Premchai a liability to his own business

TIT, or “This is Thailand”, is the phrase that has been commonly used here for years when people make fun of the country’s law enforcement, supposedly good governance and other systems. During the past few months, Thailand has been caught in the debate on how the law and the government are going to deal with Deputy Prime Minister Prawit Wongsuwon, who has been caught wearing 25 luxury watches worth close to 40 million baht in total but had failed to include them in his assets declaration. The agency which is investigating the case against him is led by his former secretary, while his alibi has been that he had borrowed the watches from his friends, one of whom has passed away.

Meanwhile, in the past week, one of the country’s largest construction companies has seen its president, Premchai Karnasuta, being arrested and accused of poaching endangered species. Now he has become a key liability for Italian-Thai Development Plc (ITD), a listed firm which has been awarded several handsome government construction contracts.

Mr Premchai, also ITD’s shareholder, claimed he was on a “recreation” trip to the World Heritage Thungyai Naresuan Wildlife Sanctuary in Kanchanaburi province when he ended up on the front pages of all media outlets for allegedly illegally hunting protected and endangered species there, including a rare black panther.

Mr Premchai, at one time set to gain superstar status had the Dawei deep-sea port in Myanmar gone ahead as planned, is now in hot water, facing several charges arising from the allegations.

The Stock Exchange of Thailand-listed ITD, which has a market capitalisation of about 20 billion baht, is a company that relies heavily on government contracts for its survival. ITD is not just present in Thailand, but has managed to expand its presence in other countries such as India where it owns nearly half of the listed shares of the 30-billion-rupee ITD Cementation India Ltd, again one of the largest construction contractors in the Indian market.

Both the companies in Thailand and India have been awarded large-scale government contracts to build dams, bridges, tunnels, mass-transit systems, highways, hydropower projects and expressways and the list could go on.

Mr Premchai should realise that he needs to take the right step to save the company’s reputation by stepping down as soon as possible.

In every one of these projects undertaken, there is always concern raised by civil society and non-governmental organisations over potential negative social and environmental impacts associated with them. Therefore, it is paramount that these companies should always publicly demonstrate their commitment to good governance, social responsibility and the protection of the environment.

Without a clean image, they will find it hard to convince opponents and critics of their projects that associated negative effects will be kept to a minimum. More importantly, they will face increasing public opposition as long as Mr Premchai has not cleared his name.

As the case drags on, more details are emerging regarding how Mr Premchai has been fond of hunting since his early years and a recent search of his residence yielded dozens of firearms, which are now being processed by the authorities.

Mr Premchai, who personally owns nearly 15% of ITD, needs to realise that the allegations of illegal wildlife hunting and arms collection have today become the liabilities for the SET-listed company, not to mention its Indian subsidiary ITD Cementation.

Although the SET and many high profile ministers in this government have come out to say that the allegation was a “personal” issue of Mr Premchai, and the company is separate from his personal life, public discontent over Mr Premchai and ITD continues to grow.

This issue can stir opposition against any contracts that are handed to this group both in Thailand and in India.

Competitors may also take advantage of this, especially in India, where government contracts are fought over tooth and nail — a sharp contrast to the oligopolistic methods used here in Thailand where the big players distribute the work among themselves.

Mr Premchai should realise that he needs to take the right step to save the company’s reputation and its future by stepping down as president of ITD as soon as possible and possibly return if and when his name is cleared.

If he does not take such a step, he is most likely to face the wrath of the shareholders at the annual general shareholders’ meeting some time in April or May this year as per the schedule.

But from the looks of it, Mr Premchai is all set to remain at the helm and not step down.

This may be because he may well be aware that in this country it is power and money that has the strongest voice.