CORRUPTION ISSUES IN THE HEADLINES

C O N F I D E N T I A L SECTION 01 OF 02 BANGKOK 000636

SIPDIS

SIPDIS

E.O. 12958: DECL: 02/01/2016
TAGS: PGOV ECON TH
SUBJECT: CORRUPTION ISSUES IN THE HEADLINES

REF: A. BANGKOK 00538

B. 05 BANGKOK 7305

C. 05 BNAGKOK 7197

Classified By: Deputy Chief of Mission Alex A. Arvizu, reason 1.4 (b) (
d)

1.(C) SUMMARY: Corruption issues are dominating the media
again. There is good news and bad news. One piece of good
news is the reinstatement of Khunying Jaruvan as the
Auditor-General, after over a year of bureaucratic infighting
that drew in even the Palace (ref B). For the Prime
Minister, there is good news in the reports of corruption
scandals now plaguing the main opposition party. The bad
news is that the palace has rejected the Senate's proposed
new members of the National Counter-Corruption Commission, an
embarrassing development for the Senate (allegedly
non-partisan, but openly dominated by Thai Rak Thai
sympathizers). Finally, there is the PM's sale of his shares
in his publicly listed, family owned holding company,
Shincorp, to Singapore (ref A). Opposition newspapers and
many pundits are highly critical of the PM and his deal, but
it's not clear that the general public is catching up to the
apoplectic reactions of the opposition. Nonetheless,
questionable elements of the deal leave Thaksin vulnerable to
legal repercussions. END SUMMARY


2. (C) Corruption issues are in the headlines and leading
the newscasts again. In the Senate, it was one step forward,
one step back. The long-running soap opera starring
Auditor-General Khunying Jaruvan took a surprising plot
twist. After over a year of bureaucratic wrangling over the
legality of her appointment, the Senate decided that she
could resume her responsibilities as one of the chief
counter-corruption watchdogs in the government. Jaruvan was
sidelined on a technicality; it was widely believed
authorities wanted to remove her from the job because she was
too committed to fighting corruption. The role of the King,
who refused to sign off on a replacement proposed by the
Senate, was key, and was one of the recent signs of conflict
between the PM and the King. (Ref C).

Second verse, same as the first?
--------------


3. (C) A feeling of deja vu has descended on the Senate, as
the Palace last week refused to endorse the list of nine
National Counter-Corruption Commission members forwarded for
the King's signature. The nominees had been criticized on
technical grounds (the Senate is supposed to choose nine out
of 18 nominees, but there were only 17 nominees on the list
when the vote was taken.) More importantly, some of the nine
had been criticized for being too close to the ruling Thai
Rak Thai (TRT) party. That complaint has no legal standing,
but the King's rejection of the list will likely be read as
criticism of the quality of the Commission members, rather
than concerns about the minutiae of the selection process,
especially in the wake of the high-profile Auditor-General
case. The Senate committee will meet again next week to try
to resolve the situation.

Politicians are all the same
--------------


4. (C) The split in the Thai media, between the
government-controlled broadcast media and the anti-Thaksin
print media, is clearly seen in the coverage of the two
scandals dominating the news. The broadcast media is giving
lots of play to the bid-rigging scandal in the Bangkok
Metropolitan Authority. Although the Bangkok Governor, a
leading member of the Democrat party, has not been directly
accused of misbehavior, his deputy has been implicated. The
Democrats are attempting to burnish their image by
establishing an inquiry commission, but the TV viewing public
will mainly take away the message that the Democrats are also
tainted.

The big story
--------------


5. (C) The print media, especially the anti-Thaksin
English-language press, is dominated by continuing outrage
over Thaksin's 1.8 billion dollar sale of his family's stake
in Shin Corp (ref A),While there is some criticism over
selling such an important asset to a foreign entity
(Singapore's Temasek Holdings),most of the hullabaloo is
about questionable legal aspects of the deal and the tax-free
status of the profits. Securities regulators will reportedly
be looking into questions about the transfer of shares from
Thaksin to a company he set up and registered in the British
Virgin Islands, Ample Rich, and subsequent transfers of Ample
Rich holdings to Thaksin's son and daughter, especially those
made right in advance of the Shin Corp sale. The head of the
Thai Law Society has joined a chorus line of other academics
and experts who are already declaring various aspects of the
deal illegal. We expect the investigation and the
accompanying denunciations to drag on for long time, a
further burden the PM will have to carry.

Comment
--------------


6. (C) Despite the outcry in the elite press, it is hard to
judge how much resonance this issue has with the average
voter. The broadcast media are reporting the basic facts,
but commentators tend to make comments like, "it's the PM's
property, and he has a right to sell it." The arguments
about the legality of the deal itself, and the tax exemption,
are just too complicated for most people to follow. However,
the opposition is hammering on these points and spreading the
word. Many Thai voters admire Thaksin precisely for his
business acumen and his wealth, but 1.8 billion dollars is a
lot of money to get without paying any tax. If the deal
skirted the law in any way, it will almost certainly come
out, given the high level of interest. And it's part of a
long litany of corruption issues that have dogged Thaksin
since before he even took office.


7. (C) It will take a while before we see what real impact
public reaction to the sale will have. Thaksin may have been
too clever by half; there are probably some aspects to the
Ample Rich deal that may not hold up well under the close
scrutiny that is coming. In the end, though, the issue will
probably stoke up further opposition to Thaksin among those
who already despise him -- the educated, Bangkok elite and
growing segments of the middle class -- without affecting the
views of most of his supporters in rural areas.







BOYCE