The road to scandal

Published by Khun Thanong, on the Nation, on October 31, 2009.

Thanong Khanthong examines the Bangkok Bank of Commerce saga, which emerged as the ailing symptoms of the 1996.

A turning point at the Bank of Thailand in mid-1996 revolved around the Bangkok Bank of Commerce (BBC).

With the credibility of the BOT hit hard, governor Vijit Supinit was forced to resign on July 1, 1996, bringing an abrupt, but hardly surprising, end to his six-year reign.

Vijit had become embroiled in the BBC scandal. The BOT had looked the other way while the rogue bank got itself into trouble dabbling in high finance. Most of its loans went towards stock-market speculation and takeover deals, as well as to politicians (at cheap rates). As the stock market headed downward, BBC quickly lost its capital.

But the central bank assisted BBC in its recapitalisation. Vijit did not think BBC had a big problem at the time. The problem, he argued, had more to do with Thai politics. If there were confidence in political stability, the financial markets would soon nurse BBC back to its normal health.
That was Vijit's view of the BBC affair.

The Banharn Silapa-Archa government was having a tough time managing the economic downturn. The Thai bubble economy was losing its steam, and asset quality of the banks was fast deteriorating. Indeed, the Thai crisis actually started in 1996 with an infection, which then burst in July 1997.
In the end, BBC could not survive. The Democrats exposed the BBC scandal in Parliament, telling the whole world that politicians had been dining at a BBC buffet.

The central bank ended up losing Bt120 billion in the bail-out for BBC, whose non-performing loans stood at almost 100 per cent. The episode dealt a serious blow to the BOT's credibility. If BBC was in this big a mess, how about other banks and finance companies?

Prime minister Banharn wanted to remove Vijit, and it fell to finance minister Bodi Chunnananda to do the dirty work. He instructed Vijit to lodge criminal charges against BBC president Krirk-kiat Jalichandra and his accomplice, Indian-born financier Rakesh Saxena, for causing such huge damage to the bank.

Both Krirk-kiat and Saxena were responsible from shifting the bank from routine banking operations to high finance, stock-market speculation and takeover deals. Several dozen dummy companies had been involved, with bank deposits shuffled around in deals involving both local and international banks.

Politicians belonging to the Chart Thai Party had benefited from the sweetheart deals with BBC, and Saxena was furious that Chart Thai had betrayed him.

Bodi threatened to fire Vijit if he failed to bring the case to court, so Vijit scrambled to put the case together. He filed charges against Krirk-kiat and Saxena with the police, but they did not carry much weight, because they were put together in too much of a hurry.

Saxena had the last laugh, as he had already left Thailand quietly, leaving Krirk-kiat holding the bag.
Still, Vijit was unable to keep his job. He did not stay in office long enough to witness the baht attack in November and December 1996.

Rerngchai Marakanond succeeded Vijit as governor and promised to launch a full in-house inquiry into the BOT's inept handling of the BBC scandal. Nevertheless, he hinted the inquiry would not begin until after the central bank had concluded talks with the Industrial Finance Corp of Thailand over the prospects of assuming management of the failed bank. That deal would never happen.

Rerngchai was aware if he did not attend to this scandal that had done so much damage to the BOT's reputation, someone else would. The opposition, led by the Democrat Party, had threatened to launch a House inquiry.

How was a bail-out of BBC with Bt90 billion in public funds allowed to proceed with such poorly outlined details?

Rerngchai had been frozen out by his predecessor, Vijit, confined for six years to running the obscure note-printing house. He was not even the first choice for the governorship when Vijit was sacked in July 1996.

Immediately upon assuming office, Rerngchai faced a series of crises, from an economic crash-landing, a financial meltdown and a currency war to the BBC scandal. Yet, as governor he had to act to restore the integrity of the BOT, which had previously been held as one of Thailand's finest institutions.

The central bank was a gathering of top-notched technocrats. Of its 5,185 employees, 180 work in the Supervision and Development of Financial Institutions Department, 40 in Legal Affairs, 285 in the Commercial Bank Examination Department and 200 in Finance Company Examination Department.
A source familiar with the BOT vouched for the integrity of both the central bank's examination and the legal officials handling the BBC case.

"The problem was that when their BBC reports were submitted to their superiors, no action was taken," the source said.

Phenwan Thongdithae, the BOT's top examiner and assistant governor, called on Vijit to take action against BBC management. Vijit replied to Phenwan's recommendations by reassigning him to a dead-end post under Chaiyawat Wibulswasdi, another assistant governor.

The reassignment marked the first time in the history of the BOT that a senior assistant governor was placed under another assistant governor.

Honest though he was, deputy governor Jaroong Ngukuan must have been aware of the rot at BBC. He worked closely with Vijit and read every report, yet he could not bring himself to warn the governor of the danger of letting BBC continue to play. Jaroong was simply a passive onlooker as the BBC collapsed at his feet.

BOT reports made public in May 1996 by Suthep Thaugsuban, at the time a Democrat MP from Surat Thani, indicated central-bank officials must have detected wrongdoing inside BBC as early as 1992, when its bad loans soared to Bt11.11 billion.

Despite warnings from the central bank, the management, led by Krirk-kiat, continued to flout banking regulations by lending money to cronies and other high-risk borrowers.

By the end of 1995, BBC's bad debts had skyrocketed to almost Bt80 billion.
Instead of taking drastic action against BBC's management, Vijit sought to bail out the bank with money from the Fund for Rehabilitation and Development of the Financial Institutes and the Government Savings Bank (GSB).

The GSB, under the chairmanship of Nibhat Bhukkanasut, approved a deal to buy a 3.125-per-cent stake in BBC for more than Bt400 million. This ill-advised investment ended up with a huge loss.
At that point, about Bt60 billion had been injected into the bank - but Bt30 billion more was needed just to keep it on its feet.

Asked by finance minister Surakiart Sathirathai for details of the BBC affair, due to its political implications, Vijit duly submitted confidential reports.

A letter written by Surachai Phruekbamrung, the BOT's director for supervision and examination of commercial banks, summarised alleged defrauding of the bank by Krirk-kiat, Saxena and Ekachai Athikomnantha. The letter, dated January 23, 1996, was submitted to Jaroong.

Yet it was not until that June that Vijit was forced to file charges against BBC executives for violating banking law. Actually, Vijit had no intention of bringing Krirk-kiat and his cohorts to justice in the first place, which explains the delay.

When the case was forwarded to the Economic Crime Investigation Division, it was handled in an extremely sloppy manner. Neither BOT officials nor the police knew for sure the exact date the one-year statute of limitations in the case would expire, from either not talking to each other or simply not wanting to follow up on the case.

When Rerngchai learned the attorney-general had decided to drop the case against the three suspects in the BBC scandal, he was shocked. By this time, BBC had become a full-blown political scandal, which gave interior minister Snoh Thienthong and his Rambo-style deputy, Chalerm Yoobamrung, the ammunition they needed to settle old scores with attorney-general Khanit na Nakhon.

Only after Khanit put up a strong fight by arguing the statutory period should have started with the BOT's January 23 letter - not February 12, when the BOT informed the BBC executives they were under investigation - did he escape Snoh and Chalerm's vendetta. By this time, prime minister Chavalit Yongchaiyudh and finance minister Amnuay Viravan, who had formed a new government in late 1996, had no choice but to look into the matter - as much as they preferred to distance themselves from this hot potato.

A special panel headed by Ackaratorn Chularat, secretary-general of the Office of the Council of State, was quickly formed to determine the flaws in the legal process that had resulted in failure to bring the notorious case to trial.

It was clear the central bank, after failing to supervise BBC adequately, could not afford to let a "technical mistake" further tarnish its reputation. Hence, Rerngchai's promise to launch an internal inquiry into the BOT's handling of the BBC scandal that would prove, not surprisingly, to go nowhere.

The several names of a Stupa

An important Bhuddhist structure, the Stupa, is a mound-like structure containing Buddhist relics. The word ‘stupa’ is a Sanskrit word, in Pali, the language that Gautama Buddha used for teaching the Buddhist religion, the related word is ‘thupa’.  In the Thai language, it is more commonly known as ‘chedi’, which is related to the Pali word, ‘cetiya’.  In a more colloquial Thai, or the northeastern dialect, it is also know as ‘pra that’, which is related to the Sanskrit word, ‘dhatu’, for which the Sinhalese’s name for the stupa, “dagobah’ is derived from.  In Tibet, the stupa is known as a ‘chorten’.  In Koren, Vietnam, China and Japan, they are known as ‘Tap’, ‘Thap', 'Ta', and 'To', respectively.

 

Shwegaddon Pagoda, Myanmar

In Myanmar, the stupa is more commonly known as ‘pagoda’, the general English term for tiered tower with multiple eaves. According to wikipedia, the word is first attested for in English in the period c. 1625–35; introduced from the Portuguese pagode, temple, from the Persian butkada (but idol + kada temple, dwelling.)  Another etymology, found in many English language dictionaries, is modern English pagoda from Portuguese (via Dravidian), from Sanskrit bhagavati, feminine of bhagavat "blessed" bhaga "good fortune."

The architectural structure of the stupa has spread across Asia, taking on many diverse forms as details specific to different regions are incorporated into the overall design.  After his conversion to Buddhism in the third century BC, King Ashoka had several thousand stupas build across the Mauryan empire. According to Brahmi, Kharoshti, Pali and Sanskrit edicts Ashoka The Great  founded 84,000 stupas all over the south Asia.

 

Advanced engineering techniques and knowledge, for example the use of lightning conductors, were used and shared across cultures in their construction. Numerous stupas across South and Southeast Asia have been standing undamaged for a thousand years or two.

A stupa is essentially made up of a square base, a hemispherical dome, a conical spire, a crescent moon, and a circular disc, representing the five purified elements which constitute the fabric of manifest existence.  The elements are earth, water, fire, air and space. The shape of the stupa represents the Buddha, crowned and sitting in meditation posture on a lion throne. His crown is the top of the spire; his head is the square at the spire's base; his body is the vase shape; his legs are the four steps of the lower terrace, and the base is his throne.

To build a stupa, transmission and ceremonies from a monk is necessary.  Which kind of stupa to be constructed in a certain area, is decided together with the teacher assisting in the construction. Some times the kind is directly connected with events that have taken place that certain area.  All stupas contain a treasury filled with various objects.

A very important element in every stupa is the Tree of Life. It is a wooden pole covered with gems and thousand of mantras, and placed in the central channel of the stupa.  It is placed here during a ceremony or initiation, where all the participant hold colorful ribbons connected to the Tree of Life. Together all make their most positive and powerful wishes, which are stored in the Tree of Life. In this way the stupa is charged up, and will start to function.

There are eight kinds of stupas which are related to major events of the Buddha’s life, however, a ninth, the Kalachakra Stupa’s symbolism relates to Tibetan Kalachakra Tantra, is created to protect against negative energies.  A Kalachakra Stupa was built in Karma Guen, Benalmádena city, Spain in 1994.

If it had not been for King Ashoka

The visit of cvltvre's colleagues to India prompted me to reread the few books I had about that great country, especially one written by John Keay, "India Discovered: The Recovery of a Lost Civilation".
My favorite chapters were "Thus Spake Ashoka" and "Black and Time-Stained Rocks", about how James Prinsep, a British official sent to work at the mint in Bengal in 1819, who was key to the deciphering of then unknown scripts found on impressive polished sandstone pillars and boundary stones scattered over an area so wide it was challenging to imagine who had done such a remarkable feat.

from flickr, photographer: Sunaina Suneja.

Nowadays, we know that these remarkable pillars and edicts were left by King Ashoka two thousand years ago, forgotten until it caught the intrigue of British enthusiasts in the early nineteenth century.

King Ashoka (304 BC-232BC), who had signed these edicts as "Devam Piya Priyadasi Raja", was grandson of Chandragupta (also known in ancient Greece as Sandracottus), founder of the Mauryan Empire.

Ashoka was a terrible warrior, and in his rage for the murder of his mother, he not only murdered his half-brothers who had schemed against him, but also killed some 100,000 people of Kalinga. However, once the war was over, the sight of such destruction sickened him to the heart and turned him to pursue ahimsa (non-violence) and thus became the greatest patron of then relatively new religion of Buddhism, building temples, hospitals, universities, irrigation systems, sending monks to many parts of the world to spread its teaching.

King Ashoka convened the Third Buddhist Council, led by his brother, an ordained monk, in 250-253 BC. He also sent his own son and daughter to Ceylon (Sri Lanka) to spread the teachings of Buddha where it has never faded out as it had in India soon after his death. Historically significant for Thailand (where I am from) was sending of Sohn Uttar Sthavira, a royal monk and many other with sacred texts to Suvannabhumi (Burma and Thailand) around 228 BC.

The following entry in wikipedia (http://en.wikipedia.org/wiki/Ashoka_the_Great) explains how important King Asokha was for Thai culture:

"One of the more enduring legacies of Ashoka Maurya was the model that he provided for the relationship between Buddhism and the state. Throughout Theravada Southeastern Asia, the model of ruler ship embodied by Ashoka replaced the notion of divine kingship that had previously dominated (in the Angkhor kingdom, for instance). Under this model of 'Buddhist kingship', the king sought to legitimize his rule not through descent from a divine source, but by supporting and earning the approval of the Buddhist sangha. Following Ashoka's example, kings established monasteries, funded the construction of stupas, and supported the ordination of monks in their kingdom. Many rulers also took an active role in resolving disputes over the status and regulation of the sangha, as Ashoka had in calling a conclave to settle a number of contentious issues during his reign. This development ultimately lead to a close association in many Southeast Asian countries between the monarchy and the religious hierarchy, an association that can still be seen today in the state-supported Buddhism of Thailand and the traditional role of the Thai king as both a religious and secular leader."

Congratulations for 40 years volunteership: National Museum Volunteers

I was pleasantly surprised to rediscover the National Museum Volunteers through their website and receive the delightful news of their 40th anniversary which will be celebrated through a variety of activities and products which are announced through their website: http://www.museumvolunteersbkk.net/

Another favorite organization of mine that if I were living in Thailand, I would be a regular member of is The Siam Society.

Silpakorn's University Electronic Resources on Art in Thailand

Silpakorn University is the leading Thai university in the fine arts and archaeology.  It was founded in 1943 when the Italian art professor Corroda Ferroci (Silpa Bhirasri), who contracted under King Rama VI to work as sculpture for the Thai government started giving free sculpture classes for those interested. 

Searching for new information on prehistoric cave painting, I found this excellent website, a generous gift of images I can only hope to see.  Two sections are my favorites (text only in Thai, but the numerous images provided more than made up for the disappointing lack of English explanations):

• Mural Paintings in Thailand  (Three categories to choose from: by region, by period, and special projects)

• Cave Art (Click on the regions on the map and it will bring you to provinces of the region chosen, after which will be a list of caves that are located in that province.  Clicking further will lead you to a page with brief description, location of cave and sample images of the cave paintings/art.)