No Bribery In Deal For Bomb Detectors

[george]

SUVARNABHUMI AIRPORT

No bribery in deal for bomb detectors

BANGKOK: -- Transport Minister Suriya Jungrungreang-kit denies any senior official or politician in Thailand has taken bribes from a project to import explosives detectors from the US for installation at Suvarnabhumi airport.

The minister said yesterday that American authorities had investigated the planned supply of 26 explosives detectors by GE In Vision Co to Airports of Thailand Plc, and found no Thai authorities were involved in any irregularity.

He said Michael J Delaney, counsellor for economic affairs at the US embassy in Bangkok, had sent him written confirmation to that effect.

The investigation was prompted by reports that a broker had tried to bribe some Thai officials to seal the US$35.8 million (1.42 billion baht) procurement deal. The detectors are to be installed on conveyor belts at the new airport.

--The Post 2005-04-26

[sriracha john]

Funny thing is.... the company already admitted to offering bribes.

The US company, InVision Technologies Inc, admitted recently that its Thai distributor, Patriot Co Ltd, “may have made or offered to make potentially improper payments to Thai government officials” in connection with certain foreign deals.

The US Department of Justice and the Securities and Exchange Commission is investigating the company.

InVision’s claims, made in the US, were an admission it violated the US Foreign Corrupt Practices Act.

[RDN]

1,400 million baht deal, and not a satang goes astray?

[astral]

Is there any contract here that does not involve a bribe?

Pretty rare I would imagine.

[Humphrey Bear]

There were no bribes - just very large Agent's Fees

[taxout]

In February, InVision agreed to pay over $600,000 and comply with an SEC cease-and-desist order in connection with violating the Foreign Corrupt Practices Act ("FCPA") in several countries, including Thailand.

Here's how the order describes InVision's activities in Thailand:

"11. Beginning no later than 2002, InVision competed for the right to supply explosives detection machines to an airport under construction in Bangkok, Thailand. Construction of the airport is overseen by a corporation controlled by the government of Thailand. InVision retained a distributor in Thailand to lobby the airport corporation and the Thai government on InVision's behalf. Under the terms of the transaction, the distributor would purchase the explosives detection machines from InVision and then make its profit by reselling them at a higher price for use by the airport. The distributor was InVision's primary representative to the airport and associated governmental agencies.

"12. From at least January 2003 through April 2004, in communications with the responsible Regional Sales Manager and the Senior Executive, the distributor indicated that it had offered to make gifts or payments to officials with influence over the airport corporation. Based on the information provided to the Regional Sales Manager and the Senior Executive, InVision was aware of a high probability that the distributor intended to fund any such gifts or offers out of the difference between the price the distributor paid InVision to acquire the machines and the price for which the distributor was able to resell them. Despite this awareness, InVision authorized the distributor to continue to pursue the transaction.

"13. In or about April 2004, the airport corporation, through its general contractor, agreed to purchase 26 of InVision's explosive detection machines from the InVision distributor in a sale InVision valued at approximately $35.8 million. Consummation of the transaction was deferred after InVision received notification of possible FCPA violations. InVision has not recognized any revenue from the transaction and has agreed that the transaction will proceed, if at all, only as a sale directly to the airport corporation or another Thai governmental entity. "

http://www.sec.gov/litigation/admin/34-51199.htm

[Pattaya_Fox]

....I wonder if the directors of In Vision have applied for Elite cards?

[Golf]

There is no such thing as "fair deal" in Thailand. This issue is as classic one. Bribery at all level. For this bomb detector's deal, they employed what called "locking sepecification or LockSpec". This LockSpec can be like:

- The company should have an experience in very large, government-related projects for at least 5 years and 7.5 months (locking the time).

- The company must have an experience working in projects that has a budget of 135,0389.98 baht (any companies that used to worked for a project cost 135,0389.00 baht will be automatically rejected).

These are just two tricks these government officers use to get rid of those companies they don't want, except the one that already paid them.

Golf

[meom]

There is no such thing as "fair deal" in Thailand.  This issue is as classic one.  Bribery at all level.  For this bomb detector's deal, they employed what called "locking sepecification or LockSpec".  This LockSpec can be like:

- The company should have an experience in very large, government-related projects for at least 5 years and 7.5 months (locking the time).

- The company must have an experience working in projects that has a budget of 135,0389.98 baht (any companies that used to worked for a project cost 135,0389.00 baht will be automatically rejected).

These are just two tricks these government officers use to get rid of those companies they don't want, except the one that already paid them. 

Golf

There's nothing tricky about "locking specifications" as you call it and it's done all over the world.

It's just common sense that if you are tendering lets say a 100 million dollar project which will last for example 2 years that you don't want every mickey mouse company to bid for it so part of the pre-qualification process is that potential bidders have to show a reference list of similar succesful projects in value and duration.

[Golf]

Correct, but look at the number in my example. The number of compaies that possibly win this contract is ZERO, except one company that match this number exactly. The winer is usually the one who worked on that previous project and has long connection, bribe well.

That's LocSpec in Thailand.

Golf

[meom]

I agree with this explanation and it always helps if you have worked with the same people before. At least you know who to bribe

[sriracha john]

In February, InVision agreed to pay over $600,000 and comply with an SEC cease-and-desist order in connection with violating the Foreign Corrupt Practices Act ("FCPA") in several countries, including Thailand.

Here's how the order describes InVision's activities in Thailand:

"11. Beginning no later than 2002, InVision competed for the right to supply explosives detection machines to an airport under construction in Bangkok, Thailand. Construction of the airport is overseen by a corporation controlled by the government of Thailand. InVision retained a distributor in Thailand to lobby the airport corporation and the Thai government on InVision's behalf. Under the terms of the transaction, the distributor would purchase the explosives detection machines from InVision and then make its profit by reselling them at a higher price for use by the airport. The distributor was InVision's primary representative to the airport and associated governmental agencies.

"12. From at least January 2003 through April 2004, in communications with the responsible Regional Sales Manager and the Senior Executive, the distributor indicated that it had offered to make gifts or payments to officials with influence over the airport corporation. Based on the information provided to the Regional Sales Manager and the Senior Executive, InVision was aware of a high probability that the distributor intended to fund any such gifts or offers out of the difference between the price the distributor paid InVision to acquire the machines and the price for which the distributor was able to resell them. Despite this awareness, InVision authorized the distributor to continue to pursue the transaction.

"13. In or about April 2004, the airport corporation, through its general contractor, agreed to purchase 26 of InVision's explosive detection machines from the InVision distributor in a sale InVision valued at approximately $35.8 million. Consummation of the transaction was deferred after InVision received notification of possible FCPA violations. InVision has not recognized any revenue from the transaction and has agreed that the transaction will proceed, if at all, only as a sale directly to the airport corporation or another Thai governmental entity. "

http://www.sec.gov/litigation/admin/34-51199.htm

<{POST_SNAPBACK}>

Patriot Business Consultants Co Ltd, the broker firm at the heart of the controversy over the supply of 26 CTX explosives-detection machines for Suvarnabhumi Airport, is netting about US$10.2 million (Bt404 million) in benefits from the deal.

This has come to light in a preliminary investigation by Airports of Thailand Plc (AOT), which will run the new airport.

Results of the investigation will go to Transport Minister Suriya Jungrungreangkit, and will be forwarded to a committee to be set up this week to investigate the scandal.

“We found that InVision [the maker of the machines] quoted $35.8 million for the machines, but Patriot [inVision’s local agent] quoted the price at $46 million, resulting in the differential of $10.2 million,” said an AOT source.

----------------------------------------------------------

ok, now that we know THAT part of the story, the remaining question is from 12. above

"12. From at least January 2003 through April 2004, in communications with the responsible Regional Sales Manager and the Senior Executive, the distributor indicated that it had offered to make gifts or payments to officials with influence over the airport corporation."

well, alledgedly, the "official with influence" is none other than Transport Minister Suriya Jungrungreangkit.

Yep, the SAME Transport Minister Suriya Jungrungreangkit who is investigating the bribery allegation.

[The_Eye_Of_Sauron]

I'm sure its all been a terrible misunderstanding - and everyone'll have a good laught about it once its sorted out.

[astral]

There were no bribes - just very large Agent's Fees

<{POST_SNAPBACK}>

Ah! Now I understand.

[Sphere]

Who cares how much was given in bribes? I just want to sleep soundly on my flight knowing that InVison machines have actually scanned all bags before boarding. As soundly as the guys that are sleeping while operating those machines.

[Plus+]

Exactly. That's why corruption is so ingrained in Thai society.

The drawback is that this money could have been spent on something useful for the passengers. But since we don't know what we are missing, it doesn't really hurt, does it?

[RDN]

Who cares how much was given in bribes? I just want to sleep soundly on my flight knowing that InVison machines have actually scanned all bags before boarding. As soundly as the guys that are sleeping while operating those machines.

<{POST_SNAPBACK}>

...and the guys flying the plane