Thailand's new anti-corruption law targets foreign corporates

Thailand is the latest Asian jurisdiction to strengthen its anti-graft legislation. India, Japan, Singapore, Malaysia, Vietnam and China have all introduced anti-bribery legislation this year. The net effect is an uptick in the local enforcement risk for corporates operating in the region.Thailand's Act Supplementing the Constitution Relating to the Prevention and Suppression of Corruption B.E. 2561 (2018) (New Anti-Corruption Law) came into force on 22 July 2018, officially repealing and replacing the long standing Organic Act on Counter Corruption B.E. 2542 (1999) (OACC). It expands the definition of persons who can commit bribery to include foreign companies. Companies operating in Thailand, despite not being registered there, should put in place appropriate internal control measures or re-evaluate their measures so that they comply with relevant guidelines.

Background

The New Anti-Corruption Law is the latest in a series of steps Thailand has taken in recent years to strengthen its anti-corruption framework. In 2015, the OACC was broadened to prohibit demand and supply side bribery of foreign public officials and international organisations (now sections 173 and 176 of the New Anti-Corruption Law). Another key 2015 amendment was the introduction of corporate liability, introducing an offence for companies benefiting from a bribe by a related person, subject to a reasonable procedures defence. This wording is based on the UK Bribery Act, and demonstrates a growing trend by domestic legislatures to adopt UK Bribery Act wording to tackle corporate bribery.

Key Amendments under the New Anti-Corruption Law

Foreign companies

The addition of foreign juristic persons means that companies registered abroad but operating in Thailand can also be criminally liable for bribes given to officials. As long as the bribe is given by an associated person (which includes employees, joint venture partners, agents), and is for the benefit of the company, liability is established (unless the company can prove that it had adequate procedures in place to prevent the corrupt act). Despite the availability of this defence, it was unclear until recently what would constitute appropriate internal control measures. In 2017, the National Anti-Corruption Commission (NACC) issued Guidelines on Appropriate Internal Control Measures for Juristic Persons to Prevent Bribery of State Officials, Foreign Public Officials, and Agents of Public International Organizations (Guidelines). The Guidelines continue to apply under the New Anti-Corruption Law and comprise eight principles:

Principle 1 Strong, visible policy and support from top- level management to fight bribery

Principle 2 Risk assessment to effectively identify and evaluate exposure to bribery

Principle 3 Enhanced and detailed measures in high-risk and vulnerable areas

Principle 4 Application of anti-bribery measures to business partners

Principle 5 Accurate books and accounting records

Principle 6 Human resource management policies complementary to anti-bribery measures

Principle 7 Communication mechanisms that encourage reporting of suspicion of bribery

Principle 8 Periodic review and evaluation of anti-bribery measures and their effectiveness

We are yet to see a prosecution under the corporate liability offence. It is too early to say whether expanding the offence to capture foreign companies and their associated persons will change this. As with the UK Bribery Act, there may be a relatively long lead in time (over four years in the case of the UK legislation) before a corporate prosecution is brought.

The level of punishment for bribery by corporations remains as it was under the OACC: a minimum of the amount equal to the benefit received from the corrupt act, and a maximum of twice that amount.

International Cooperation

The New Anti-Corruption Law also seeks to streamline how the NACC seeks international assistance with investigations. It is intended that this will facilitate more efficient cross border cooperation to ease the collection of evidence and the building of cases.