Thailand’s NACC Issues Guidelines to Combat Supply Side Corruption

26
October
2017

The National Anti-Corruption Commission (“NACC”) recently issued its official Guidelines on Appropriate Internal Control Measures for Juristic Persons (“Guidelines”) to combat bribery of state officials, foreign public officials and agents of public international organisations. Prior to this, the laws on bribery in Thailand were only restricted to local government officials. In 2015, the Organic Act on Counter Corruption[1] was amended to include foreign public officials and agents of public international organisations, in compliance with Thailand’s endorsement of the UN Convention against corruption in 2011.

The amended Act also requires companies operating in Thailand to have appropriate internal control measures to prevent bribery. If convicted, guilty entities may be fined a sum between one to two times of the damage caused, or benefits received.

Directors and shareholders directly involved in bribery are primarily liable in their individual capacity for the offence. While innocent directors or shareholders are not held jointly liable with the offenders, damage to the business as a result of substantial fines and loss of reputation may nonetheless have an indirect negative impact on them as well.

The question remains as to what constitutes ‘appropriate control measures’? These Guidelines, which are part of NACC’s efforts to tackle the supply side of corruption, introduce 8 practical fundamental elements that constitute effective ‘appropriate internal measures’, which must be adopted by juristic persons[2] to prevent its employees or associates from committing the act of bribery.

The 8 fundamental measures are:

  • having strong, visible policy and support from top-level management to fight bribery;
  • conducting risk assessments to effectively identify and evaluate exposure to bribery;
  • implementing enhanced and detailed measures for high-risk and vulnerable areas;
  • application of anti-bribery measures to business partners;
  • keeping accurate books and accounting records;
  • adopting human resource management policies complementary to anti-bribery measures;
  • having in place communication mechanisms that encourage reporting of suspicion of bribery; and
  • conducting periodic reviews and evaluations of anti-bribery prevention measures and their effectiveness.

Besides the 8 fundamental measures above, the Guidelines also explain and give case studies on the application of section 123/5 of the amended Act.

The principles in the Guidelines may be familiar to most multi-national companies that have implemented internal control measures in compliance with the US’ Foreign Corrupt Practices Act and UK’s Bribery Act 2010.

The NACC has also set up an Anti-Bribery Advisory Service (ABAS) to help business entities comply with the Guidelines by providing academic consultations on the implementation of appropriate internal measures and good practices within the business entities.

Companies should be concerned with the definition of “bribery” under the Guidelines, which were drafted to illustrate activities that are subject to the Act.

The Guidelines highlighted that, in the eyes of the regulator, high-risk payments may fall within the definition of a “bribe” if they:

  • are paid improperly;
  • are facilitation payments (small payments paid unofficially to a state official to secure or expedite the normal and lawful performance of his or her duty); or
  • are hospitality expenditures, gifts, and charitable or political contributions.

Therefore, companies should have in place processes which allow them to monitor, prevent and limit their employees from making any high risk payments without the necessary approvals. If such high risk payments are authorised to be paid, these payments must be recorded in the company’s books with sufficient detail and in an accurate manner.


[1] B.E. 2542 (1999) (as amended by (No. 3), B.E. 2558 (2015)

[2] Juristic persons mean any entities incorporated by virtue of law (e.g. companies, partnerships, limited companies, limited partnerships, public companies limited, foundations, etc.).


If you have any questions or require any additional information, please contact Yodwarat Tedkham, Panwadi Maniwat or the ZICO Law Partner you usually deal with.


This alert is for general information only and is not a substitute for legal advice.