Anti-corruption body slams CP All

Anti-corruption body slams CP All

The Anti-Corruption Organization of Thailand (ACT) has finally joined the chorus of criticism against CP All Plc, operator of the 7-Eleven convenience store chain in Thailand, two months after regulators fined its executives for insider trading.

"The case reflects the weaknesses and flaws in business operations which result in a dishonest, unethical and immoral image outlined under 1992 the Securities and Exchange Act," it said in a statement.

It also undermines anti-corruption efforts to tackle the lack of corporate governance and corruption in the private sector, it continued.

"It may also erode confidence in all Thai listed companies and weigh on the country's development."

The ACT, whose members include senior business executives, applauded the Securities and Exchange Commission (SEC) for taking action without showing any favouritism toward one of the country's largest businesses.

CP All is part of the Charoen Pokphand Group empire led by billionaire Dhanin Chearavanont, which has major interests in agribusiness through CP Foods, and telecoms and media through True Corp. It is also one of the largest foreign investors in China.

"We stress our position in supporting all groups to fight corruption. We also urge all Thais to use discretion in supporting a business,"  said the ACT.

The insider trading occurred in 2013, according to a statement by the SEC on Dec 2. Korsak Chairasmisak, vice-chairman of CP All, was at that time its chief executive. He bought 118,000 shares of Siam Makro, a cash-and-carry chain, over a 12-day period ending on April 22 that year.

The following day, CP All announced a tender offer for Siam Makro shares at 787 baht, 15% above the April 22 close.

The regulator found that Mr Korsak had prior knowledge of the deal and fined him 30.2 million baht. Two directors — Pittaya Jearavisitkul had bought 7,500 Makro shares during the time and Piyawat Titasattavorakul bought 5,000 shares — were also fined 3.1 million baht in total, but no criminal charges were brought.

Athueck Asvanund, vice-chairman of True Corp, was also fined since the SEC found his daughter had bought 6,000 Makro shares before the deal was announced. He was fined 1.41 million baht.

Mr Korsak reportedly claimed he did not know there was a rule against insider trading and said the fact that he bought the stock under his own name was proof of that. 

Things went from bad to worse for CP All after its board took no action against the executives, raising further questions about its corporate governance.

Its auditors and independent directors issued a statement in mid-December saying that it was appropriate for the executives involved to retain their positions.

Early this month, Voravan Tarapoom, chairwoman of the Association of Investment Management Companies (AIMC), an industry group of mutual fund companies, expressed disappointment in CP All's inaction and said its members might sanction the company by not buying its shares.

If the group's 21 mutual fund companies, which manage assets worth around 1.1 trillion baht, make good on their word, CP All's valuation would be hard hit and its planned issue of 10 billion baht in debentures might be derailed.

The Government Pension Fund (GPF) said earlier this week that it would reduce investments in any company involved in insider trading, saying that reflects poorly on corporate governance.

The AIMC plans to meet this coming week with the GPF and SSO and other institutional investors to discuss their next move after the board of CP All declined to remove executives convicted of insider trading.

But some stock analysts speculated Mr Korsak might resign at the board meeting on Feb 23, when the case might be discussed.

Under the SEC Act, the regulator can also lay criminal charges for insider trading, which can result in up to two years in jail. However, it must lodge a formal complaint with the police.

Statistics for the period from 2009-15 show that out of 47 cases of insider trading, eight criminal complaints were made, two resulted in convictions and one in a jail term.

CPALL shares fell 1.23% to 40.25 baht in trade worth 1.3 billion baht on the Stock Exchange of Thailand on Friday.

Movements of CPALL stocks over the past 12 months. News about the insider trading by its executives was announced in December 2015. (Bloomberg data)

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