Supreme Court's Verdict To Seize Thaksin's Assets (2)
( Last edit 2010-03-00 )
1. The conversion of concession fee for mobile phone operators into excise tax
On February 28, 2002, the defendant started the processes of legislation to convert the concession fee for mobile phone operators into excise tax which resulted in: the promulgation of the 2003 Emergency Decree number 4 amending the Excise Tax Act of 1984; and the 2003's Emergency Decree amending the Tariff of the Excise Tax Act of 1984; as well as the Announcement of the Financial Ministry number 68, dated January 28, 2003, on the reduction of the tariff and exemption of excise tax which for the mobile phone businesses the rate was cut from 50 per cent to 10 per cent according to the addendum; in addition to the cabinet's resolution on February 2003 to deduct the concession fee [as originally contracted to be paid to the state] with the excise tax paid.
Moreover, the defendant reorganized the ministries and state departments to set up anew the Ministry of Information Technology and Communication to change the contracts to partnership contracts and to change the revenue dividend to be in the form of excise tax without the actual objectives and principles of excise taxation. In order to benefit the defendant's businesses and associates, such proceedings were intended for obstructing the National Telecommunication Communication (NTC) which is a free body, to function as specified by the laws. Since the operators have the obligations to pay the concession fees to the state or the state agents as specified by the concession contracts, the proceedings were damaging to the state because the state gets less payment from the concessions as specified by the contracts. In addition, the cabinet did not have the authority to deduct the concession fee with the excise tax paid. As well, it was a twist of legislation by making laws to impede new telecommunication business competitors to benefit AIS.
Furthermore, the exception of excise tax on satellite business despite of being a telecommunication and a state concession just like the basic telephone and mobile telephone, is considered unlawful and a dishonest abuse of power by the defendant while in the Prime Minister post. When the concession fees at 10 per cent rate are deducted by the excise tax, in case of AIS, Truemove public company limited, Total Access Communication public company limited (TAC) to be paid to TOT and NTC, the incomes of TOT and NTC are reduced. The defendant also proposed to amend the law for telecommunication business to allow foreigners to own shares in higher proportion in order to enable the defendant and his associate to sell their shares to foreign investors.
2. The sixth amendment of the mobile phone concession contract between the Telephone Organization of Thailand (TOT) and AIS dated March 27, 1990 on 15 May 2001 to reduce the proportion of revenue for the pre-paid mobile service which AIS had to pay to TOT
Initially in 1999, AIS started pre-paid mobile phone service under the name of one-two-call. A managment board designated AIS to pay a proportion of revenue according to the regulations in the main contract. Until December 31, 2001, the proportion was 25 per cent. In the sixteenth year of the contract, October 2005, AIS would have to pay 30 per cent.
On January 22, 2001, AIS requested in writing to TOT to consider to reduce the proportion of the revenue for the pre-paid mobile phone service.
On April 12, 2001, the agenda on the reduction of the proportion of the revenue for the pre-paid mobile service of AIS was proposed to the Board of TOT. Then, on May 15, 2001, the sixth addendum of agreement was signed to permit the mobile phone service which was in effect from June 1, 2001 onward and means that the proportion of the revenue for the pre-paid mobile service of AIS to be paid to TOT becomes constantly 20 per cent throughout the concession lifetime after June 1, 2001. Such agreement in the sixth addendum is illegal as the special committee of the Council of State deliberated and noted in the record of the Council of State number special 291/2007 that the contract to permit mobile phone service is to follow Private Sector's Participation or Private Sector's Operation in State Affairs Acts B.E.2535 (1992). Although the [original concession] contract had been in effect before the Private Sector's Participation Act was enforced, such the [much later and under the Acts] sixth addendum was not submitted to the coordination board for consideraton as stipulated by article 22. Also, despite being a significant change of the essence of the main contract, it was not submitted to the cabinet to get consent. Moreover, at that time, according to TOT's board of directors' order number 24/1998 dated October 30, 1998, TOT had already set up a coordination board, which is the coordination board as stipulated by article 22 of the Private Sector's Participation Acts, to monitor and control the operations under concession contracts for mobile phone services.
In addition, the reasons [cited by AIS] to ask for reducing the proportion of the revenue for the pre-paid mobile phone service that TAC public company limited had requested the network connection fee for monthly pre-paid mobile phone service from 200 baht per number to 18 per cent of the face-value of the [pre-paid] cards, was considered by TOT's interests management team to be unjustifiable since AIS did not have to pay such fee while TAC was less competitive than AIS because of more burdens on costs than AIS.
The reasons claimed by AIS, to ask for reducing the proportion of the revenue to pay, is not justifiable since it created business advantages for AIS whereas it did not directly result in reducing of the service charges to the people and in increasing of the customers as well as in increasing of TOT's revenue. The reduction of the payment was too high. If compared with the 30 per cent of the revenue as stipulated by the main contract, TOT lost what should have been the revenue of 14,213,750,000 baht between 1999 to 2006 and of 56,658,280,000 baht between October 2006 and September 2016. As a result, AIS was able to make higher profit from the reduction of direct cost i.e. concession cost. In turn, AIS's share price increased and became attractive to investors which benefited AIS from the sixth amendment to September 2006, 14,213,750,000 baht and 56,658,280,000 baht for the later period. The total benefit awarded to AIS by the sixth amendment was 70,872,030,000 baht.
The defendant was involved and benefited from such proceeding because, at the time, the defendant was in the Prime Minister post which had the power to command and control over TOT which was a state organization according to the Rules for Country Administration Acts B.E.2534 (1991).
The provision of benefits to AIS which Shin Corp was holding its 42.9 per cent shares while the defendant was holding Shin Corp's shares during the Prime Minister's term, resulted in the benefits to the defendant whereas TOT lost the revenue of 70,872,030,000 baht.
3. The 7th amendment of the cellular mobile phone concession contract of March 27, 1990 dated September 20 , 2002 regarding network roaming services and deduction of the expense from the revenue as well as the reduction of the network roaming charges can be considered as benefiting Shin Corp and AIS in two ways as follows.
3.1 The 7th amendment of the cellular mobile phone concession contract.
On March 27, 1990, AIS contracted a twenty years agreement for cellular mobile phone services with TOT when AIS would award TOT annual payment at least at a designated baseline or proportionate to the revenue whatever is higher. The 4th amendment dated September 20, 2002, extended the concession to 25 years.
On January 30, 2001 AIS requested in writing to TOT to open roaming cellular mobile phone services to DPC company from February 1, 2001 in which the revenue will be divided to TOT at the same proportion as the main contract governed. On September 3, 2001 a written request was made to open national roaming with Asia Regional Service Co., Ltd.(ARS) from November 2001 at 6 baht per minute for the same zone and at 12 baht per minute for out-of zone, with the revenue divided to TOT at the same rate according to the main contract. On August 21, 2002, a written request to the 2/2003 meeting of TOT's board of directors, was made to consider a proposed policies on sharing the network between other operators using AIS's network and vice versa, in which the expense from using the roaming would be deducted from the revenue before paying TOT. The consideration was that the revenues from other operators were to be included as a part of the total revenue to be proportionately divided according to the main contract while the expenses of AIS in using other operators' networks are the responsibility of AIS to expand the network to support its services.
Then, on August 26, 2002, AIS requested some adjustments for the policies on other operators using AIS's network and vice versa. On September 5, 2002, board of directors of TOT permitted such request at the rate not less than 3 baht per minute for the whole country. If other service providers use AIS's networks, AIS would add the revenue to the total which would be divided to TOT. If AIS uses others' networks, AIS would add the revenue less the expense for using other networks paid to other service providers, to the total which would be divided to TOT. Mr.Sutham Malila of TOT and Mr.Boonklee Plangsiri of AIS signed the 7th amendment of the cellular mobile phone concession contract dated September 20, 2002 to take effect from October 1, 2002 onwards.
3.2 The reduction of the rate of charge upon using networks between TOT and DPC.
According to the digital PCN1800 cellular mobile phone concession contract with TOT dated November 19, 1996, DPC would pay TOT annually at least at a designated baseline or proportionate to the revenue whatever is higher. In December 2001, AIS took over more than 90 per cent of DPC shares which made the companies merged into one group. On November 27, 2002, TOT wrote to DPC granting DPC to share the networks with AIS from November 1, 2002 under the condition that TOT would charge 2.10 baht per minute against the revenue originating from AIS sharing the networks with DPC, effective from November 1, 2002. Also, DPC would have to submit quarterly CDs containing data of the transactions for TOT verification.
On October 26, 2005, DPC wrote to TOT requesting a reduction of the rate of charge upon sharing networks from 2.10 baht per minute to 1.10 baht per minute. Again, on January 9, 2004 DPC wrote to the senior managing director of TOT requesting a reduction of the rate of charge upon sharing networks from 2.10 baht per minute to 1.10 baht per minute. In addition, a letter dated February 2, 2004 requesting a review of DPC's request was submitted.
Mr.Pisal Jorpocha-udom the senior managing director of TOT granted the reduction of the rate of charge upon sharing networks to DPC at the rate of 1 to 1.10 baht per minute, resulting in 796,223,110 baht loss to TOT. Then, on March 24, 2008, TOT wrote to DPC informing DPC to calculate the sharing networks charge effective from April 1, 2007 until present, at the rate of 2.10 baht per minute and to pay the outstanding to TOT.
The 7th amendment of the cellular mobile phone concession contract to permit the network sharing, to deduct the revenues with the expenses, and to reduce the charge on using the networks was not carried out duly as stipulated by the Private Sector's Participation or Private Sector's Operation in State Affairs Acts B.E.2535 (1992) according to the special committee of the Council of State's ruling number special 291/2007, that it was against article 9, 16, and 30 of the cellular mobile phone concession contract dated March 27, 1990.
From October 2002 to April 2008, when the deduction with the network sharing expense was allowed, there appeared to be network sharing between AIS and DPC for 13,283,420,483 minutes. As a result, TOT lost 6,960,359,401 bath worth of revenue and would lose more than 18,175,359,401 bath worth of what is supposed to be the revenue toward the end of concession.
In case of DPC's network which AIS used a lot just over 13,283,400,220 minutes, AIS was able to deduct such payment to TOT. Contrarily, despite of being the same manner, DPC used AIS's network for 384,323,146 minutes but was not able to deduct the payment to TOT.
Examination of the shareholder registration revealed that, since 2001 and continuously to now, AIS has been a shareholder in DPC in a proportion of more than 90 per cent, to be precise 98.55 of all shares. Together with the fact that the 90 per cent of directors of DPC came from AIS, therefore, both companies are to be considered the same one. Hence, AIS intends to use its own network without paying the expense on using the network by avoiding to follow article 16 of the main contract.
to be continued