A high-level investigative committee looking into the roots of the financial crisis has pinned responsibility squarely on the shoulders of former executives of the Bank of Thailand. The committee completed its final report yesterday, focusing on the failed defence of the baht in 1997 and state assistance given to ailing financial institutions, including the Bangkok Bank of Commerce. Amnuay Viravan, former finance minister, and former central bank governors Rerngchai Marakanond and Chaiyawat Wibulswasdi were among those named for alleged violations of the Bank of Thailand Act and the civil code. Kleothong Hetrakul, former director of the Economic Research Department, and Tanya Sirivedhin, deputy central bank governor, were also named for alleged disciplinary violations.
Thailand exhausted its international foreign reserves in 1997 in a failed defence of the baht against speculators. Regulators took out forward swap agreements to mask the central bank's actual reserve position. Eventually, the central bank was forced to float the baht in July 1997. Afterwards, Thailand accepted a $17.2 billion standby credit line from the International Monetary Fund.
The investigative committee named three former governors for their role in bailing out ailing banks and finance companies through the central bank's Financial Institutions Development Fund. Named in the investigative report were former governor Vijit Supinit, Mr Rerngchai and Mr Chaiyawat. Also blamed for possible civil and criminal liability were Jaroong Nookwun, former deputy governor; Siri Ganjarerndee, former assistant governor; Anghani Vorasaph, former finance deputy permanent secretary; and Swangchit Chaiyawat, former FIDF manager.
The report said central bank officials violated procedures in approving loans by the FIDF to ailing financial institutions without what it termed "appropriate caution."In other cases, assistance in the form of short-term deposits was not converted to secured loans as required by FIDF regulations. Assistance was also given in excess of approved collateral. Central bank funds were also used to repay foreign loans, violating regulations which stated assistance was to be used only for meeting liquidity needs stemming from deposit withdrawals. The Financial Sector Restructuring Authority ordered 56 finance companies closed in December 1997, with assets liquidated.
Total liabilities for the Financial Institutions Development Fund exceed 1.3 trillion baht. The total debt is scheduled to be repaid through the national budget and proceeds generated from the privatisation of state enterprises.The new report containing the findings will be presented to the cabinet for further action.
Bangkok Post, February 23, 2000
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