We met with Dr. Seree Nonthasoot, an active role-player in the fight against corruption in Thailand and beyond, during the ASEAN Responsible Business Forum in Singapore on 27-28 August 2018.
Dr. Seree Nonthasoot contributes to the anti-corruption work from different entry points. He has been serving as the Representative of Thailand to the ASEAN Intergovernmental Commission on Human Rights (AICHR) since 2013. One of his priorities for his second term (2016-2018) has been to develop a national action plan for business and human rights in Thailand, where anti-corruption is crucial. He is also a legal counsel to the State Enterprise Policy Office within the Ministry of Finance, a board member of the Sub-Committee on Corporate governance at the Government Pension Fund, and Director and Audit Committee member of SME Development Bank of Thailand.
How corruption in the private sector in Thailand impacts the human rights, environment and transnational organized crimes situation in ASEAN?
Dr. Seree Nonthasoot: We know from The Guardian, last year, that executives of two major State-Owned Enterprises (SOEs) in Thailand are alleged to have received bribery in their procurement projects. Corruption is like electricity, you don't feel its impact until it switched off.
Different sectors have different failures. For example, when it comes to agriculture, forced labour is a very sensitive point and is the number one corruption-prone area in Thailand. How do you supply your labour? For a major infrastructure project, you may need more than 4000 employees. How do you source all these employees? Not in Thailand, but from neighbouring countries. And in the supply chain of sourcing these migrant workers, corruption is huge: bribes are given to ensure that certain recruitment agencies are the ones selected.
'Forced labour is the number one corruption-prone area in Thailand'.
Another corruption-prone area in Thailand is getting business licences, for instance to sell liquors or to construct a building. If you want to operate a shop, and you need 17 licences, think about how many people you need to contact. In Singapore they have a single agency: we aim to do the same, not just for the cost of doing business, but hoping to reduce the opportunities for both the applicants and the officers to engage in corrupt activities. We have seen huge improvements in land registration with a new law requiring the officers to complete the process of files within a certain amount of time.
Our Thai companies are expanding their investment in neighbouring countries. In Myanmar for instance, Thai companies are investing in Dawei, within close distance (70km) from Thailand, a clear opportunity for Thailand to develop a Western corridor with huge seaports to connect to the Andaman Sea. In Laos, they are investing in huge dam projects with other foreign companies, and the buyers of electricity are Thai SOEs. In Cambodia, Thai companies are obtaining land concessions to grow sugarcane. The problem has been that these companies don't observe Thai standards, because they see that they can follow standards that are less stringent: pay low wages, cut down trees, displace populations and not pay proper compensation.
This is linked to corruption: think about how do they get there, how do they win the concession, the contracts, get their licenses? How can they remove the population with impunity? How can they sustain their businesses without the community protesting? How could they have done that without the help of the local authorities? If the local authorities see this and enforce the law… how can you see your own people removed or plantations destroyed without compensation? That's illogical. If you turn a blind eye, there is something wrong. These projects are disrupting local communities and violating human rights.
'How can you see your own people removed or plantations destroyed without compensation? That's illogical. If you turn a blind eye, there is something wrong'.
Sometimes businesses don't realize that corruption fuels transnational organized crimes such as illicit drug trafficking, but they do have a role to play to ensure they are not engaged in illicit activities. How can businesses avoid getting involved? As users, sellers, how can we know that the money fed in our system does not come from illicit drugs networks? That's a challenge. If you sell diamonds, you need to make sure you know your customers! But diamonds companies are 'easy' to suspect. What about other companies such as construction companies? To make sure your business is not involved in illegal drugs, due diligence once again comes into play.
'If you sell diamonds, you need to make sure you know your customers! But diamonds companies are 'easy' to suspect. What about other companies such as construction companies?'
We outsource, we outsource, we outsource. We often don't know or claim not to know what our suppliers are doing. If I sell chocolate, I need to know how about the cacao plant, if they hired or forced children in Congo, if they used drugs on boys to work during long hours: you need to know, we are requiring you to know. Outsourcing does not end or limit your liability. This is the same for environmental pressing issues, such as the problems with plastic waste management in Asia.
Thailand is having promising measures to combat cross-border bribery with the new Anti-Corruption Law (2018) and innovative tools to make sure Thai companies operating abroad are complying with anti-corruption good practices, such as the 2017 Corporate Governance Code. What are the biggest challenges to ensure effective law enforcement?
Dr. Seree Nonthasoot: Thailand has adopted strong policies on two sides: the human rights national agenda for three years, and the new 2018 Anti-Corruption Law. Perhaps our first challenge is to weave human rights and anti-corruption policies together, to alert people and raise awareness on how they are related to one another. People tend to think that anti-corruption has nothing to do with human rights.
'Perhaps our first challenge is to weave human rights and anti-corruption policies together, to alert people and raise awareness on how they are related to one another'.
Our second challenge is how to implement these policies properly. We have the specific challenge of Thai SOEs that have invested abroad. A strong disclosure policy has been put in place. Although when it comes to implementation, these SOEs in many cases don't establish local presence by themselves, but via subsidiaries and as shareholders. We need to make sure that SOEs establish clear links between the mother company and the subsidiaries to ensure they have the same disclosure priorities and practices in those countries.
'We need to make sure that State-Owned Enterprises [operating abroad] establish clear links between the mother company and the subsidiaries to ensure they have the same disclosure priorities and practices in those countries'.
Anti-corruption is like due diligence, like the oxygen that must be taken every time you breathe, it's not just a campaign, it must be internalised and mainstreamed all the time- it's like an internal audit system which must be conducted on a regular basis. In Thailand, once a year, we traditionally tidy up our office. Due diligence and disclosure are not like that. People tend to think that they are a once or twice yearly event, which is not the case. Really, we need to make a strict culture of no corruption. You must constantly be worried about the gaps in your company, for instance in the procurement section, the human resources section, or the marketing section.
'Anti-corruption is like an internal audit system which must be conducted on a regular basis. In Thailand, once a year, we traditionally tidy up our office. Due diligence and disclosure is not like that'.
We expect our SOEs to show good practices by requiring their suppliers to have clear policies. Perhaps the most challenging in ASEAN now is how you can mainstream this to Small and Medium Enterprises (SMEs) as well. For instance, we are raising awareness on good accounting practices, encouraging SMEs together with the Revenue Department to have a single account in their operations, which would lead to a lot of transparency.
Finally, another challenge is developing a holistic approach. Thailand is very serious about elevating its ranking in the Competitive Index of the World Economic Forum. But that ease of doing business must be matched with transparency. You need to address bribery from the two sides, not only from the business side: for instance, the new legislation requires that all high-ranking officers must report their assets and liabilities. I think it's a good way forward, but these things take time.
What can we do about it?
Dr. Seree Nonthasoot: The case of Dawei in Myanmar is the tip of the iceberg. We don't want to see Thai businesses exporting bad behaviour. Thailand itself is not entirely free of problems but at least we have a robust legal system in place. We don't want our companies to exploit the weaknesses of the legal systems in other countries, such as the independence of the authorities and the Court or the lack of appropriate laws and regulations.
The National Human Rights Commission of Thailand is undertaking investigations of this case from a human rights perspective and we hope it will pay a key role in exercising extra-territoriality. With the new Anti-Corruption Law, the National Anti-Corruption Commission in Thailand (NACC) may be able to exercise extra-territoriality as well. But implementation of this law may take time.
'The National Human Rights Commission of Thailand is undertaking investigations of the case of Thai companies investing in Dawei, Myanmar, from a human rights perspective'.
Another challenge is how governments can use leverage. For example in a procurement process: those we do business with must have strong anti-corruption or prevention policies. But to ensure that they are really certified is another step. We have been discussing with the NACC whether it would be appropriate and possible to require that all major SOEs can only acquire goods and services from those who are certified with ISO37000. This may be a real way forward. But to begin with, we must make sure that these companies have put in place clear policies- this is the work that the Securities and Exchange Commission has been pushing with the 2017 Corporate Governance Code. Prevention of corruption is always expensive. But it's proven to be worth it, all the time.
'Prevention of corruption is always expensive. But it's proven to be worth it, all the time'.
ASEAN is the 4th largest economy in the world. The NACC in Thailand has certainly an important role to play together with other anti-corruption agencies in neighbouring countries in leading joint-investigations on cross-border investments, and help businesses take the lead on corporate responsibility. UNODC can support building these investigation capacities and regional networks.
'The National Anti-Corruption Commission (NACC) in Thailand has certainly an important role to play together with other anti-corruption agencies in neighbouring countries in leading joint-investigations on cross-border investments, and help businesses take the lead on corporate responsibility'.
Thailand will chair ASEAN in 2019. Is it an opportunity to become a role player in business integrity and encourage a level-playing field for businesses operating in ASEAN countries?
Dr. Seree Nonthasoot: I have also been engaged in the development of the national action plan for business and human rights in Thailand, where business integrity is crucial. We have identified anti-corruption as a key crosscutting issue to ensure a positive impact of businesses on environment, human rights, labour and investment. Because of cross-border activities, we want to encourage other similar initiatives in ASEAN.
Many times we have heard that if we don't provide bribery, we will loose competitive advantage to our competitors, who still do the same. It doesn't help if one is seen as transparent and another is not. It would bring a lot of value to create this level-playing field in ASEAN so we want to help others too. Supporting national action plans on business integrity in other ASEAN countries is key for us, as we share the land, the economy, the borders and the resources with them.
'We have identified anti-corruption as key crosscutting issue to ensure a positive impact of businesses on environment, human rights, labour and investment'.
In view of Thailand's chairmanship next year, we have organized consultations with more than 50 civil society organisations to determine activities that will be planned next year to support human rights. This include events related to disability rights, access to justice for migrant workers and those convicted with death penalty, juvenile justice, a youth debate, and the Bangkok human rights & business week, which may focus on due diligence.
Together with the Pension Fund and the Stock Exchange of Thailand, we will organize the ASEAN Institutional Investor Forum and send a strong message that we will only invest in companies that are recognized as having strong governance practices, meaning effective anti-corruption policies and practices as well. Having an institutional investor investing in your company is a success: you are gaining recognition.
In addition, it would be great to have anti-corruption agencies in ASEAN focusing for instance on cross-border transactions: if our money launderers open a bank account in your country, how can we make sure that we can access and investigate those accounts?
'We will send a strong message that we only invest in companies that are recognized as having strong governance practices, meaning effective anti-corruption policies and practices as well'.
This year, it will be the 70th anniversary of Universal Declaration of Human Rights, and we will celebrate the progress made during the Human Rights week, which coincide with the Anti-Corruption Day on 9th December. In 1948 we didn't talk about corruption. Now we recognize that it is like rust that affects human rights, realistically. At the very least, corruption takes away resources that can be used to fulfil and realise the rights of many people.
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All ASEAN countries have ratified the United Nations Convention Against Corruption (UNCAC), which provides an effective legal and institutional framework for Southeast-Asian jurisdictions to hold legal entities investing in ASEAN accountable for corruption offences, build systems to prevent corruption in the private sector, and develop innovative public-private partnerships.
Significant regulatory and enforcement gaps in ASEAN were identified in relation to key provisions of the UNCAC, such as the liability of legal persons for corruption offences and the establishment of foreign bribery. Positive trends following the first Implementation Review Mechanism in 2015 can be noted in the region as legislations on liability of legal persons are progressively being introduced in ASEAN, with Singapore, Thailand and Indonesia being the most prominent examples. UNODC supports ASEAN countries enhancing their legal and regulatory frameworks in line with UNCAC, and supports national anti-corruption institutions in ASEAN to develop their capacities to investigate corruption offences committed by legal persons.
UNODC has been supporting Thailand to develop innovative practices for corporate integrity systems. The country has adopted new provisions in its Anti-Corruption Law, holding legal entities accountable for corruption, and has also recently developed guidelines on appropriate internal control measures to combat bribery in the private sector. UNODC supported the dissemination of these codes of conduct to local and multinationals companies operating in Thailand during the Regional Seminar on Effective Measures for the Private Sector to Prevent Bribery, 2-3 August 2018 in Pattaya, Thailand.
Regional networks to make foreign bribery enforcement effective are also supported by UNODC, such as the Regional Working Group on Promoting Integrity in ASEAN, which recently developed its 2018-19 private sector's engagement action plan. Thailand's chairmanship in 2019 will be an opportunity to promote business integrity in ASEAN.