"Yes, I saw the flag that day, but did not do anything because the match is in progress. I had the fans who hung the flag informed after the match finished," he said.
Thaksin who returned to Bangkok from London on Sunday is the owner of Manchester City football club.
Several photos taken from the club's stadium showed his name inscribed on a Thai national flag. The matter caused dissatisfaction among Thai public and it goes against laws in Thailand.
He claimed the fans did it because they did not know it was prohibited in Thailand and because they "loved Thailand and the club."
"The fans are now well aware that the actions caused unhappiness in Thailand. They asked me to convey their regrets. They did not know and understand our culture. When they were informed, they felt sorry and stopped doing that," Thaksin said.