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Thailand blasted by airport
scandal
By Richard S Ehrlich
BANGKOK - Investigations by the US
Department of Justice and the Securities and
Exchange Commission (SEC) into "foreign corrupt
practices" by a US company selling airport
bomb-detectors, and the alleged involvement of
Thai officials, have created an uproar in
Thailand.
The US bomb-detection deal for
Bangkok's new international airport may have
provided Thais with more than US$10 million in
bribes, kickbacks or inflated contracts, according
to a report by the Justice Department and the SEC,
which brought the possible payoff to light while
conducting due diligence on InVision Technologies,
the supplier of the scanners.
The scandal
broke late last year when General Electric Co
merged with InVision, incorporated in Delaware and
headquartered in Newark, California. InVision
wanted to sell to Thailand 26 high-tech machines
that identify explosives when luggage is put on to
an airport's conveyor belt. The CTX 9000 DSi
machine uses technology derived from medical
tomography, in which X-rays scan bags in a
tunnel-shaped chamber. It can also detect
narcotics and currency, InVision said.
In
December, US-based General Electric Co paid $900
million to acquire InVision. But on December 6,
the Justice Department's fraud section announced
that InVision's deal in Thailand included
"criminal liability associated with potential
violations of the Foreign Corrupt Practices Act"
(FCPA) and fined InVision $800,000 in penalties.
In February, the Securities and Exchange
Commission fined InVision an additional $1.1
million "for violations" of the FCPA.
"InVision was aware of a high probability
that its foreign sales agents, or distributors,
made or offered to make improper payments to
foreign government officials in order to obtain or
retain business for InVision," the SEC said. China
and the Philippines were also cited in the SEC's
findings, but Thailand has emerged as the biggest
likely recipient of kickbacks because it is the
biggest prospective client of the three.
After the merger with General Electric,
the company changed its name to GE InVision Inc
but expects to complete the sale of the 26
explosives-detection machines to Bangkok's
Suvarnabhumi International Airport, which is under
construction to replace the Thai capital's smaller
Don Muang International Airport.
Thai
distributor Patriot Business Consultants Co Ltd
appeared to be at the center of the initial deal
between InVision and the new airport, but Thai
officials said Patriot would no longer be involved
because of the allegations.
"GE wants to
cancel the [Patriot] contract and sell the
machines directly to the [airport]. That would be
a colossal loss for me," said company owner
Worapoj Yasadatt. "But I guarantee that there is
no bribery involved."
Meanwhile, Thai
officials spent much of Wednesday and Thursday
trying to assure reporters they were innocent of
all allegations, after the Thai media splashed
details of the case. "We are seeking information
from both local and foreign agencies, so we can
know where to begin," said Deputy Prime Minister
Vishanu Kruangam, who promised to examine the
case.
On February 14, the SEC issued an
Accounting and Auditing Enforcement document that
identified Thais allegedly involved in the
corruption as a "distributor", "government
officials", and "governmental aviation
authorities".
"The [Thai] distributor
indicated that it had offered to make gifts or
payments to officials with influence over the
airport corporation" in Bangkok, the SEC said.
"Construction of the airport is overseen by a
corporation controlled by the government of
Thailand."
In the first quarter of 2004,
the airport corporation agreed to buy 26 InVision
bomb-detection units for a total of $35.8 million.
"Under the terms of the transaction, the [Thai]
distributor would purchase the
explosives-detection machines from InVision, and
then make its profit by reselling them at a higher
price for use by the airport," the SEC said.
Patriot allegedly quoted the price for the
detectors at $46 million - $10.2 million more than
InVision's price - according to the Thai media.
Richard S Ehrlich is a
Bangkok-based journalist from San Francisco,
California. He has reported news from Asia since
1978 and is co-author of Hello My Big Big
Honey!, a non-fiction book of investigative
journalism. He received a master's degree from
Columbia University's Graduate School of
Journalism.
(Copyright 2005 Richard S
Ehrlich.) |
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