The 6 th International Conference on Financial Criminology 2014 Rangsit University, Pathumthani, Thailand Friday 5 September 2014 Corruption in the State Enterprise Listed as Public Company in the Stock Exchange of Thailand (SET): A Case Study of MCOT Public Company Dr. Suraphol Srivithaya Dr. Rattaphong Sornsuphap

1. Background and Rationale Privatization of profitable State enterprise policy Transformation of MCOT to be a listed company MCOT opportunity to corrupt by conflict of interest State Enterprise status VS MCOT Public Company A case study to determine rules and regulation of transparent performance and accountability for the management and operation of MCOT Plc. assets in order to prevent and suppress corruption in the State enterprises transformed to be a listed company in the Stock Exchange of Thailand (SET)

2. Objectives of Research 2.1 To analyze the State enterprises, including the objectives of the establishment, the modification of revenue earnings, the expenditure as well as regulations regarding management, operation and auditing; 2.2 To find out ways and means probably bringing about corruption problems in the State enterprise and gap resulted from regulation by laws; 2.3 To propose possible measures and recommendations for preventing and suppressing corruptions in the State enterprises in a case study of MCOT Plc. as a listed company in the Stock Exchange of Thailand (SET).

3. Scope of Research Problem The study is aiming at analyzing and processing of data to find out a ways and means to provide beneficial policy of the management and operation of State enterprises transformed into public company limited in accordance with the State Enterprise Funding Act B.E and registered as listed company in the Stock Exchange of Thailand (SET). As there were various corruption problems arising from the management and operation of MCOT Plc. business agencies, the scope of study shall be concentrated on nature, causes, and models of MCOT Plc.’s corruption with recommendations to prevent suppress such a kind of corruption in the transformation of State enterprises to be listed companies in the Stock Exchange of Thailand.

4. Research Methodology The study was undertaken in form of a mixed method research, including documentary research by collecting and analyzing data from document concerned and a specific case study research by interviewing specified persons involved in MCOT Plc. as listed company in the Stock Exchange of Thailand (SET), as well as interviewing and focus group meeting with related high experienced persons as key informants in the fields of mass media and corruption problems deriving from the MCOT Plc. management, operation and auditing.

5. Results of Research The study found that there were at least 10 risky factors causing corruption in MCOT Plc. as follows : 1) The non-transparency resulted from the fact that MCOT was transformed it status into a public company and registered in the Stock Exchange of Thailand; 2) The interference of politicians in nominating the Board of Directors and Executives of the State Enterprise. 3) The procurement such as land buying and selling with the value of more than 1,200 millions baht since 2004 by submitting project plans but until nowadays none of them has been implemented in spite of the fact that 30 millions baht were spent to hire project consultants; 4) The amount of rewards paid for importation; 5) Too much freedom agreed for advertisement without charge

5. Results of Research 6) The modification of co-operating contract with private agencies that brings about loss of interest of MCOT, for example, in case of the contract with Bangkok Entertainment Co., Ltd., UBC group; 7) Authorizing the UBC Group to be free from being registered in the Stock Exchange of Thailand; 8) Authorizing UBC group to use TRUE logo with UBC and MCOT logos broadcasted on radio programs be membership register in favor of commercial interest in spite of the fact that TRUE is not the co-contractor; 9) Joint venture with others private companies to broadcast some sport programs that make MCOT loss prospective commercial interest; 10) Establishing companies to sub-contract with MCOT in order to produce program that is in the form of the conflict of interests, mostly in case of radio media business while television media has been operated after business transformation.

6. Recommendations 6.1 For the government : 1) The organizations that were competitive and semi-controlled by the State, had double status of management by marketing mechanism and political mechanism. If the Managing Director concentrates one mechanism, it will affect other mechanism, for example if the management concentrate more profit-oriented business, it will neglect the benefit of social sectors. Therefore, the government should have clear guidelines for the policy of privatization of media sectors. 2) The image of media organizations were expected by the society that they are inefficient and have the conflict of interests and transparency problems in their management as well as political interference. How can the government eliminate such image although the media organization has already transformed to be a public company?

6. Recommendations 6.2 For the MCOT: 1) The MCOT is recommended to emphasize the promotion of the good governance within the organization because it is essential for provide the immunity for solving the economic corruption. The immunity is based on principle of responsibility to perform and carry on its duty in a strict and careful manner. The transparency principle will promote more efficient independent internal audit system within MCOT organization to assure the shareholders that the MCOT’s management is carried on in an utmost beneficial way for all of them. 2) The MCOT should set up its efficiency internal audit system to support its own management for transparency. In the short term, it should improve its existing internal audit organs to have more enough power for working independently. 3) The MCOT should give more importance to the management of co-operating contracts with private agencies, by establishing a new unit to study, to follow up and to supervise its interests as well as to recommend any alternatives to the Executive Board for consideration. This new unit should be established in the Legal Section or directly under the Corporate Strategy and Risk Management Office. If not, it should employ external professionals to help managing such contracts. 4) The MCOT should amend and improve its rules and regulations of its adoption power, which are not suitable for the present situation as well as any necessary new rules and regulations. 5) The MCOT should utilize its existing Committee of TV Program Planning to consider and approve its annual program plan or its quarterly program plan. 6) The MCOT should develop and improve its personnel, who looked after the risk management system, in order to have more ability in analysis and evaluation of any risks at intensive level.

Dr. Suraphol Srivithaya Dr. Rattaphong Sornsuphap Thank You for Your Kind Attention