Following the alleged fraud committed by the former chief executive and chief financial executive of SET-listed Energy Absolute (EA), the Finance Ministry has vowed to take decisive action to rebuild confidence in the Thai capital market.
Finance permanent secretary Lavaron Sangsnit said the actions carried out by the Securities and Exchange Commission (SEC), along with the Department of Special Investigation and the Anti-Money Laundering Office, are likely to restore confidence in the country's capital market.
Late on Friday last week, the SEC accused EA's founder and chief executive Somphote Ahunai and deputy and chief financial officer (CFO) Amorn Sapthaweekul of being involved in an alleged fraud relating to the company's purchase of equipment from overseas and/or software for a solar power plant between 2013 and 2015.
A third person, Phornlert Techarattanopas, was also mentioned as being involved in the procurement process, which was made through two subsidiaries. The deal resulted in the three people receiving benefits totalling about 3.5 billion baht, the SEC said in a statement.
The regulator said it has filed a case with the Department of Special Investigation and the Anti-Money Laundering Office for further legal action.
"Today, it is time to bring everything hidden under the rug out into the open, regardless of when it was hidden. If we find it, we need to address these issues decisively to build confidence in the [Thai] capital market," Mr Lavaron said.
Regarding concerns about the slow progress of the case, Mr Lavaron said that the speed would depend on the evidence, but it has been faster than expected. The SEC discovered the issue rather than another party, and it then filed the complaint. Accusations of this severity require clear evidence, he noted.
As a member of the SEC, Mr Lavaron said measures to build confidence in the Stock Exchange of Thailand have already been implemented, such as strict controls on short selling and program trading.
More measures would follow, but they cannot be disclosed yet due to the level of sensitivity. Law enforcement must improve to ensure quick and fair enforcement, which would rebuild confidence, he said.
"The key is that law enforcement must be clear, swift and decisive," Mr Lavaron said. "Each securities-related allegation case has its loopholes. Stark [Corporation] had one, More [Return] had another, and EA has another. These issues often involve large stocks or strange and hefty [initial public offering] prices, which affect confidence. Therefore, restoring confidence requires multiple approaches."
Mr Lavaron emphasised that auditing firms must thoroughly inspect accounts, particularly of listed companies, questioning how the big four audit firms, which oversee these audits, had not detected any irregularities in the problematic listed firms.
He said the Finance Ministry would be able to support the capital market by introducing new products after restoring confidence, likening it to fixing a leaking water jar before filling it up.
The ministry is currently preparing the Thai ESG Fund, which would increase the tax deduction limit from 100,000 to 300,000 baht per year and reduce the required holding period from eight years to five years. If approved by the cabinet, trading could start as early as September, with an estimated market inflow of 50-60 billion baht, according to Mr Lavaron.
Another measure is the expansion of the Vayupak Fund. Currently, the Vayupak Fund has two types of unit holders: Type A for the general public with a value of 150 billion baht, and Type B held by state agencies and the Finance Ministry with a value of about 350 billion baht.
Mr Lavaron said expanding the Vayupak Fund would involve Type B, allowing for quick action since it does not require a new filing.
He said Type B serves as a guarantee to ensure returns for members of the public who purchase Type A investment units, which have a minimum return rate of 3%. If the return on Type A units falls below 3%, the return from Type B units will be used to supplement it up to the full 3%.
According to Mr Lavaron, the Type B fund, which guarantees a minimum return for members of the public who purchase Vayupak Fund investment units, has seen a significant increase in value recently.
Therefore, the government will allocate 100 to 150 billion baht from this fund to set up a new fund and sell investment units to the public. Combined with the funds from the Thai ESG and Vayupak funds, it is estimated that around 200 billion baht will flow into the market, he said.
"Domestic investors still want to invest in the Stock Exchange of Thailand, but they have lacked confidence or perceive unfairness in the market," he noted.