The Rolls-Royce corruption scandal that plunged Thailand’s national airline

A bribery scandal involving Thailand’s national airline and British jet engine maker Rolls-Royce is back in the media spotlight after Thailand’s anti-corruption agency concluded that their deal to buy engines there three decades ago was “illegal”.

The National Anti-Corruption Commission (NACC) has found that two top executives of Thai Airways International (THAI) at the time violated a 1959 law against corruption in state organizations and agencies when the national carrier bought Rolls-Royce engines in a deal that was worth it. more than 14 billion baht.

On July 18, the NACC decided to indict former finance minister Thanong Bidaya, who oversaw the deal as chairman of THAI’s board of directors, and Kaweepan Ruengpaka, who at the time was vice – president of finance of the airline.

They are among 11 former senior airline officials investigated in connection with the corruption scandal. Only Thanong and Kaweepan face legal proceedings, while the others have faced disciplinary action or had their charges dropped. One of the accused is deceased.

The NACC found that Thanong and Kaweepan violated the Act’s provisions on bribery in procurement projects and dereliction of duty. The statute of limitations for the alleged breach of duty has expired.

However, the offense of corruption alone is punishable by a sentence of five to 20 years in prison and/or a fine of 2,000 to 40,000 baht.

Rolls Royce confession

In January 2017, Rolls-Royce admitted to UK authorities that it had bribed Thai government officials between 1991 and 2005 under three separate deals to purchase aircraft engines for THAI.

In statements to Britain’s Serious Fraud Office (SFO), Rolls-Royce admitted to paying bribes to private individuals to help it secure a deal with the Thai government to buy Rolls-Royce Trent 800 engines for six Boeing 777s and Trent 500 engines. for seven Airbus A340s.

The bribery involved payments totaling US$36.3 million (about 1.25 billion baht) to “regional intermediaries”, according to British court documents. Part of the bribes were paid to “Thai state officials and employees of Thai Airways”.

The bribes were paid to secure THAI’s purchase of three batches of Rolls-Royce turbofans.

The deal for the first batch saw 663 million baht paid between 1991 and 1992, followed by 336 million baht for the second batch from 1992 to 1997, and 254 million baht for the third batch between 2004 and 2005.

However, only the last batch of payments were considered because the 20-year statute of limitations had expired for the bribes that took place in the first two transactions.

Thai surveys

Rolls-Royce’s confession to British authorities has sparked an investigation by Thailand’s national airline.

“THAI Chairman Charamporn Jotikasthira said progress was being made in Rolls-Royce’s bribery case over the sale and purchase of aircraft engines from THAI between 1991 and 2005. The company is currently collecting information from various sources in order to fully investigate the matter,” the national carrier said in a statement in January 2017.

Shortly after Rolls-Royce confessed to corruption in 2017, Prime Minister Prayut Chan-o-cha ordered all agencies linked to corruption, including the NACC, the Auditor General’s Office and the Anti-Corruption Commission public sector corruption, to launch investigations into the Thai side of the scandal.

Accused of bankruptcy

In August 2020, a Department of Transport investigation concluded that corruption and mismanagement by dozens of THAI executives led to the airline’s bankruptcy.

Then Deputy Transport Minister Thaworn Senneam blamed the Rolls-Royce corruption scandal as one of the causes of the national carrier’s downfall.

THAI has been in corporate rehabilitation under judicial supervision since filing for protection in September 2020.

Experts say the airline never recovered financially from the huge outlay it made on Rolls Royce engines. They identify the corruption scandal as the starting point for two decades of poor performance and crippling losses.

By Thai PBS World’s Political Desk

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