Former Krungthai Bank (KTB) president Viroj Nualkhair and former bank chairman Suchai Jaovisidha were yesterday sentenced to 18 years in prison for malfeasance in office by the Supreme Court for approving huge loans to subsidiary firms of an ineligible real estate developer during 2003-2004.
The Supreme Court's Criminal Division for Political Position-Holders ruled that Viroj, Suchai and 22 other defendants were guilty of wrongfully approving more than 9.9 billion baht in loans to the affiliates of developer Krisdamahanakorn even though the firm was listed with the bank as a non-performing debtor.
Among the defendants in the case, Thaksin Shinawatra, who was the prime minister at the time of the loan being approved, was named as the first defendant.
However, the court did not make a ruling on Thaksin pending his return to the country. The court issued an arrest warrant for Thaksin, a fugitive living overseas, after he failed to report to the court for indictment in 2012.
Nineteen defendants were handed down prison terms ranging from 12 years to 18 years. Viroj and Suchai, the twin brother of late finance minister Suchart Jaovisidha, were among four sentenced to 18 years in prison by the court. Another five defendants were fined 26,000 baht each.
The defendants comprised Thaksin, bank executives, senior credit executives, credit and risk analysts, the private firms involved, and representatives of the private firms.
In the indictment filed by the Office of the Attorney-General (OAG) in June 2012, a total of 27 people and private firms were accused of malfeasance in violation of Section 157 of the Criminal Code, the law on offences committed by officials of state-run agencies, the Commercial Banks Act, the Securities and Exchange Act, and the Public Companies Act.
Under the debt rehabilitation agreement, Krisdamahanakorn was not eligible to receive any more loans. However, KTB eventually approved loans to the company's affiliates, including 500 million baht to RK Professional and 9.9 billion baht to Golden Technology Industrial Park.
It also extended a 1.18-billion-baht loan to finance the sale of convertible preferred shares between Krisdamahanakorn and Grand Computer Communication. All the transactions took place while Thaksin was prime minister.
In its ruling, the court found the defendants did wrong in approving and applying for the loans and the approval was made in a rush to allow RK Professional and Golden Technology Industrial Park to pay debts and buy back shares, which was not the intention of the loan applications.
The court also ordered Krisdamahanakorn, Wichai Krisdathanon and Ratchada Krisdathanon to pay 10 billion baht back to Krungthai Bank.
The court rejected the defendants' argument that the OAG was not authorised to file the case because the bank is not a state enterprise.
According to the court, KTB is considered a state agency under the jurisdiction of the Bank of Thailand. The central bank owns more than a 50% stake in KTB.
Two of the defendants, Narin Darunaithon and Nongnut Thianpaiboon, who were responsible for the bank's credit review, were cleared of the charges.
After the judgement was passed, family members and friends of the convicted broke down in tears. The male convicts were sent to Bangkok Special Remand Prison, and the women to the Central Women's Correctional Institution.
Bangkok Special Remand Prison commander Ayut Sinthopphan confirmed that all 16 male offenders, some looking distressed, had arrived at the prison. They were going through routine processing, filling out personal details forms and health examinations.
However, he said those sentenced to 18 years in jail would be transferred to Klongprem Central Prison, which was built for prisoners serving long sentences.
The irregularities came to light after the 2006 coup when the defunct Assets Scrutiny Committee (ASC), set up by the junta, looked into a complaint filed by the Bank of Thailand against KTB over three transactions.
The National Anti-Corruption Commission (NACC) picked up the case after the committee's mandate expired before it was able to conclude its investigation.
The NACC accused Thaksin of damaging the economy by allowing the bank to issue the loans when he administered the country.
Based on the ASC findings, Thaksin was accused of using his power as prime minister at the time to force KTB executives to provide loans to the developer causing more than 5.2 billion baht in damage despite the company's poor credit rating.
The money was spent not in accordance with the loan objective but to channel funds to Krisdamahanakorn.
According to the ASC investigation, Thaksin was accused of being involved in the irregularities because Suchai reportedly told the bank's committee that he was called by the "big boss" (Thaksin) to approve the loans.