Jail for Pojaman Shinawatra's Evasion of Tax

Attorney-General as Plaintiff
VS
Bannapot Damapong, defendant number 1;
Khunying Pojaman Shinawatra, defendant number 2;
Kanjanapa Honghern, defendant number 3
on charges of tax evasion and falsifying testimonies with the intent of evading taxes

Charge number 1:
On November 7, 1997, the three defendants intentionally evaded taxes in the sale of Shinawatca Computer and Communications Public Company Limited or Shin Corporation Public Company Limited's shares worth 738 million baht. The shares, owned by defendant number 2, were held under the name of Mrs. Duangta Wongpakdee or Mrs. Duangta Pramoolrueng, and were sold to defendant number 1, who is related to defendant number 2. The three defendants falsely declared that the shares were sold through the Stock Exchange of Thailand, whereby the transaction is exempted from income tax. In reality, defendant number 2 did not sell those shares to defendant number 1 but transferred the shares to him, who is her relative, thus concealing the giving. Defendant number 1, who received the shares, should have included the 738 million baht's worth of shares in his 1997 income tax report and pay taxes worth 273.06 million baht. However, defendant number 1 failed to do so. Therefore, the three defendants have conspired to commit fraud resulting in the state losing revenue.

Charge number 2:
On May 18, 2001-August 30, 2001, defendants number 1 and 2 knowingly conspired to falsify their testimonies with the intention of evading taxes to revenue officials. Defendant number 1 testified that the share purchase on November 7, 1997 was a gift from defendant number 2 as he is her foster brother and has helped her company advanced. Defendant number 2 presented a gift of 4.5 million shares to the family of defendant number 1, which is exempted from taxation according to section 21 (10) of the Revenue Code. Defendant number 2 said in her testimony that she wanted to give the shares to defendant number 1 as a wedding gift but had to do so at a latter date as Pol. Lt. Col. Thaksin Shinawatra was preparing to enter politics. both defendants intentionally falsified their testimonies to the revenue officials in this share giving by reporting it as a transaction on the Stock Exchange of Thailand to intentionally evade taxes, resulting in a loss of 273.06 million baht in taxes and 273.06 million baht in penalty charges. The Assets Examination Committee had set up a sub-committee to investigate the case and charged the three defendants but they denies the charges.

In the transaction, defendants number 1 and 2 falsified the sale of shares through the Stock Exchange of Thailand with the transaction ordered through Phatra Securities Public Company Limited. On November 7, 1997, 4.5 million shares, priced at 164 baht per share, were sold for a total of 738 million baht. Defendant number 2 paid for the shares for defendant number 1, with a cheque of Siam Commercial Bank Public Company Limited's Ratchayothin branch. After Phatra Securities Public Company Limited deducted its transactions fees and value added tax, it issued a cheque for payment of the shares to Ms.Duangta but the cheque was deposited back into the defendant number 2's same bank account instead. All the activities were carried out by defendant number 3.

In defendant number 1's 1997 income tax report, he failed to report the 738 million baht's worth of shares as part of his income and Defendant number 2 also failed to include the 738 million baht received from the share sale in her income tax report for that year as it is exempted from taxation for being a transaction through the Stock Exchange of Thailand.

In 2000, the National Counter Corruption Commission (NCCC) inspected the assets declaration form of Pol. Lt. Col. Thaksin Shinawatra and interrogated defendants 1 and 3 on the transaction, of which they admitted that there was no actual purchase of the shares. The NCCC then ruled that Pol. Lt. Col.Thaksin intentionally falsified his asset declaration. The Revenue Department launched an investigation and ruled that the shares were a gift so the transaction should be exempted from transation.

On September 11, 2006, the Council for Democratic Reform under Constitutional Monarchy took control of the country and established the Assets Examination Committee (AEC) to investigate major corruption allegations of Shinawatra's family. The AEC decided that the shares transferred from defendant number 2 to defendant number 1 are incomes according to section 40 (2) of the Revenue Code. This means that defendant number 1 must include the shares in his income report as they cannot be considered a gift. The AEC ordered the Revenue Department to collect 546.12 million baht in tax and penalty from defendant number 1. Criminal charges against the three defendants were filed by the Attorney-General.

After deliberation by the Crirninal Court, the court explained that the three defendants are well-known individuals in society, particularly defendant number 2 who is the wife of a high-ranking politician in administrative position. Consequently, they should have set a good example for society. Instead, they intentionally conspired to violate the law, which is unfair to the public and taxation system. Moreover, the amount of evaded tax are very little, relative to the wealth of defendant number 2's family.

The court, therefore, ruled that the three defendants violated section 37 (2) of the Revenue Code, section 83 of the Criminal Code, and defendants number 1 and 2 violated section 37 (1) of the Revenue Code and section 38 of the Criminal Code for falsifying testimonies and evading taxes. The court sentenced all three defendants to two years in jail and added an additional one-year jail sentence for defendants number 1 and 2 to make a total jail term of three years.

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