CONFLICT OF INTEREST
Ethics review for state firms
Move to prevent abuse of positions at public agencies
After Songkran an important board meeting will take place at Thai Asset Management Corp (TAMC), where broad guidelines are expected to be discussed concerning the subject of conflict of interest.
According to Somjate Moosi-rilert, president of TAMC, while directors are discussing this issue good governance will be observed by all.
"When the board has to discuss a debt-restructuring deal that concerns a bank a director is affiliated with, that director should leave the room," he said.
This issue will also be discussed at the Government Savings Bank (GSB), another state-linked agency.
Woravit Chailimpamontri, senior executive vice president of GSB, admitted that the bank had not yet identified what guidelines it should adopt to ensure good governance and prevent conflicts of interest.
"The only requirement for directors is they must not be
directors at other banks," he
said, adding that he sought to
give clear guidelines to direc-
tors, executives and staff about what they should and should not do.
Earlier, Staporn Jinachitra, president of the Export-Import Bank, said it would review
measures to curb conflicts of interest.
Executives and lending staff have to immediately state if they have close relationships with loan applicants, he said, because they should not be involved in such transactions.
Conflict of interest has become a buzz word following the Supreme Administrative Court's ruling in March to cancel the privatisation of the Electricity Generating Authority of Thailand (Egat).
Two decrees supporting the privatisation of the authority were nullified because of four main factors.
One of them involved Olarn Chaipravat, who was considered by the court to hold a conflict of interest.
As a director of Shin Corp
and chairman of Shinawatra University, both majority-owned by the Shinawatra family, Olarn should not have been on a committee that set the rules for privatising Egat.
This would avoid giving him access to information that might benefit his affiliates. One instance was his learning about Egat's fibre-optic project to be launched after privatisation. This could have benefited Shin.
Last week Olarn resigned
as director of Thai Airways International Plc following labour-union protests.
The union cited conflicts
of interest as Olarn is a director
of Shin. As Shin is also a shareholder of Thai AirAsia, the body feared improper conduct could ensue.
It also feared business secrets could be leaked to Thai AirAsia.
Vichit Surapongchai, an executive chairman of Siam Com-mercial Bank who was recently appointed a director of THAI,
also resigned on similar grounds.
A public issue today is whether individuals connected to politicians can serve in state firms. The issue is whether such people may take advantage of their positions to benefit their affiliates.
Civic groups are now scrutinising Olarn, who also serves as a director of PTT Plc. They do not want PTT's privatisation to benefit politicians.
The groups plan to file a petition this month with the Supreme Administrative Court to nullify PTT's privatisation.
According to a survey by The Nation, several well-known individuals and public figures serve on the boards of state firms. Their reputations draw public concern regardless of whether they have acted on behalf of others.
Cabinet secretary-general Bavornsak Uwanno currently sits on THAI's board.
Somchai Wongsawat, the husband of caretaker Prime Minister Thaksin Shinawatra's younger sister Yaowapa, sits on PTT's board.
Somchai is also permanent secretary of the Justice Ministry and an independent director of Krung Thai Bank.
Uttama Savanayana, who is on the board of Krung Thai Bank, served as vice minister for the Commerce Ministry in the Thaksin II government.
Influential economist Virabongsa Ramangkura, who is an advisor to the Finance Ministry, sits on the board of the Export and Import Bank.
In an interview with Manager Monthly, Virabongsa said he served with about 18 companies.
At the State Railway of Thailand, there is Siri Jirapongpan, who is an advisor to the planning board of Thai Petrochemical Industry Plc, formed under the close supervision of former finance minister Somkid Jatusripitak, who is now tipped to be the next prime minister.
He is also acting director-general of the Port Authority of Thailand, another privatisation target.
Also in the limelight is Pansak Vinyaratn, chief policy advisor to Thaksin.
He is a director of the Board of Investment (BoI), which awards tax privileges to investment projects in the Kingdom
Also advising the BoI is Boonklee Plangsiri, chief executive officer of Shin Corp Plc.
Many more will no doubt come to light, particularly when the organisations they serve with are involved in transactions that could result in losses or poor performance.
Since Olarn's case, it is time for all organisations to clarify their positions on preventing conflicts of interest.