption, I support that, but like in all wars its best to pick your battles, the time and the place.   It should also be noted the an ounce of prevention cost far less then a pound of cure.  You can't fix everything that been broken.

You can indite a cheese sandwich for being peanut butter if you want, its doesn't mean your even close to having made a case yet.  i.e. saplings

Whats the difference in fair price and the price paid?  Total.  i.e. the lose   It is assumed that the contractor cheated and should not be paid and the deal canceled but indited someone other then the contractor themselves.  Its a contract,  paying 1B in fees plus lawyers, travel and on and on assumes They will win the case.  

"The supplier has already received many installments of the payment. Many of the fire vehicles have also been delivered to Thailand."

What if they lose?  frankly, I think they will.

Mark my words this is a complete waste of time and money at the expense of the people in Bangkok.  

Fix the bidding system, stop chasing after the results of the old bad system and get off the tread mill.  The only people benefiting from all this are lawyers.  In the mean time needed fire trucks are wasting away on the docks without replacement.  Trucks that are going to be paid for like it or not.

 

[Gary A]

It's just another example of, "IT'S NOT MY FAULT." You buy something and there are kickbacks and money passed under the table. The politicians take the money, profess their innocence and blame the company who sold the equipment. It's difficult to hide money in this computer age. The simple thing is to follow the money but you won't see that happening. The good ole boys network is and has always been that you don't tell on me and I won't tell on you. The political party makes no difference.

[PoorSucker]

I can see it before me now.

Dear judges, before you make a verdict you must try our delicious pastries.

[bkkjames]

Who else besides me thinks this will get settled out of court.

Example: 1 billion baht worth of Chickens will be donated to government of where the firetrucks came from. That government will in turn give the fire truck manafucterer a 1 billion baht equivelent tax break.

Everyone wins, except the chickens.

[basjke]

Why all those fees for sending lawyers abroad?They have a representative fugitive of the previous government traveling the globe,and who is loved by all those foreign governments,so let him solve the case.

Edited September 24, 2009 by basjke

[Old Man River]

Lets hope some sense comes from what could be a rude awakening. The truth is that everty government/local municipality introduces projects of its own and cancels those of past administrations and the whole poltical game of oh we found your corruption we must cancel it and replace it with our own goes on and on. And in the end nothign is ever purchased. It happens with central gobvernment too especially with military or other large ticket expenditure. Of course this cant exactly be good for relations with companies who get jerked around all over in the game of fill our pockets while holier than thoughing you.

Hammered, foreign companies that do business with Thai government entities already are aware of the risks.

Similar defaults on international obligations have been going on for many years. Remember the second stage expressway? Still, to this day, foreign companies continue to chase Thai contracts and cry when it looks like bidding wasn't fair. They all know the risks and as long as they are willing to enter into these contracts, when precedented defaults like this one occurs, they have no one to blame but themselves.

[scorecard]

They can and should be prosecuted the evidence is in the contract not the trucks.

If they paid a higher price to cover the cost of a pay off then file criminal charges to those that got the money.  If you don't know who that may be you don't have much of a case anyway.  At any rate still, you don't need to let the trucks set.   If the price gets adjusted because you made a bad deal your going to be buying them anyway.   If they paid far to much for the equipment they can get a refund perhaps, but that does not mean they can't put the trucks to work. 

Here is the way it will end up anyway.  You have a valid contract and you don't like the price after the fact, buyer beware.  Next time make a better deal.  

Just how far out of line are the prices of these trucks.  Its amazing just how much these kind of trucks can cost and it would seem a crime to pay it even when its a fair and going price.  Its not like buying a mass production car from a dealer.

RKASA, you raise some good points. Here's a few more details:

- The trucks were massively overpriced in multi millions of Baht per unit, not just a few baht. I can't find it quickly but these details have been published before, quite some time ago. From my memory the price agreed per unit is something like 8 or 9 million Baht per unit over a 'normal' price. Several investigations have espablished what is considered to be the 'normal' price, and this has not been disputed by the seller, who has been very quiet.

- There have been several high profile attempts to get the contact price reduced and/or cancelled. The seller won't budge and has threatened to sue if the full price / payments are not made. You can read some obvious points in that.

- Several Thais have been charged with corruption / malfeansance and the cases are slowly making their way throught the Thai courts. Samak is high profile. A little later than the others, Apirak was more recently 'labelled' by one of the investigation authorities, which is why he stood down from his elected position as BMA governor.

A little off topic - Apirak (good Democrat boy) was then appointed into a national government spokesman position, which shocked me, I was thinking that Abhisit was trying desperately to look lilly white. It seems to never end!

[Old Man River]

A little off topic - Apirak (good Democrat boy) was then appointed into a national government spokesman position, which shocked me, I was thinking that Abhisit was trying desperately to look lilly white. It seems to never end!

Just for the record, neither Apirak nor anyone else affiliated with this contract has been charged with anything more than paying too much. No corruption was found. Hence, no problem with his being appointed as a spokesman.

[brahmburgers]

what a can of worms.

When gov't gets involved with something, prices often soar thru the roof.

About a year ago there was an estimate for hauling a bunch of moldy fruit out of warehouses. I can't recall details, but by the time the Thai gov't got involved, the clean-up price was stratospheric.

In regard to the fire vehicles and boats, Thailand should have done what they're good at. Get some samples and copy 'em. The copies would never be as good as the originals, but they'd save some dough in the near term. Of course, when the vehicles fail in emergency situations, then there'd be hel_l to pay.

[Plus]

These Austrian trucks are actually modified Mitsubishi imported from Thailand, and not even current ones, the previous generation.

6 mil a truck, or was it 4 mil?

[Old Man River]

Some good info on this contract off of the Absulutely Bangkok website:

"Allow a few words on the fire truck and boat procurement scandal that shook and still shakes Bangkok administrations. A classic Thai zero sum game with losers only. Practically everybody involved has now been found guilty according to the National Counter Corruption Commission NCCC. But guilty of what?! (Check comments below for latest updates.)

The height of the scandal had “coincided” with the change of power in Bangkok and the ensuing power struggle between Thailand’s current two main forces. And there the punching bag was, Austrian company Steyr Daimler Puch, manufacturer of the pick-ups, trucks and boats – caught in the center of a textbook Thai power struggle and turned into a grateful scapegoat.

Steyr was accused of overcharging and breaching the contract … I had a talk back then with Steyr’s Bangkok office. The poor Austrians couldn’t believe what they were suddenly accused of. One accusation: According to the contract Steyr had to deliver imported cars. Not true, Steyr said: “The client had seen the “Made in Thailand” prototype.” A scandal was born.

“The client knew,” I was told, “that the empty chassis of the pick-ups would be produced in Thailand. The client knew that car maker Mitsubishi assembles that very model only in Thailand.” Steyr then exported the empty cars to Europe, where they were equipped with all the bells and whistles, and re-exported back to Thailand.

Steyr had even ordered the raw empty chassis at Mitsubishi’s European headquarters in London. As Mitsubishi produced the ordered vehicles solely in Thailand, they built them in Thailand – remember, the “Detroit of the East” … No magic to it, no hidden agenda. The buyer, said Steyr, was completely aware of this.

The Austrians became crooks when the opposition took power in Bangkok. 176 shiny new fire trucks got stuck at customs. Because of unpaid import taxes. And it was “discovered” that the cars smaller, 65 pick-up trucks were produced by “Mitsubishi Motors Thailand.” What a surprise.

Steyr had paid Mitsubishi the equivalent of 14,000 euros for a single chassis. Exported to Europe, equipped with state-of-the-art gear and re-exported to Thailand the final price amounted to about 110,000 euros per unit. Included in this price were spare parts and a half-year training for 800 people.

The Austrians got finally paid for doing what they had to do: fulfilling their contract. While Bangkok governor Apirak Kosayodhin has now been found guilty of wrongdoing for fulfilling Bangkok’s part of the deal: paying the bill; as per the buying contract signed by then-Bangkok governor Samak Sundaravej.

Nobody to this day has any idea about actual corruption involved. But if you just shout loud enough and you got a scandal."

[Thai at Heart]

These Austrian trucks are actually modified Mitsubishi imported from Thailand, and not even current ones, the previous generation.

6 mil a truck, or was it 4 mil?

Can't seem to find the figures. They are buried in back issues of the Nation somewhere.

Looking at the website. Did this company ever make "fire" trucks/boats per se?

http://www.steyr-ssf.com/company/activities/

http://www.generaldynamics.com/

Seems like an awfully convoluted way to commit a fraud. Bring the trucks out of Thailand? Who benefits? Fix them up, inflate the price and bring them back?

[dave_boo]

Some things to consider. Per this link you can see that the cost in the States is in excess of 443K USD (14.9M THB); this link has a boat in Canada (warning pdf) costing over 520 K Candian (16.3M THB). 315 fire trucks at that rate is 4.7B THB and 30 fire boats at the listed rate is 489M THB. Total cost? 5.2B THB. It helps to bear in mind that those are NOT imported items. Now that is some 1,7B THB shy of the contract, but averaged out that's only 5M THB per unit over what is paid for locally produced vehicles in other countries. Another couple of things not mentioned is that spare parts and a half of a year training for 800 personnel (assuming that there needs to be 1 trainer per 20 people, that's 40 trainers making, per Thailand's income rules, 1,6M THB per month for 6 months-9,6M THB total) is included in the price, as is the cost of the truck shells that were required to be purchased from Thailand at 14k Euros each (693K THB each total of 218M THB).

So, the real question is; is spare parts, shipping the shells from Thailand and back to Thailand, and cost due to the fact the equipment is not locally manufactured worth some 1,1B THB?

[brahmburgers]

Not surprising, coming from the same city which decided to get horses for a spiffy new (at the time) mounted police force, yet couldn't get it together to provide silage for the animals. Hence, the program was scrapped. And the horses? .....maybe trotted on down to the glue factory.

[animatic]

No doubt all the corruption involved was local in origin and profit.

The trucks are IN THAILAND,

And the investigation could find out who got the EXTRA profits, without;

a ) depriving the people of their nearly delivered extra fire protections

b ) screwing the manufacturer...

But seems no one is looking that far ahead, It was a dodgy deal at this end,

and Samak's people l;eft the LAST signature to the next guy in a Dem,

basically get the profits be hand off the blame.

Of course Apirak saw:

a ) apparatus here, ready to be used

b ) the huge fines to be paid if he didn't sign

c ) the rules at the time said he HAD to sign it

d ) I don't think he realized he would be charged for

doing his job as it was written, and thus be called culpable for this.

So basically he got screwed royally for doing his job,

but this screwing so far hasn't extended dee0ply into the REAL perpetrators camp.

Apirak resigned gracefully, and awaits his court date.

I think this is a pretty dodgy charge against him abd he will be acquitted.

[Old Man River]

No doubt all the corruption involved was local in origin and profit.

The trucks are IN THAILAND,

And the investigation could find out who got the EXTRA profits, without;

a ) depriving the people of their nearly delivered extra fire protections

b ) screwing the manufacturer...

But seems no one is looking that far ahead, It was a dodgy deal at this end,

and Samak's people l;eft the LAST signature to the next guy in a Dem,

basically get the profits be hand off the blame.

Of course Apirak saw:

a ) apparatus here, ready to be used

b ) the huge fines to be paid if he didn't sign

c ) the rules at the time said he HAD to sign it

d ) I don't think he realized he would be charged for

doing his job as it was written, and thus be called culpable for this.

So basically he got screwed royally for doing his job,

but this screwing so far hasn't extended dee0ply into the REAL perpetrators camp.

Apirak resigned gracefully, and awaits his court date.

I think this is a pretty dodgy charge against him abd he will be acquitted.

We are in complete agreement.

I do not, however, think there will be an inclination to look further into this case from a corruption standpoint unless it can be linked to Thaksin either directly or indirectly (abuse of power). Since a clear link to Thaksin does not appear to exist, there have been no corruption charges filed and I doubt there will be (the charges that have been filed are only for paying too much).

Since there doesn't appear to be any willingness to dig deeper into the corruption angle, what will become sticky for the Thai's is going to an international court and arguing that the contract should be declared void and the LC issuing bank not obligated to pay all because the Thai government paid too much. Caveat Emptor.

[Plus]

There could be only a potential corruption angle - installments were reluctantly paid to Austrians after people were charged, so I doubt anyone received any kickbacks whatsoever.

They will charge them for damage to the state, which isn't a walk in the park either, assuming they don't want to wait for Samak to go to heaven first.

[Old Man River]

There could be only a potential corruption angle - installments were reluctantly paid to Austrians after people were charged, so I doubt anyone received any kickbacks whatsoever.

They will charge them for damage to the state, which isn't a walk in the park either, assuming they don't want to wait for Samak to go to heaven first.

Plus, installments may have been paid after people were charged (I don't know), but that doesn't mean that no fundings took place on the contract signing. This wouldn't be the first contract where that occurred. It may not have happened here, but unless you specifically know about this contract, don't assume.