Police Reveal Corrupt Practices in Thailand's ADB-Financed Klong Dan Wastewater Treatment Project by Phairath Khampha 30 June 2003 Papers issued illegally Land ownership papers for the entire 320-ha area of the Klong Dan wastewater treatment project site were issued illegally, a senior Thai police officer said on June 10, 2003. The Japan Bank for International Cooperation (JBIC), a major creditor of the corrupt-ridden Klong Dan wastewater treatment plant in Samut Prakan, asked the Thai government for the immediate repayment of 1.6 billion baht. Investigators were frustrated in their attempt to seek arrest warrants over the fraud at the Klong Dan wastewater treatment project due to legal technicalities, the chief investigator of the case said. This was seen by most as a legal manoeuvre to protect the guilty members of the country's economic and political elite who had stolen millions of dollars through this project. Pol Maj-General Noppadol Somboonsap, director-general of the Special Investigation Department (SID), disclosed the findings after submitting his report to Natural Resources and Environment Minister Prapat Panyachatraksa. Police investigators on the same day finalised the names of 10 people involved in the Klong Dan corruption scheme and said arrest warrants could be issued within the month. All were very senior government officials and politicians. Noppadol added that the National Police Office (NPO) would first have to confirm the warrants. Five of the 10 suspects were well-known politicians and businessmen, while the rest were former senior officials, mostly from the Pollution Control Department (PCD). Senior officials of the land department involved in the case would be barred from being witnesses, a source said. "The list is almost the same as that revealed to the Senate committee on the environment," Prapat said. Noppadol said the list would be sent for confirmation and approval to Pol Maj-General Suthep Thammarat, vice-commander of the NPO, who oversees the Klong Dan case. The SID chief accompanied Suthep and other relevant officials on an inspection tour of the project site in Samut Prakan. Aphichai Chawacharoenphan, director-general of the PCD, said the authority would establish two committees to investigate corruption charges against its senior officials. He said some might have been unintentionally involved in corruption, but this being Thailand it sounded unlikely. Vatana, nine others accused - Graft report names VIPs, senior officials Veteran Thai politician Vatana Asavahame, his brother Somporn, his long-time close aide Man Pattanotai and seven others were charged with involvement in the corruption surrounding the Klong Dan wastewater treatment project. The others were all senior officials and VIPs, according to an official report by the Special Investigation Division. The report also named Boonsri Pinkayan and Lalin Pinkayan, and high-ranking Pollution Control Department officials including former directors-general Pakit Keeravanit and Sirithan Pairoj-Boriboon. Mr Vatana immediately denied all charges, suggesting that the case against him and people close to him was politically motivated, a classic excuse made by members of the Thai economic and political elite when caught with their hand in the cookie jar. The land was sold to the former Ministry of Science, Technology, and Environment at 1,030,000 baht (US1 = 41 baht) per rai (1 rai = 1,600 m2) even though nearby land at the time sold for about 100,000 baht per rai. Mr Vatana used his authority while serving as deputy interior minister from 1988-1990 to persuade officials of the Land Department to issue title deeds to the land which included a public garbage dumpsite, two public canals and a mangrove forest. A high-level source said Mr Vatana's brother Somporn, Ms Boonsri and Ms Lalin were cited as major shareholders of Palm Beach Development Co which accumulated public land and illegally obtained title deeds for the land. Ms Boonsri and Ms Lalin are closely related to Subin Pinkayan, late veteran politician of the Social Action party. "Mr Vatana was not a shareholder of Klong Dan Marine and Fishery Co Ltd, which sold the land to the state. This case was built from the point that Palm Beach, with which Mr Vattana had close ties, illegally obtained title deeds," the source said. Palm Beach sold the land to Klong Dan Marine and Fishery, which sold it to the Pollution Control Department. Ex-pollution control chief Pakit was a key person. He initiated the project and reportedly modified the original plan for two plants to a large single plant. The change pushed the cost up from 13 billion to 23 billion baht. Mr Pakit also advised four construction companies to include a design with only one treatment plant as an alternative, while cabinet was still calling for a project with two plants. The source said witnesses would testify in court against Mr Vatana. Mr Vatana warned the authorities to be careful in their investigation. "It wouldn't be right to implicate innocent people," he said trying to scare off the investigators with veiled threats. "I don't know why my associates and I are targeted. This could be politically motivated." He and his associates formed a company over in the early 1990s to buy about 900 rai of land, not for the wastewater plant but for sale to a golf course development company, apparently referring to Palm Beach. He received no more than 100,000 baht a rai from the sale. All documents to the land were legally issued and endorsed by land, harbour and highways officials. He denied using his authority while deputy interior minister to obtain the legal land documents. "I had no authority over the Land Department then," he said. Arrest warrants were also sought for two other senior pollution control officials--former deputy chief Nisakorn Kositrattana and Yuwaree In-na, formerly director of water quality management. Creditor comes knocking - Japan Bank wants money back at once The Japan Bank for International Cooperation (JBIC), a major creditor of the scandal-ridden Klong Dan wastewater treatment plant in Samut Prakan, asked the government for the immediate repayment of 1.6 billion baht. Praphat Panyachartrak, minister of natural resources and environment, said Toshio Fujinuma, chief representative of JBIC in Bangkok, met him the morning of June 16 to discuss the loan package following the project's suspension. The government cancelled its contract with NVPSKG consortium in February for breach of contract after handing over about 20 billion baht. In a letter to the government dated June 13, JBIC stated that it accordingly treated all disbursements made to the project as "misprocurement", a diplomatic terms meaning "corruption" and "official theft". It also said the government had for the past two years failed to inform the bank that North West International, a crucial party of the joint venture, had pulled out before the consortium won the 23-billion-baht contract. The bank asked the government to "give a serious consideration to voluntary refund and/or repayment". The Pollution Control Department, which oversees the project, had disbursed 1.648 billion baht of the total 1.75-billion-baht JBIC loan package. Previously, the Asian Development Bank (ADB), another major creditor, had asked the government to clarify the future of the project. Mr Praphat said he assured the ADB and JBIC that the corruption investigation and nullified contract would not affect the debt service schedule, which was to start in 2009. The two financial institutions were told that all debt would be repaid as negotiated. Mr Praphat said JBIC insisted on an immediate refund while ADB, which lent US$230 million to the project, was "more flexible" and willing to wait another six months. Graft probe 'blocked by legal snag' Investigators were frustrated in their attempt to seek arrest warrants over the fraud at the Klong Dan wastewater treatment project due to legal technicalities, the chief investigator of the case said. This was seen by most as a legal manoeuvre to protect the guilty members of the country's economic and political elite who had stolen millions of dollars through this project. Pol Lt-General Noppadol Somboonsup, director-general of the Justice Ministry's Special Investigation Department and head of the fraud probe, said a Royal Thai Police directive required investigators to file complaints with the National Counter Corruption Commission (NCCC) before seeking arrest warrants against political officials. Noppadolinvestigated and found that certain political officials collaborated with officials from the Land Department and Pollution Control Department and private firms to cheat the state out of 1.9 billion baht by getting it to buy overpriced land for the project. The police directive was in line with the National Counter Corruption Commission Act, which required the ant-graft agency to first rule in corruption cases against political officials before allowing police to take legal action. The NCCC itself is filled with corrupt officials whose function seems to be to protect corruptors rather than prevent and punish corruption.