MATCHIMA PARTY'S PROSPECTS DIM AS BUMBLING LEADER

C O N F I D E N T I A L SECTION 01 OF 02 BANGKOK 006069 SIPDIS SIPDIS NSC FOR PHU E.O. 12958: DECL: 12/07/2017 TAGS: PGOV KDEM TH SUBJECT: MATCHIMA PARTY'S PROSPECTS DIM AS BUMBLING LEADER CONVICTED REF: BANGKOK 5806 (AMBASSADOR MEETS PRACHAI) BANGKOK 00006069 001.2 OF 002 Classified By: Deputy Chief of Mission James F. Entwistle; reason: 1.4 (b) and (d). SUMMARY -------------- ¶1. (C) The Matchima Thippathai Party faces an uphill struggle for relevance after the conviction of Party Leader Prachai Leophairatana for financial improprieties. This conviction marks the most recent of several setbacks for Matchima, a collection of avaricious politicians from the Northeast who labor under Prachai's erratic leadership and tendency to publicize complaints better left private. It is unclear which rival party will benefit the most from Matchima's troubles. End Summary. BACKGROUND -------------- ¶2. (C) After the September 2006 coup d'etat, Somsak Thepsuthin, Thaksin Shinawatra's Labor Minister, deserted Thaksin's Thai Rak Thai (TRT) party. Somsak led one of the largest factions from within Thai Rak Thai, with approximately 100 legislators from northeastern Thailand; he seemed to bring most of these figures with him as he set up a political group called "Matchima" ("The Middle Way"). By the spring of 2007, credible rumors claimed Somsak had become close to certain military figures. He then reportedly felt embittered by the Constitutional Tribunal's May decision in May to strip him and other former TRT leaders of their political rights for a five-year period, but he did not return to the pro-Thaksin camp. ¶3. (C) Somsak wound up forming common cause with wealthy businessman Prachai Leophairatana, a staunch opponent of Thaksin who helped finance the People's Alliance for Democracy, which led anti-Thaksin protests prior to the coup. Prachai served for a brief period as Secretary General in the Pracharaj Party of Sanoh Thienthong, a veteran politician who angrily defected from TRT prior to the coup. Prachai and Sanoh had an acrimonious public spat, however; Prachai wound up assuming the leading role in the Matchima party, with Somsak's wife serving as his Secretary General. Clearly, Somsak contributed the network and expertise, while Prachai brought resources to the table. Matchima has not been favorably disposed toward Thaksin. Reftel reported Prachai's exposition of his policy views to the Ambassador. PRACHAI'S DOWNWARD SPIRAL -------------- ¶4. (C) Prachai's political inexperience soon began to raise doubts about Matchima's prospects in the coming legislative election. As the campaign period progressed, Prachai made public his intention to cut off his financial sponsorship of candidates who were outside of Bangkok, where Prachai's own candidacy was registered. While one contact told us that it was Prachai's nature to promise more funding than he would deliver, we hesitate to attribute his threat to parsimony; a separate contact recently assessed privately that Prachai had over the past year spent approximately one billion Baht (almost 30 million USD) on his political efforts. ¶5. (C) Seen as a wealthy financier desperate to regain control over the petrochemical firm he had founded (which went bankrupt after the 1997-98 Asian Financial Crisis), Prachai may have looked like an easy mark for avaricious politicians who lost their main source of influence and income when Thaksin dissolved the parliament in early 2006. Not only did Matchima's candidates press Prachai to continue funding their efforts, but some figures may have tried to shake him down further. In late November, Prachai complained publicly that unspecified people in his party, working with one or more Election Commission officials, tried to extort 60 million Baht (almost two million USD) from him by threatening BANGKOK 00006069 002.2 OF 002 to block essential paperwork relating to Matchima's registration. Prachai announced he would rather dissolve the party than pay up. ¶6. (SBU) Soon thereafter, Prachai retracted his claim, chalking it up to a misunderstanding. But just a few days later, Matchima suffered another setback. On December 3, a criminal court found Prachai guilty of deceiving investors in an initial public offering of Thailand's third-largest cement producer. The court sentenced Prachai to three years' imprisonment, although he remains free on bail while appealing the verdict. Seemingly disqualified from holding a cabinet position -- although still eligible to run for parliament -- Prachai said publicly on December 4 that he would quit as Matchima's Party Leader. Facing the prospect of desertion by their principal financier, self-interested and sycophantic Matchima candidates urged him to stay on, cheering, "Fight on, billionaire fighter! Don't leave your subordinates to die!" Prachai announced on December 6 that he would remain as Matchima's party leader. COMMENT -------------- ¶7. (C) Stained by Prachai's conviction, and with diminished prospects for parting much more of his money from him, Matchima's outlook is notably dimmer. Even the smallest of parties, however, may end up able to act as a swing vote when the time comes to form a governing coalition, and some significant crumbs may be tossed Matchima's way. It is too early to predict who benefits the most from Matchima's decline, although the pro-Thaksin People's Power Party and the ostensibly neutral Motherland Party appear to be the strongest competitors in the Northeast, from where Matchima's strongest candidates hail. ¶8. (C) Prachai's saga inspires further grudging respect for Thaksin's political skills. Matchima represents just one of many former Thai Rak Thai factions that Thaksin managed to keep in line during his administration. While money fuels Thai politics, it clearly takes more than money alone to exert effective control in the political realm. BOYCE