Submarine deal passes audit with flying colours

Submarine deal passes audit with flying colours

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The Royal Thai Navy's submarine procurement project was clear and above-board, the Office of the Auditor-General (OAG) has concluded following an in-depth audit.

The navy and a Chinese submarine supplier signed the procurement contract in China on May 5.

The deal involves the purchase of a 13.5-billion baht Yuan-class S26T submarine.

It is one of three submarines the navy intends to purchase from China over 11 years in its 36-billion-baht procurement plan.

The deal was signed one day after the OAG launched an auditing process for the purchase scheme.

Referring to the OAG's audit result, Auditor-General Pisit Leelavachiropas said the navy handled the project meticulously. He insisted the OAG's audit was not covering up anything.

"The OAG would not risk its reputation and dignity over this," Mr Pisit said, adding the OAG officers would not want to be jailed because of others.

He noted the budget set aside for the submarine procurement did not affect the allocation of budgets for other state agencies.

The cabinet approved the budget for the project on July 14, last year. It is a committed budget running from 2017 to 2023.

The navy will pay 700 million in the first instalment this year, two billion baht next year and the rest until 2023.

Before the approval, the project had been repeatedly rejected by several cabinets since 1994, Mr Pisit said.

The project was proposed to the cabinet on 25 Oct last year to commit a budget over 11 years, and this was in line with a regulation which indicates that a proposal for a committed budget running for more than five years must be sought with the cabinet within 60 days of the fiscal budget being adopted.

Regarding concerns about whether the purchase came under the genuine government-to-government (G2G) agreement, Mr Pisit said the procurement of the first submarine was signed between the navy, which represents the Thai government, and the Chinese submarine manufacturer, endorsed by the Chinese government.

The supplier is also an agency under the Chinese government, he noted.

He noted such a G2G contract did not fall under Section 178 of the new charter, which requires international agreements that might affect or have far-reaching implications on national and economic security, trade and investments to be approved by parliament before the agreement is signed.

The Foreign Ministry and the Council of State had been asked by the OAG about the issue, and they replied it is only a commercial contract, not an international treaty.

The OAG also examined whether the procurement project took into account proposals from other countries, Mr Pisit said, noting the OAG found that six countries had been contacted and notified about the navy's required specifications for submarines.

The navy, he said, agreed the Chinese submarines were suitable in terms of price and deployment.

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