Varathep guilty in lotto case

The Supreme Court has handed down two-year suspended jail terms to a former deputy minister and two top officials for "violating laws and regulations" over the launch of the two-and three-digit lottery scheme.

The three - former deputy finance minister Varathep Rattanakorn, former Government Lottery Office director Chaiwat Pasokpakdi and former permanent secretary for finance Somchainuek Engtrakul - were however found not guilty of corruption as no embezzlement was uncovered in the case, one of the nine judges said.

The lottery scheme was initiated by the Thaksin Shinawatra administration in 2003. The 2006 coupappointed Assets Scrutiny Committee investigated the scheme for possible corruption.

The National Anti-Corruption Commission pressed criminal charges on behalf of the ASC after its tenure ended last year against 47 defendants with the Supreme Court's Criminal Division for Holders of Political Positions.

All 30 members of the first Thaksin cabinet were implicated by the ASC for their role in issuing a cabinet resolution that approved the two-and three-digit lottery scheme. However Thaksin was not included in Wednesday's judgement as the court said it would only rule on him in his presence.

The court acquitted 28 of the remaining 29, saying they were not directly involved in the administration of the GLO and therefore were not in a position to acknowledge the legalisation violated the Government Lottery Office Act.

The guilty verdict centred on legal aspects of the project which generated 123 billion baht from 2003 to 2006. The Thaksin government channelled part of the revenue to education, health and other social projects.

"Despite the fact that [the two-and three-digit lottery scheme] was a good and useful state policy, it was not allowed by law," the court said.

The Thaksin administration approved the project, claiming it would be a charity lottery scheme which was allowed by the GLO Act and entitled to a tax exemption.

But the court found it was not a charity scheme, saying its nature and procedures were different from previous charity lotteries introduced under the GLO Act. Unlike them, the two-and three-digit lottery scheme did not set revenue targets, limit the number of times it would be issued or specify the ticket sales to prizes ratio.

That meant the GLO was at risk of losing revenue and this could threaten the country's treasury and finance systems, the court said. The revenue could not be spent on social projects but had to go to the GLO.



As it was not a charity scheme it was not entitled to tax exemption, and therefore it broke tax regulations.

The court ruled Varathep, Chaiwat and Somchainuek were guilty of malfeasance because they proposed the project and went ahead with it, despite a warning on its legality from the Senate committee on justice and human rights. The Senate panel had also advised on the legalisation needed to amend the GLO Act.

Varathep intended not to have the law amended as advised, the court said, because it would force the scheme to follow GLO procedures on revenue spending. This made the project vulnerable to corruption.

Chaiwat realised the project could result in the GLO losing revenue because he arranged to have a 20 billion baht bank overdraft on standby for the office to prepare for a loss, the court said.

Varathep was fined 20,000 baht and the other two 10,000 baht each.

The court cleared 15 other members of the GLO board who approved the spending of revenue of criminal charges because they were not aware of the legal violations.

It rejected a request from the ASC for the cabinet members to pay the GLO 36 billion baht in damages, saying there was no embezzlement found in the case.

"I don't regret initiating the scheme which was beneficial to poor children," Varathep said after leaving the court room.

"The project was just legally flawed but I never obtained personal gains from it."

He challenged the government to amend the lotteries act to solve the problem of the underground lottery which makes huge illegal profits.

All of the former cabinet members attended the hearing apart from former commerce minister Adisai Bodharamik and Thaksin.

The court has issued arrest warrants for Mr Adisai and three other defendants - Somchainuek, former GLO director Surasit Sangkapong and former finance minister Suchart Chaowisit - who failed to showed up Wednesday.