Former FRA bosses given suspended prison terms

The former chairman of the Financial Sector Restructuring Authority (FRA), Amaret Sila-On, and former FRA secretary-general Vicharat Vichitvadakan have received two-year jail sentences for malfeasance in the agency's sale of assets from 56 defunct finance companies.

Amaret

The jail terms, however, have been suspended for three years.

Amaret, the former commerce ministry in the Anand Panyarachun administration, said he would appeal against the verdict.

Public prosecutors indicted Amaret and Vicharat on September 2008. Vicharat is also the former president of the Stock Exchange of Thailand, Lehman Brothers Holding Inc, Lehman Brothers (Thailand), Global Thai Property Fund and property fund registrar One Asset Management Co.

Based on investigations by the Department of Special Investigation, Amaret and Vicharat were charged with assisting Lehman Brothers evade taxes on assets it purchased at the FRA auction in August 1998.

Lehman Brothers won auctions for 11.5 billion baht out of a total of 24.62 billion baht worth of corporate loans, putting up property as collateral on Aug 13, 1998.

Prosecutors said this could constitute a conflict of interest and lack of transparency as Lehman Brothers (Thailand) was appointed as an adviser to the FRA.

Lehman Brothers Holding Inc was required to seal the deal within seven days, or by Aug 20, 1998, together with an initial payment of 20% of the purchased assets value, or 2.3 billion baht. The company would also have been subject to tax if it had signed the deal.

However, the US investment banking firm failed to sign the deal, only placing a 10-million-baht pledge for the purchase.

Vicharat

Instead, the company set up the Global Thai Property Fund to enter into an agreement with the FRA on behalf of Lehman Brothers, thanks to a regulation issued earlier by the FRA, under the guidance of its adviser, Lehman Brothers (Thailand).

The court said this could be considered as an attempt to evade taxes via the property fund, which would be tax-exempt by law.

The prosecutors accused Amaret and Vicharat of negligence and malfeasance by allowing Lehman Brothers to set up the property fund to enter an agreement with the FRA.

The Criminal Court said Amaret and Vicharat were guilty of failing to collect the 2.3-billion-baht initial payment from Lehman Brothers Holding and allowing the US company to set up the property fund to enter the agreement on behalf of it, which the court views as an act that favoured the US firm and caused damage to the FRA.

The court sentenced the defendants to two years in prison and fined them 20,000 baht each. The jail sentence is suspended for three years, in consideration of the defendants' ages. Amaret is 79 years old and Vicharat is 65.