Corruption in Thailand

How Corruption Works

There are many types of corruption; I will focus on corruption in business. Again, there are many ways to line one’s own pocket illegally especially if you are in a position of trust – sometimes it’s as simple as that.

Suppose you’re working in a company and you’re chosen to choose and implement a new system – could be any kind of system, let’s say a business intelligence system. You’ve been given the responsibility for narrowing down the vendors – and because you’ve got a bit of black in your heart (and, “hey everyone else is doing it so why shouldn’t I,” mentality rocking around in your brain), you immediately think of how you can benefit personally from this transaction.

You sound out the market for people who have the systems and get a feel for their sales people – can they engineer a bribe? You go out for dinner and amid the smiles and wishes of goodwill and the whiskey (oh, for sure the whiskey); sometime a question will be asked or a suggestion proffered.

“How much do you think this project is worth to your company?” or the suggestion (delivered with varying degrees of subtlety, from true finesse via nominees three times removed to the subtlety of a piece of 2 x 4, like, “I want 25%”;

Once broad agreement has been reached on rough terms of reference for the bribe – the paperwork and “due process” has to be taken care of: The company only procures items after receiving three bids from qualified vendors… although in the beginning many more vendors may be invited as a first round cut.

From here on in it’s all about appearances. Committees are established, user groups, trips to inspect this and inspect that and finally a short-list of three vendors is produced and they are given an RFP (Request For Proposal).

The RFP document will list out the specifications for the Business Intelligence system; but within that document two out three vendors will have been placed at a disadvantage by the writing of the specifications – and in fact the RFP will be what is known as, “Lock Spec”. As the name implies the specification is “locked” for one vendor to look good (these specifications usually worked out in the company of whiskey and pretty girls).

The time for bidding comes near, all bids to be delivered in a sealed envelope to the office of the committee chairperson for selecting the new vendor – except one of the envelopes isn’t sealed because the committee chairperson has the documents in his pocket. After reading through the bids, he selects the document from his chosen vendor that most suits the conditions for a successful outcome… and nine times out of ten, he chooses right.

That’s corruption on a micro scale, but the sums can be very large and the larger the sums the more elaborate the finesse. For instance, putting systems into airports costs several hundred million dollars. Where finesse is described as being elaborate it means that those in control of the checks and balances are actually manipulating them to provide the appearance of control while controlling the end result for their own personal benefit.

What is sad to see, but not surprising, is that in the last year Thailand has slipped dramatically in the list of the world’s least corrupt countries. If this culture is allowed to continue it will rob future generations of their potential because they will be paying for our mistakes. There is ample evidence of this fact.

Corruption can be rooted out when people join together to change the system that facilitates it.

Many times, hundreds, if not thousands of times in the last twenty-five years I have heard the phrase, “Oh, that’s just the way it is, there’s nothing you can do about it.” Many, many, many times.

I don’t believe it. Not at all.

I believe you can make a personal difference by not accepting to give or take bribes, and not allowing any bribe you see being given or taken to happen without you reporting it. By taking that stance and educating others to behave in the same way we are making a difference. We are causing those who have a different short-term greed mindset to stand out. The way the corrupt work is from within, blending in with a smile and a wai, while they rob your children of their future. So the more people are pure white, the more a light shade of gray will stand out, and the truly black even more so like lumps of coal in pure-driven snow.

Many times I’ve also seen, first-hand, the acceptance of corruption with a shrug and a sheepish smile, “if you can’t beat them, join them,” this mentality – has to be changed. It is not okay to take a bribe or give one. These are often the people that could be swayed if public and private opinion, against corruption in any form, were unanimously aligned. These people are the light to dark gray of the spectrum, where pure white is never take or pay a bribe and pure black is take and give whatever bribe you want to profit.

Will this cost you business?

Yes, in the short to medium term, while corruption is still endemic don’t expect to win any government contracts or contracts with certain large state enterprises. Don’t be surprised if you lose deals at some of the larger enterprises as well; even though private entities, the culture of corruption runs deep and strong, and, as they say, there are many ways to skin an elephant.

I personally have walked away from various contracts adding up to a total of over one billion baht in the last twenty years, because I refused to pay any bribes for being awarded the contract – many have called me stupid for that – maybe they’re right; I’m not a rich man, if you regard money as your measure of “rich”. In all the aforementioned instances other companies went on to win the contracts.

So yes this stance will cost you business.

Why can’t corruption be “Business As Usual?”

When corruption is accepted as, “the way it is”, then it leads to a system led by the corrupt. This is a logical and natural progression – commonsense if you will. It is important to emphasize the word common in terms of commonsense because such is the “common understanding of the common people”. Right now that commonsense, particularly upcountry, dictates that corruption is normal, expected and accepted as business as usual.

This attitude is the attitude that must be changed.

The simple reason that corruption cannot be accepted is because it is eroding long-term value with every bribe taken or given.

This is the example:

An airport is being built and the budget for the security equipment, scanners and so forth, is 1 billion baht (just fictitious numbers to highlight the erosion of value over time); of this 1 billion baht 40% is lost in the first round to corruption. That’s 400 million baht gone. Then because the equipment purchased was inferior quality (putting all of our lives at risk) a maintenance contract does not cover all of the problems – new maintenance contract at 200 million baht (20%) and 40% of that is lost which means 80 million. And this cycle repeats every five, seven or ten years – whatever the perpetrators (perpertraitors) can get away with. Say five years to keep the math easy – in fifteen years a total of 1.44 billion lost out of a budget of 3.6 billion.

Here’s the issue – the system was designed with 3.6 billion in mind, maybe allowing for a gross profit to vendors of 12 – 18% – thus the system was meant to be built using funds of roughly 3.3 billion. Bad quality, shortcuts in safety, poor performance, and poor maintenance¬†– all are now present and enhanced because of the corruption. Examples abound.

Enough negativity… what can happen if we do stop corruption (or, at least, make it the exception rather than the norm)?

Thailand would become the wealthiest country in South-East Asia and one of the wealthiest in the world. Our competitiveness would increase massively as much needed funds were put towards education, infrastructure, social services, and agricultural reform. Our children, and their children will remember then, with fondness, the generation that said, “No more” to corruption.