Thailand

National Anti-Corruption Commission Guidelines to Supplement Section 123/5 of the Organic Act on Counter Corruption

Chandler MHM

To foster more effective and appropriate enforcement of the Organic Act on Counter Corruption (as amended) (“Act”) on legal entities, in September 2017 the National Anti-Corruption Commission (“NACC”) announced Guidelines on Appropriate Internal Control Measures for Juristic Persons to Prevent Bribery of State Officials, Foreign Public Officials and Agents of Public International Organizations.

These Guidelines supplement Section 123/5 of the Act. They now include a crucial provision which results in avoidance or mitigation of corporate liability in the case of bribery by an employee committed without the knowledge of the employer. This provision, however, will only apply if the entity has established comprehensive internal control measures pursuant to the principles set out in the Guidelines.

There are eight fundamental principles that the NACC considers when deciding whether the internal anti-corruption measures of an entity are sufficient to warrant exception under Section 123/5. They are as follows:

Fundamental Principles of Internal Control Measures to Prevent Bribery under Section 123/5

  1. Management Commitment: Internal control measures must clearly reflect strong direction from each organization’s senior management on how to prevent corruption, with demonstrated support and participation in the process by top management. Such direction must also include allocation of suitable resources to combat bribery.
  2. Risk Assessment: The control measures must provide clear risk assessment guidelines and systems to enable each organization to review, identify, and evaluate areas that are prone to misconduct. These measures must also take into consideration the nature of the organization’s business and operations, with recommendations, including review of organizational areas, such as internal auditing, data collection, and other risk areas relevant to each business. The level of risk for each area must also be identified, as well as methods for internal risk reporting.
  3. High-Risk Issues: Control measures must also provide clear guidelines and systems to address other vulnerable and high-risk areas, such as those involved with facilitation payments, gifts, entertainment, and charitable donations. These functions or areas may overlap with certain common cultural practices. Thus, designation as areas of high-risk may require careful scrutiny to differentiate between those identified as high-risk, such as bribes, and those designated as standard business or cultural practices.
  4. Cooperation of Business Partners: Each organization must utilize its best efforts to require its business partners, including affiliates, suppliers, agents and advisors, to apply the same anti-bribery measures. The objective is to lessen the potential for corruption, as it might affect both a business partner and the organization individually, as the author or beneficiary of an improper transaction.
  5. Proper Record Keeping: The control measures should provide a clear mandate for each organization to keep accurate and transparent books and accounting records. The objective is the ability to conduct independent, external audit reviews, in order to eliminate opportunities for associated persons to fraudulently utilize the organization’s assets for corrupt purposes, and to conceal such transactions within an organization’s records.
  6. Supporting HR Measures: Each organization’s human resource management policies and processes, including recruitment, promotion, evaluation, compensation, and training, must complement the anti-corruption measures, so that positive past and present behavior is recognized and taken into consideration within the organization.
  7. Whistle-Blowing Measures: The control measures should also provide confidential communication channels and mechanisms to encourage and promote reporting of suspicion of bribery and of non-compliance. These measures must include protective measures to foster confidence in cooperation and eliminate fear of retaliation by others.
  8. Periodic Review and Evaluation: Regardless of the historic effectiveness of each organization’s control measures, provisions must be in place for their periodic review and revision to ensure ongoing effectiveness, given the evolving business environment, including the applicable legal regime, organizational structure, and operational circumstances.

The Guidelines also include an introductory discussion of the scope of Section 123/5 and some illustrative case studies on its application, including circumstances leading to potential liability of persons such as directors or senior management for improper acts of employees.

Key Contacts

Jutharat Anuktanakul
TEL +66-2-266-6485 Ext 117
jutharat.a@chandlermhm.com

E. T. Hunt Talmage, III
TEL: +662-2-266 6485 Ext 157
talmage@chandlermhm.com

Pranat Laohapairoj
TEL +66-2-266-6485 Ext 116
pranat.l@chandlermhm.com

Suphakorn Chueabunchai
TEL +66-2-266-6485 Ext 112
suphakorn.c@chandlermhm.com

Supakan Nimmanterdwong
TEL +66-2-266-6485 Ext 115
supakan.n@chandlermhm.com

Chandler MHM Limited
7th-9th, 12th and 16th Floors
Bubhajit Building
20 North Sathorn Road
Bangkok 10500, Thailand
www.chandlermhm.com
Tags: Anti-corruption, Thailand
Related Articles by Firm
Amendment to Thai Arbitration Act
The Amendment expands the ability of foreign arbitrators and representatives to act in arbitral proceedings.
Update on Stamp Duty regulating electronic transactions
A new notification requires parties who enter certain electronic transactions to pay stamp duty in cash.
Ministerial Regulation removing back office services from the Foreign Business Operations Act announced
Certain back office service businesses will no longer require a foreign business licence.
Developments in Thai M&A
Corrupt practices, environmental breaches and merger filing are becoming more significant priorities for clients ...
Thailand: Projects and Energy
Commentary on the latest developments in the Thai projects and energy sector ...
Secondary laws under the Trade Competition Act BE 2560
The enactment of these five Notifications represents a significant leap of progress.
Thailand Update: Amendment to Work Permit Law
In response to criticism, the government decided to amend the Emergency Decree on Managing of Foreigners with relaxed penalties ...
Leasing of residential buildings − A contract-controlled business
The Contract Committee of The Consumer Protection Board recently announced a new Notification which designates the lease of residential property as a “contract-controlled business”.
New Mining Regulations for Thailand
On 30th January 2018, the Ministry of Industry issued a new notification regarding prohibited actions for foreigners ...
Mergers and acquisitions in Thailand
A number of factors are making Thailand a target of choice for international and regional investment ...
Amendment to the Thai Civil and Commercial Code
Part IX: Combination of Limited Companies ...
Thailand: Amendment to the Public Company Act
The National Council for Peace and Order has considered the lack of clarity on conditions, procedures and time limitations related to the laws governing business operations ...
Thailand: The Act on the Amendment to the Civil Procedure Code (No. 30) B.E. 2560 (2017)
There are a number of amendments to the current Civil Procedure Code (CPC) as part of its legal execution ...
Projects & Energy Special Report: Thailand: New Minerals Act
A new Minerals Act (BE 2560 (2017) was published on March 2, 2017 and took effect on August 30, 2017 (180 days after the publication date) ...
Thailand: ERC Announcement - Purchase of Electricity From Hybrid-Renewable Energy Small Power Producers
The Energy Regulatory Commission (ERC) issued an invitation to bid for the sale of electricity from Hybrid-Renewable Energy Small Power Producers (SPP) on 4 August 2017 ...
Thailand: New Amendment to the Labor Law
The Labor Protection Act B.E. 2541 (“LPA”) was first enacted in February 1998; the LPA has been amended several times ...
Thailand: Extension of the Reduced VAT Rate
Value added tax (VAT) is an indirect, non-cumulative, consumption tax levied on the supply of goods or provision of services in Thailand ...
Thailand: Ten year visa extension
Due to the rapidly increasing number of foreign senior-citizens seeking Thailand as a retirement destination, Thailand’s Cabinet recently approved the ten-year retirement visa extension ...
Thailand: The New Trade Competition Act
On 24 March 2017, the National Legislative Assembly (the “NLA”) in Thailand passed the final reading of the draft Trade Competition Act ...
Thailand: Amendment to BOI Act to create new BOI benefits
The Thai government has recently been promoting “Thailand 4.0”, which refers to creative and innovative industries ... as a master plan to pull Thailand out of the middle-income trap and toward becoming a high-income country ...
Energising Thailand’s M&A sector
With a focus on the energy and natural resources sector, Chandler & Thong-ek Partner Ratana Poonsombudlert answers our questions on Thailand’s M&A present and future
Related Articles
New challenges for investors in the US – CFIUS
It would be a mistake to underestimate the growing power of CFIUS to regulate foreign investors in US companies.
New transparency registry for all private BC companies in the offing
If the bill comes into force it will have far reaching compliance consequences for all private BC companies.
Doing business and ease of doing business in India
The government has taken numerous steps to give an impetus to foreign investment, but a lot remains to be done.
Related Articles by Jurisdiction
Thailand: Projects and Energy
Commentary on the latest developments in the Thai projects and energy sector ...
Mori Hamada & Matsumoto and Chandler & Thong-ek announce integration of their Thai practices
One of the top Japanese firms, Mori Hamada & Matsumoto (MHM) has announced that they will be integrating their Thailand practice with Chandler & Thong-ek Law Offices Limited. ...
Fund marketing in Thailand under the ASEAN Collective Investment Scheme
Looking at the ASEAN Collective Investment Scheme, Kowit Somwaiya and Vincent Birot of LawPlus Ltd. state why they feel ASEAN offers investment funds terrific opportunities going forward, as well as noting what ASEAN has planned for the near ...
Latest Articles
Press Release: New Bilingual Standard Templates for China’s New Foreign Investment Regime
Top multinational and China SOE in-house lawyers and heavyweight Chinese and international law firms join forces with legaltech start-up docQbot and The In-House Community™ to help create new bilingual standard templates for China’s new foreign investment regime ...
New challenges for investors in the US – CFIUS
It would be a mistake to underestimate the growing power of CFIUS to regulate foreign investors in US companies.
New transparency registry for all private BC companies in the offing
If the bill comes into force it will have far reaching compliance consequences for all private BC companies.