The Securities and Exchange Commission have settled (PDF) a Foreign Corrupt Practices Act proceeding against Diageo, a spirits company. The Thai connection is that Diageo Moet Hennessy Thailand (“DT”) is a joint venture of Diageo. Key excerpt:

From April 2004 through July 2008, Diageo, through DT, retained the services of a Thai government and foreign political party official (the “Thai Official”) to lobby other Thai officials to adopt Diageo’s position in several multi-million dollar tax and customs disputes.

For this retainer DT paid approximately $12,000 per month for 49 months, for a total of $599,322. DT compensated the Thai Official through 49 direct payments to a political consulting firm (the “Consulting Firm”) for which the Thai Official acted as a principal.

Most, if not all, of the $599,322 paid to the Consulting Firm was for the Thai Official’s services and accrued to his benefit. The Thai Official served as a Thai government and/or political party official throughout the relevant period (April 2004 – July 2008) in which he received compensation from DT. At various times the Thai Official served as Deputy Secretary to the Prime Minister, Advisor to the Deputy Prime Minister, and Advisor to the Ministry of Agriculture and Cooperatives. The Thai Official also served on a committee of the ruling Thai Rak Thai political party, and as a member and/or advisor to several state-owned or state-controlled industrial and utility boards. DT’s senior management knew that the Thai Official was a government officer during its engagement of the Consulting Firm. The Thai Official was the brother of one of DT’s senior officers at that time. Several members of Diageo’s global and regional management attended meetings with the Thai Official and senior members of the Thai government.

The Thai Official provided extensive lobbying services on behalf of Diageo and DT in connection with several important tax and customs disputes that were pending between Diageo and the Thai government. For example, with respect to excise taxes, the Thai Official coordinated and attended numerous meetings between senior Thai government officials and senior Diageo and DT management, including two meetings in April and May 2005 with Thailand’s then Prime Minister. In May 2005, shortly following the meetings arranged by the Thai Official, the Prime Minister made a radio address publicly endorsing Diageo’s position in favor of a “specific” approach (based on quantity) rather than an “ad valorem” approach (based on price) to calculating excise taxes.

On Diageo’s behalf, the Thai Official also met repeatedly with senior commerce, finance, and customs authorities in charge of the transfer pricing and import tax disputes, as well as with members of the Thai parliament. The Thai Official’s services contributed to Diageo’s successful resolution of several components of these disputes. For example, during 2004 and 2005 Diageo and DT were actively engaged in a dispute with the Thai government over the appropriate transfer pricing formula applied to One Liter bottles of Johnnie Walker Red Label and Black Label Scotch whiskey. Based in part on the Thai Official’s lobbying efforts, the Thai government accepted important aspects of DT’s transfer pricing method and released over $7 million in bank guarantees that DT had been required to post while the tax dispute was pending.

BP: Some comments:

1. Who is it? The SEC deliberately don’t name the person and BP googled around and well could not find anyone. BP asked a few people last night as well and again nothing. So we need look at the description, (a) he served on the committee of TRT (assume they mean he was an executive) which means unless he quit before the end of 2006 he should be one of the 111, (b) he served on the boards/advisors to state boards (when they say between April 2004-July 2008, unsure whether they mean the whole time including September 2006-January 2008), and most importantly (c) he was Deputy Secretary [General?] to the Prime Minister, Advisor to the Deputy Prime Minister, and Advisor to the Ministry of Agriculture and Cooperatives.

Initially, thought it would be easy to identify because of (c), but can’t find anyone who was all three. Probably, the key is to figure out who this person was close too. Either he was close to a senior politician who served as advisor to Ministry of Agriculture and Cooperatives and also Deputy Prime Minister during the period (list of Ministers of Agriculture and Cooperatives in Thai is here) OR he was just an upcoming TRT politician who was moving around various positions to get more experience.

2. Did Thaksin and others in TRT know what he was up too? There is a family connection, but did the senior politician in TRT know it was also his job.

3. Will this case be properly investigated in Thailand? The case against former TAT governor Juthamas has been known since the end of 2007 – see here and here. In that case, Hollywood producer Gerald Green and his wife Patricia were convicted in the US of paying of bribes to the Governor of the Tourism Authority of Thailand (i.e Juthamas ) so they could manage the Bangkok International Film Festival, but the investigation in Thailand seems to be going nowhere even though she has been indicted in the US and we have the convictions of the Greens. There is also a tobacco case too where a company also settled with the SEC and a few others. Is there is a big enough Thaksin link – not sure how close to Thaksin this guy was as he may be in the group of TRT defectors or even PPP defectors – that the case will move forward?

h/t to a reader

Comments have been enabled.