Tax evasion tops corporate graft portfolio in Thailand

Tax evasion is the most popular form of corruption in the Thai business sector, on top of collusion in government bidding and mischievous transfers of assets to subsidiaries, according to research.

Academics suggest the strengthening of corporate governance and information-disclosure rules for listed companies to end corruption.

At a conference on "Collective Action against Corruption" yesterday, Deunden Nikomborirak, an academic from the Thailand Development Research Institute, said the business environment encouraged companies to be involved in corruption to sustain their competitiveness, and penalties remained light.

Based on TDRI data, 64 per cent of corruption cases involved tax avoidance and 11 per cent collusion in bidding for state contracts.

Most penalties for corruption are fines, ranging from Bt500,000 (S$20)  to Bt1 million.

Of the 220 cases filed with the Securities and Exchange Commission from 1992 to 2009, only 12, or 5 per cent, were punished.

To prevent corruption at the corporate level, incentives must be put in place, Deunden said.

Paiboon Nalinthrangkurn, chairman of the Federation of Thai Capital Market Organisations, said corruption deteriorated Thailand's capability and played a part in lower-than-actual ratings of Thai listed companies' earnings estimates.

Corruption also affects the country's credit rating, which could mean higher borrowing costs for the private sector, he said.

"To solve corruption, it's important to push large companies and state enterprises to list on the Stock Exchange of Thailand because of the SET's strict inspection mechanism for corruption," he said.


To fight corruption, a government unit could be established to assess corporate transparency, he said.

If passed by this unit, companies would be able to bid for state projects. Commercial banks could also help by refusing to extend credit to companies tending to be involved in corruption, he noted.

Sansern Wongcha-um, chairman of Somboon Advance Technology, said the company had been listed for eight years, bringing in more efficient administration, and its foreign partners also helped it with efficient corruption management to lower production costs.

Supreeya Mokaramanee, executive vice president and chief financial officer at Siemens Thailand, said the company previously ran into graft with purchasing orders, and that caused it to pay high attention to preventing corruption.

Siemens has set up a system of strict investigation and serious response to corruption. Earlier, the company asked for Institute of Directors cooperation for staff training on awareness of graft.