Frauds Within Thai Private Sector Unabated: TDRI

[webfact]

Frauds within Thai private sector unabated: TDRI

BANGKOK, May 11 – The numbers of cases of fraud being committed within the Thai private sector continues unabated with the pattern of fraudulent acts remaining unchanged, according to the Thailand Development Research Center (TDRI).

Speaking of a the findings from a study on fraud in the Thai business sector as well as proposed solutions and prevention, TDRI economist Deunden Nikomborirak said fraud in the private sector has still the same pattern as before.

In particular, she said, siphoning off money from a listed parent company into a company limited owned by an executive and accounting frauds with the aim of making the operating results look good for the purpose of stock manipulation remain unabated.

Such frauds, not to mention insider trading, had caused significant damage to small investors in the stock market.

Although the Securities and Exchange Commission (SEC) found the frauds and instructed companies concerned to correct their rinformation, she said, the damage had been already incurred.

Mrs Deunden said that an effective way to solve the problem is to impose harsher punishment.

Under the current law, she said, those found guilty of the frauds are subject to fines of only Bt 0.5 million to Bt1 million while the damage incurred from such incidents amount to as much as Bt3 billion. Such frauds, if found overseas, are subject to a fine equivalent to the damage.

The TDRI economist suggested that the government give the SEC authority to file lawsuits with prosecutors directly, not through the police.

In the past, some economic crime cases were dismissed since the police might lack a proper understanding of business information used for arranging lawsuits.

She added that the varieties of fraud most commonly found in the Thai private sector included breaches of regulations (73 per cent), concealment of factual information (10 per cent), and

tax evasion (8 per cent). (MCOT online news)

-- TNA 2011-05-11

[webfact]

TDRI Report Suggests Corruption Still Prevalent in Private Sector

A study by the Thailand Development Research Institute indicates that fraudulent activities in the private sector are still characterized by use of traditional methods.

The agency has recommended that more severe penalties be imposed.

Duanden Nikhomborirak, a researcher at the Thailand Development Research Institute or TDRI, said a recent study on corruption among private companies in Thailand found that fraudsters still use traditional methods such as siphoning, falsification of bank accounts, and misrepresentation of finances, with an aim to drive a company's stock prices upward.

The report recommended that more severe penalties be imposed against companies practicing fraud, as the current maximum fine is limited to 500,000 to one million baht, which she said was far too little.

Duanden said a case study suggested that the fine should be as high as 3 billion baht and that in some countries it could be calculated by the multiplication of damages.

She also proposed that the Securities and Exchange Commission be allowed to file petitions with the public prosecutor directly, as police may not have adequate knowledge about business to be effective.

The researcher added that civil and criminal suits could be filed at the same time, just as in other countries.

According to the study, the most common fraud is violation of regulations, which accounts for 74 percent of total fraudulent cases, followed by misrepresentation of facts and tax evasion.

The study also found that between 2000 and 2008, the highest number of fraud cases was reported in 2000 at 117.

-- Tan Network 2011-05-11

[webfact]

Political will to tackle corruption 'wIll stIll be lackIng after poll'

By Wichit Chaitrong

The Nation

There is neither the political will to tackle corruption, nor are shareholders in listed firms active in protecting their interests from fraud, experts said yesterday, with one calling for a public campaign to tackle the problem.

"Whichever political party wins the upcoming election to form the new government, widespread corruption will not be reduced," said Duenden Nikomborirak, an economist at the Thailand Development Research Institute.

There is no participation from stakeholders in seriously tackling corruption issues, nor is there a sense of ownership among stakeholders, she said during the presentation of her study about corruption in the Thai private sector at a seminar hosted by the National Anti-Corruption Commission (NACC).

She said one problem is that the majority of the population cannot easily access information related to public figures, such as politicians.

This is partly due to the country's low rate of broadband Internet penetration, currently at about 10 per cent of the population. In contrast, South Korea, where the penetration rate is 95 per cent, is very successful in curbing corruption, she added.

Duenden said Thailand could learn from the South Korean success story, where the bottom-up approach is effective in dealing with society's ills. Hong Kong, meanwhile, adopted a successful top-down approach due to the reforms introduced by the British authorities when they were in control of the territory.

She said some Thai listed firms used the stock market as a tool for share manipulation, fraud and the siphoning off of money.

One of the problems is that the Securities and Exchange Commission, the police, public prosecutors and judges take too much time in enforcing the law. They should be able to bring justice within a reasonable time span, and penalties may have to be more severe for wrongdoers, she said.

She also suggested that due to a lack of political will from the government and politicians generally, the NACC should engage in preventive measures such as a public campaign against corruption.

Rapee Sucharitakul, executive chairman of Kasikorn Asset Management, told the seminar that retail and foreign investors are not active in protecting their interests from financial fraud undertaken by company executives.

"It may be because retail investors are short-term traders, so there is no sense of ownership in the companies, while foreign investors have very small Thai shareholdings in their portfolios," he said.

Local investors usually do not attend shareholder meetings. While foreign investors hold about 2 per cent of Thai shares in their portfolios, it is burdensome for them to closely monitor corporate good governance, he added.

Rapee suggested that instead of filing criminal lawsuits against executives, the authorities could file civil suits and be prepared to settle outside of court. This would be an effective way to protect the interests of stakeholders.

He said the education of shareholders, directors and the public could, however, be the best solution.

Kittipong Urapeepatanapong, a lawyer at Baker & McKenzie (Bangkok), said the high tax rates in Thailand encouraged many company executives and other people to evade payment.

The government should cut both corporate income tax and personal income tax rates, besides possibly providing incentives such as soft loans for those who pay their taxes faithfully, he said.

The press should also take a more active role, for example by campaigning against prospective politicians with convictions for wrongdoing, he said.

The local media does not play an active role partly because it depends on advertising revenue from politicians, he added.

-- The Nation 2011-05-11