Thaksin’s Ratchada Deal

It’s a blog post, not a research paper, so I’ll skip on providing the links, the case has been in the media for years, finding some old articles I’ve seen somewhere ages ago is a bitch. I can try, if there’s sufficient interest.

Ratchada land was one of the assets taken over by FIDF from bankrupt financial companies in the 90s. At its peak it was valued at over 2 billion baht.

The location is perfect in many ways – a huge plot, not in the congested CBD or in those tiny Sukhumwit sois, in a respectable neighbourhood with Rama 9 and Ratchada glistening office blocks dominating the skyline. Certainly better than low-brow Charansanitwong somewhere across the river, a neighborhood not really befitting Thaksin’s new status as country’s best, brightest, and richest Prime Minister.

It’s also practically across the street from “Software park” building, not formally Shinawatras’, but they were supposed to be major tenants there. That building was also resurrected after 1997 death but I don’t remember which got their attention first.

It looked like a very nice setup.

FIDF tried to sell Ratchada plot several times, even before Thaksin became the Prime Minister, but there was no interest, no one was buying that kind of property then. It was put up again in 2003 and no one wanted to buy as the minimum price was considered too high.

That’s when Shinawatras stepped in.

In this second round there were only two other bidders, both had very good relationships with Thaksin, down payment was hiked from 10 million to 100 million baht, possibly to prevent some dark horses joining in at the last moment, and Pojamarn emerged as a clear winner.

The land was sold for about a third of it’s peak price and below the minimum set in the first 2003 auction round, but it was sold nevertheless, so for FIDF it was a good news.

The deal was concluded on the last day of the year, public holidays were reshuffled to make Dec 31 a working day. After New Year land valuations used to set minimal price for auctions went up by 20%. Later on there was a change in zoning permits for that area – now a high rise office block could be built on the land while during the auction it was valuated as land for residential buildings (this is the most difficult part to prove, I’ve read about it in the paper Nation ages ago, long before the coup).

Legally it was all fine and dandy, if there was collusion, it was all a matter of doing favors, no bribes needed to be paid, and people at the FIDF were just doing their jobs.

Yet it was a blatant conflict of interest – Prime Minister going into auction with the state agency? How can he possibly lose? It’s like one of those mock up contests from fairy tales, between young princes and their friends.

The law is pretty straightforward here – cannot be done, and there’s no burden of proof there was corruption, it just cannot be done.

Democrats made this sale a major point in 2004 censure debate but they didn’t have numbers to grill Thaksin, they could only charge Somkid, Finance Minister at the time. A senator has also attacked Thaksin on that, and Vishanu, govt legal wiz, explained that the deal could be illegal only if FIFD was under Prime Minister’s control.

Well, FIDF is a state institution, there’s no doubt about that. It was set by the state to help with solving banking and financial problems back in the 80s. Finance Ministry has a 70% stake in it and Bank of Thailand also has representation. Both Finance Minister and BOT governor are appointed by the Prime Minister.

Somkid had no troubles taking responsibility and answering questions about the land sale during the censure debate either.

During Thaksin’s trial the court ruled on that point overwhelmingly, too.

Some people point out at an earlier precedent when Supreme Court ruled that FIDF was independent. Well, Thai judges are not obliged to follow precedents, but, apart from this point, that old case was about a private company trying to get the government to repay FIDF loans. From that aspect it was also a clear cut case – FIDF was set up specifically so that the government doesn’t carry financial responsibility for its actions.

Throughout its history FIDF worked closely with BOT and Finance Ministry, the setup and distribution of powers allowing some room for negotiations – the govt wants to dump everything into FIDF, BOT wants to keep their debts under control, and FIDF needs to sell the distressed assets, so it’s a three way tussle. One thing is clear – FIDF is not some profit oriented private entity and politicians should be prohibited from bringing their personal business interests in dealing with it.

There are also some counter points involving the set up of the prosecuting body in this case and the court itself. Fair enough, but it’s really legal matters, and legally they have been addressed. When the case is lost, people start arguing procedures, then they argue the law itself. It’s just sour grapes and refusal to admit guilt.

One more thing about conflict on interest – no investigative or prosecuting body would take on the sitting Prime Minister, and no state agency would cooperate with that hypothetical investigation either. “Conflict of interest” needs to be nipped in the bud, just for its existence, without necessity of proving actual corruption.