governance – Apichet Blog

Avoiding Misaligned Incentives

Managers are faced with a great number and diversity of issues each day. Many of these issues require prompt resolution typically in the form of a decision or direction to be issued by the Manager to subordinates.

Good managers recognize that they must base their decisions on an objective, non-biased consideration of relevant facts and circumstances, always seeking to act in the overall best interests of the organization. Unfortunately, most managers don’t have the luxury of time and tranquility required to give each issue ample and careful consideration. Major and minor issues constantly arise in a seemingly relentless manner, and our intrepid manager must consider each issue as quickly and efficiently as possible, render a judgment or decision, and hope for the best.

Modern managers are (still) human. Artificial intelligence is not yet wielding significant influence over the decision-making process. Even the most well-intentioned and highly experienced managers are influenced by personal and organizational biases, historical precedents that may have been based on faulty premises, and pressures from subordinates or other influencers that may have motivations far removed from the best interests of the organization.

One can wish to forgive managers for not giving each issue ample and careful consideration before passing judgment. Clearly, not all issues are of vital, longterm interest to the organization. However, one must be very mindful that even seemingly minor decisions can serve as precedents upon which future issues will be considered and based. This can be especially true when a decision is related to, or can be consciously or unconsciously perverted, to serve the self-interests of the manager or other stakeholders at the expense of the Company’s best interests.

These decisions that support misaligned interests often appear to be of only minor significance and importance, and self-interested parties may actively seek to emphasize the limited significance and impact of the issue in hopes of receiving the desired decision. The less time and effort a manager invests to understand any given issue, the less likely it is that the manager will appreciate the broader or longterm ramifications of the issue.

This may sound philosophically interesting, or mind-numbingly boring, depending on your personal perspective. A common example might serve to conveniently highlight the issue.

e-Waste Recycling/ Asset Disposal

Every modern office has numerous PC’s, laptops, monitors, printers, mobile phones, and other electronic devices. These devices typically become obsolete before they physically break or cease functioning. It is not uncommon for subordinates to request permission to purchase such obsolescent equipment, and in many countries it is quite common for companies to sell obsolete equipment to employees at bargain prices.

Is this in the best interest of the company? Is this in the best interest of the employees? How should a manager consider an issue such as this, and are there any biases or misaligned incentives that could adversely influence the decision-making process?

The company’s best interests are served if all capital assets are utilized to their fullest potential. If an asset should become non-useful to the organization, the asset should be disposed of in the most appropriate manner, to generate salvage income from the asset, to protect the community and environment from adverse environmental impact, and to always recognize and respect any employee or stakeholder impact or preference.

In the case of a common laptop PC, a well-cared for laptop can function well for many years. Some maintenance may be required during the lifetime of the device, such as battery replacement, memory and/or data storage upgrades, keyboard or display service, etc. Eventually, the performance of the device may no longer satisfy the operational requirements of the user, or the cost to maintain or service the device may exceed the value of the device or may be non-competitive compared with the cost of a new replacement device.

In a well-managed organization, commodity devices such as laptop PC’s can be reassigned to different users or applications to match their performance and condition to the user or application requirements. A top of the line laptop that was suitable for a power-user such as an engineer, field service technician, external sales person, or the ego of an executive when it was purchased new may become completely inadequate for these same functions and applications just 2 or 3 years later. However, many users or applications to not require high performance, especially now that many applications are moving to cloud-based solutions. A basic laptop, even one that is 5 or 6 years old, can still run web browser software suitable to support nearly all cloud-based applications. Even a laptop with a malfunctioning display or a failing keyboard can be very satisfactorily utilized by attaching an external monitor, keyboard, and mouse.

For most organizations and applications, nearly any functional laptop, desktop, or printer can continue to be satisfactorily utilized by properly matching the aging device to the application. And when a device does fail, it can become a source of spare parts for remaining identical devices, assuming that the organization has prudently managed its device procurement strategy to standardize on equipment.

Frankly, if such a device is still functional, or still has useful parts that could be used to maintain similar devices, it should be retained by the organization. When a device no longer has any value to the organization, it should also be expected to offer very little value or interest to employees or other entity except specialized recycling contractors.

So why do so many organizations sell functional (or even non-functional) used equipment to employees?

I strongly suggest that in most cases, these decisions are being made based on misaligned incentives. Supervisors and managers are incentivized to offer used equipment to employees to promote good relationships with employees. Whereas managers should be making decisions on the basis of the best interests of the company (and happy employees are certainly in the best interest of the company), they are actually making these decisions based on self-interest, or being influenced by supervisors or subordinates who themselves are acting out of self-interest.

Does sale or auction of used IT equipment such as laptops to employees promote good relationships? Undoubtedly, there are some employees who would appreciate the opportunity to purchased a used device from the company at a bargain price, especially if the device is being offered well before it has actually reached the end of its useful life. However, the company should also seriously consider whether such a used equipment sale policy can be administered in a way that is fair for all employees? If this program is beneficial to employees, meaning that the employees can purchase the used device for a bargain price compared with other retail sources of such used equipment, then it only benefits those employees who have the interest or opportunity to participate. Employees who are not interested in used IT equipment would not benefit. How many creative programs would the company need to implement to ensure that all employees with their many diverse interests would have an opportunity to receive an equivalent benefit from the company? Good employee relationships cannot be promoted and sustained by special programs that only benefit a small percentage of the workforce.

Environmental protection is certainly an important area of best interest for a company. e-Waste is rapidly becoming a global environmental problem, and companies should ensure that their e-Waste is properly managed to minimize environmental impact. Even a small company has the resources and ability to engage with a qualified e-Waste contractor to dispose of such devices at the end of their useful life. In many cases, companies can recover a salvage value from devices that are consigned to an e-Waste contractor. However, most individual consumers are unable or unfamiliar with e-Waste solutions, especially in less-developed communities and countries. It can be easily argued that a company is failing in its environmental responsibilities when it sells, donates, or otherwise distributes e-devices to individuals or small organizations (such as churches or charity groups) that cannot or most likely will not ensure that these devices are properly recycled when they do reach their rapidly approaching end of life.

I have observed that when management implements a policy to recycle all end-of-life IT equipment utilizing a qualified e-Waste contractor, the quantity of such devices selected to be recycled significantly drops. Departments are suddenly eager to receive an old laptop or desktop that is no longer suitable for its previous function, to address unbudgeted needs or to help stretch their department budgets. Once the misaligned incentive to dispose of useful equipment is removed, incremental value can continue to be extracted from aging but still useful equipment.

To avoid misaligned incentives, managers should always carefully and critically evaluate any program or proposal that seeks to create a benefit or satisfy any unmet need or expectation in a manner that is not absolutely straightforward and transparent. The more lobbying pressure a manager receives in support of a proposal, the more careful and critical the manager must become. Do not yield to popular pressure. Never allow or attempt to create or support any program that seeks to benefit any group of employees by bypassing the budgeting process. If a program is worthwhile and in the company interest, it should be supported by a budget allocation, and all employees should have the opportunity and expectation to realize equal benefit.

Many managers, probably a majority, disagree with my position concerning sale or auction of used IT equipment. I continue to believe that this is a classic case of misaligned incentives influencing policy decisions. I strongly recommend that managers diligentlyavoid implementing misaligned policies such as this. If your organization already has such policies in place, I strongly recommend that you start taking steps to eliminate these misguided programs. If you feel that your employees need and deserve incremental benefits, then create a new benefit or supplement existing benefit programs designed to positively impact all employees.

Networking or “NotWorking”

Management gurus typically recommend that Sr. Managers and Executives spend at least 30% of their time engaged in professional networking.

If this advice is to be believed and followed, we should on average allocate 12 hours per standard 40 hour work week to networking.

There is little doubt that a prudent, rational professional networking strategy can greatly benefit a manager. A strong professional network ensures that the manager enjoys a diverse array of skilled and experienced professional resources to draw upon, in addition to knowledge derived from professional seminars and conferences, to support the manager in delivering superior management performance and direction to the organization.

If you are self-employed or enjoy a great deal of autonomy, congratulations. You have a great deal of flexibility in determining how much or how little networking you wish to do, assuming you are effectively managing your affairs and not allowing your affairs to manage you.

However, if you, like most of us, have a direct supervisor, such as the CEO, who is not an enlightened and effective networker, you may have quite a challenge justifying time spent away from the office.

“NotWorking”

If your networking activities are not generating actionable, easily observable results, then perhaps you are NotWorking instead of Networking.

A lot of useful networking is done on the golf course. Evening cocktails with the local networking group or chamber of commerce can also be productive. However, though these “social” networking events can be productive and useful, individual social networking events can also prove to be a waste of time and resources.

I enjoy attending various social networking functions, and I believe that they are an important resource for the professional manager, especially if the social function is carefully selected. However, I typically consider these to be my low-priority networking activities.

Interestingly, most of the managers I know seem to feel that social networking is the only type of networking event. I promise not to judge executives for whom networking is a necessary exercise to relieve the stress of a fast-paced, high pressure job, and to enjoy a few hours of liquid therapy with professional peers.

However, let’s also agree that this is not the most effective way to achieve the benefits of a proper networking program. This is professional “NotWorking”, not Networking.

Putting the “Work” in Networking

Managing an Industrial Manufacturing or Service company is a significant professional challenge. The manager is faced with a wide range of both challenges and opportunities, distributed across a broad spectrum of disciplines. Even a highly experienced manager won’t have the necessary skills, expertise, and or resources required to provide leadership the team requires to execute all these tasks independently.

Facing an unfamiliar task or challenge is highly stressful for even the most cool or most highly medicated manager. Your company and team doesn’t expect you to instantly have the answer to each and every challenge. However, it is quite reasonable to expect an experienced and competent manager to be able to rise to a challenge and promptly find a prudent and viable solution.

A professional network is a diverse collection of friends, peers, associates, and acquaintances having knowledge, skills, and experiences that are complimentary and useful. If you are a plant manager, the lady who sells fruit down at the market probably doesn’t qualify as a resource for your professional network. However, don’t think that cultivating relationships exclusively with peers having jobs and experiences most similar to yours constitutes a satisfactory and effective professional network. You face a diverse portfolio of challenges, you need a diverse portfolio of professional friends and resources.

Networking in Action

In my professional community, I have some favorite networking venues and resources that I am confident provides me with strong and diverse professional resources, and also directly contributes to my quest for continuous education, improvement, and lifelong learning.

Here in Bangkok, we have a number of excellent Chambers of Commerce, including the American Chamber of Commerce of which I am a member. I routinely attend meetings of the Business and Economics Committee, the Customs and Excise Tax Committee, the Legal Committee, the Aerospace Committee, and the Energy and Environment Committee. I also routinely attend the AMCHAM Monthly Luncheon.

It has not escaped my notice that I am one of the few industrial managers attending most of these meetings. Does that make me a contrarian? Perhaps. However, it also means that I keep myself well informed and abreast of current issues and developments in the areas of corporate tax, customs; the domestic, regional, and global economic environment; best practices in environmental management, and the status and forecast for the vitally important energy industry. The knowledge I acquire makes me a better manager and leader. And the relationships I develop ensure that I can promptly access highly qualified professional support whenever I need it. Naturally, I am also a humble resource for members of my professional network who might seek my advice or insights.

I also maintain memberships in a few other professional organizations and societies, and carefully budget my time to attend events that are most likely to deliver the maximum amount of benefit for the investment of time required.

Who You Gonna Call?

Social media and a wide variety of digital resources, including professional resources such as Linked-in, are rapidly changing the landscape for establishing and maintaining a professional network. However, the business card has not yet gone out of style.

I always seek to exchange business cards with new professional contacts. At least once per week I go through my business cards and enter names, titles, and brief details into my Contacts List. I also search each contact name in Linked-in, and make contact requests for those professionals who are Linked-in members.

I do of course exercise some judgment concerning whom I enter into my contacts list and connect with on Linked-In. However, I try not to be too selective, because when a crisis erupts, you never know what resources you might need urgently. Ten years ago I had a shooting in my factory. Two of my employees were seriously wounded by a fellow employee, who then fled and avoided capture by the police for several days. Immediately following the shooting, I urgently needed a professional security company to secure and protect my plant site while the police conducted their investigation and tracked down the gunman. The shooting happened at 3:00 am, and thanks to my contacts list I had the mobile phone number of a highly respected security professional. I woke him up at 6:30 am, and we had armed guards at the site by mid-morning.

To provide the best leadership and service to an Industrial Manufacturing or Service company, a manager must diligently cultivate a diverse portfolio of professional contacts, and should routinely attend conferences and seminars to expand and update the knowledge and skills required to manage, monitor, and mentor the team. This is a demanding and challenging chore, which justifies the Work in NetWorking.

Frank T.

Is Teamwork Killing Your Company?

Management experts always emphasize the benefits of teamwork for creating and maintaining a strong organization. It is clear that an effective team can accomplish more than a individual or a collection of individuals working independently. Members of teams also typically demonstrate improved morale, work more efficiently, and develop and execute better solutions to problems.

Industrial Teams

Industrial products and services companies typically have a number of teams operating simultaneously to achieve overall organizational objectives. The most common teams in organizations are the various departments, such as Accounting, Purchasing, Maintenance, Production, Human Resources, Administration, and Sales. These teams are effectively permanent; they are established at the birth of the company, and persist as long as the company does.

Teams may also be established on the manufacturing floor, such as an assembly team, a painting team, an electrical PM team.

Most companies also develop one or more cross-functional teams, consisting of members selected from various departments or other teams. These cross-functional teams are more likely to be temporary in nature, and are formed to address complex tasks such as major projects, quality or efficiency initiatives, or organizing the annual New Year party.

Teams are truly an essential feature of modern businesses.

The Trouble with Teamwork

Most managers fail to recognize that even a great tool such as Teamwork needs to be carefully monitored and managed. Without responsible oversight and management, teamwork can evolve into a destructive force that can reek havoc within the organization.

You’re Not on My Team

Most cultures encourage and value cooperation and teamwork. Asian cultures, and the cultures of agrarian or recently-industrialized economies, tend to emphasize cooperation and conformity over individuality, and are therefore more likely to be team-oriented.

However, in most organizations that I have had the privilege of closely observing, teamwork quickly degenerates into a “members-only” club. The Accounting Team develops a strong shared identity and mutual trust and respect, but don’t like or accept the Maintenance Team. The Purchasing Team enthusiastically cooperates and shares information with each other, but don’t like the Production Team. The Sales Team maintains an outward focus and primarily interacts with customers, rarely interacting with any of the other teams. Each team thinks they are the most important team, and yearns for the respect that they deserve.

Without careful management, strong effective teams frequently erect virtual walls to isolate and protect their team from unwanted outside influences or interference. Just as an effective team can greatly enhance the efficiency and performance of its members, a team can also create very powerful barriers that inhibit cross-functional performance and can cripple an organization.

Early in my management career, I struggled with the destructive aspects of teams working in isolation. Even in a small office, a small workshop, or a modest sized industrial site, it is amazing that a virtual wall can be more effective than a physical wall or a great physical distance in isolating teams from each other and disrupting cooperation. A manager can easily deal with a physical wall or barrier, or reorganize the office layout to reduce the distance between teams. However, virtual walls can be very persistent and pervasive.

Shared Identity

Yes, we want and need to encourage and develop strong, effective teams. However, we must diligently guard against “members-only” teams. Once a team builds barriers, the power of teamwork makes it very difficult to remove the barriers to restore cross-functional cooperation and to maximize overall organizational performance.

In my experience, the most effective way to prevent team isolation is to create a strong shared organizational identity. Management must strongly promote an organizational identity, and ensure that every employee believes that their status as a member of the organization overrides their membership in any subordinate teams or departments.

Each organization should carefully consider and decide on an appropriate shared organizational identity. This shared identity should then be consistently promoted to all employees. Most people value being a member of a group, want to be proud of their membership in the group, and seek to be a good member and support of the group.

All In The Family

I personally like to promote the concept of Family as the shared identity for my organization. I explain to my team that a family consists of a diverse group of individuals, young and old, male and female (and any of the gender classifications recently proposed by our friends in the USA), having different education, skills, jobs, experiences, and preferences. The members of a family typically work independently of each other, but they always share a common bond and respect for each other. Members of a family eagerly work to achieve common goals.

Most of us spend more of our waking hours together with our fellow employees than we do with our biological families. It is therefore quite important for both harmony and performance that we treat our fellow employees as family members, and place the interests of our industrial family higher than those of our department, team, or other sub-grouping.

Teamwork will always remain a vital tool and skill for achieving maximum task performance. However, without a strong, inclusive, shared organizational identity, teamwork can and most likely will become a divisive and destructive force which will diminish overall organizational performance.

Consistently cultivate a shared organizational identity to ensure that the organization can derive maximum benefit from teamwork while maintaining harmony and cooperation throughout the organization.

Frank T.

Thai IOD Chartered Director Class

The Thai Institute of Directors (Thai IOD) was founded in 1999 and has become the leading Thailand based organization promoting Director Professionalism and Corporate Governance.

www.thai-iod.com

I am a big fan of the Thai IOD, both for its significant contributions to leadership and Corporate Governance, and also for its strong commitment to anti-corruption and ethical behavior.

Last week I had the privilege of attending the Thai IOD’s “Chartered Director Class” (CDC). This is a two day course that is designed to “enhance directorship expertise by strengthening key knowledge and skills.” A prerequisite to attending the Chartered Director Class is the successful completion of the Thai IOD’s “Director Certification Program” (DCP), which is a 5 day intensive course covering the fundamentals of directorship and Corporate Governance.

The CDC class was organized as four (4) half day modules covering Accountability, the Art of Directorship, the Strategic Board, and Ethical Decision Making.

I’ve attended many professional development classes and seminars. However, with very few exceptions, the Thai IOD courses have consistently been the most rigorous and professionally managed programs I’ve had the privilege of attending. The Thai IOD prides itself on starting its programs on time, and fully utilizing the time allocated for each program module. Thai IOD programs are definitely not long coffee breaks periodically interrupted by brief lectures; these are intensive lectures and engaging professional dialogs with only brief interruptions for coffee and lunch. No, you won’t be going home early … sorry, you won’t beat the traffic. However, you can always be sure to derive maximum value from your time and monetary investment in a Thai IOD program.

The CDC program was facilitated by Dr. Bandid Nijathaworn, Banchong Chittchang, Professor Dr. Kriengsak Chareonwongsak, and Dr. Warapatr Todhanakasem. These four gentlemen each have very impressive professional and academic credentials, and are also quite gifted lecturers and facilitators. The facilitators, course materials, and case studies were all very well developed, organized, and presented.

Equally important to a professional development program is the quality of the participants. The Thai IOD is very successful in not only attracting and retaining the best quality facilitators, but also the best quality and diversity of participants. Our CDC class had fifteen men and women, Thais and foreigners, coming from a variety of professional and academic backgrounds. I felt privileged to have the opportunity to share this CDC experience with such distinguished and experienced peers.

The benefits of Directorship and Corporate Governance training are not limited to the Boards of Directors of Public or Listed Companies. Any professional manager, director, or leader of a listed or limited company can benefit from the skills, leadership, ethics, and governance fundamentals taught by the Thai IOD. These courses are not “cheap”, but they provide great value for both the individual participants and also for the organizations and teams of participants.

Frank T.

BEPS: Base Erosion and Profit Shifting

Last week I had the privilege of attending the Business and Economics Committee Meeting of the American Chamber of Commerce in Thailand. Jack Sheehan, Partner at DFDL, and Steven Carey, MD of Quantera Global, gave a very interesting and informative presentation about BEPS.

Until very recently, I have heard almost nothing about the OECD BEPS initiative. BEPS stands for “Base Erosion and Profit Shifting” and it is basically an action plan to address aggressive transfer pricing (or perhaps more accurately described as “Transfer Mis-Pricing”) by multinational organizations to minimize or avoid taxation.

When companies conduct business across multiple jurisdictions, they frequently supply products or services to related entities. This creates opportunities for both double taxation of profits and also opportunities to shift profits between the related entities. Ideally, each company would honestly value products and services based on classical “arms-length” transfer pricing standards. This would allow profits to be earned by each entity in the jurisdiction where the profits are actually generated, and pay taxes on those profits accordingly.

However, it is becoming increasingly common for companies to adjust the pricing of products and services to shift profit from entities or jurisdictions with a high tax burden to an entity or jurisdiction with a low or no tax burden. Several companies, including Starbucks, Amazon, and Google, have recently been accused of aggressively implementing transfer pricing based profit shifting activities to avoid taxation on massive global earnings.

Dual tax treaties have been negotiated between many countries to protect companies and individuals from being double taxed on income arising from various types of cross border transactions. However, companies are now aggressively pursuing various loopholes and strategies to achieve “double non-taxation” on income, leveraging rules intended to protect them from double taxation on such income.

In early October 2015, the Organization for Economic Co-operation and Development (OECD) published its detailed 15 step plan to reform the system of international taxation. This plan, which is expected to be implemented by members nations of the OECD and other national jurisdictions starting in 2016, is potentially the most significant revision to the international system of taxation since the 1920’s.

One of the primary reforms proposed by the BEPS ties revenue recognition and profit more closely to real economic activity. This proposal is similar to the system of formulary apportionment, the kind of system used by the USA to tax corporations at the state level.

Thailand has also been closely monitoring Transfer Pricing issues, and in May 2015 issued a new Draft Transfer Pricing Act. This act will amend the Thai Revenue Code to implement measures to prevent tax evasion through the use of transfer pricing schemes. The Draft Transfer Pricing act has been approved by the Thai Cabinet and is expected to be enacted by late 2015 or during the first quarter of 2016.

Under the new Act, firms having related party transactions will be required to prepare and submit transfer pricing documentation. Such documentation must be submitted within 150 days of the end of an accounting period. Failure to submit transfer pricing documentation will be subject to a penalty of THB 400,000.

Transfer Pricing investigations are reportedly a top Thai government agenda, following the pace of other ASEAN countries. The Thai Revenue Department is also devoting more staff resources to Transfer Pricing investigations.

The Thai Government is reportedly closely monitoring and reviewing the BEPS recommendations. The Chinese government strongly backs the OECD BEPS proposals, but China is reportedly staking out its own proposals in a few specific areas in a bid to capture more taxes.

Many Thailand based companies, especially Thailand based subsidiaries of multinational companies, will fall under the jurisdiction of the new Transfer Pricing act, and will also likely be impacted when the BEPS rules are implemented and incorporated into existing Dual Tax Treaties. All Managers and Directors of such Thailand based companies should diligently review their exposure to Transfer Pricing related issues, and implement prudent measures to ensure compliance with Transfer Pricing rules.

It is a privilege to do business in Thailand, serve the Thailand community, and to earn profit from our Thailand based activities. Paying fair taxes in Thailand on profits derived from Thailand based activities is the honorable and just behavior of any responsible Thailand based entity, organization, or individual.

Frank T.

Thailand 6th National Conference on Collective Action against Corruption

On Thursday 15 October 2015 I had the privilege of attending “Thailand’s 6th National Conference on Collective Action against Corruption”. This conference was organized by the Thai CAC, formally known as “Thailand’s Private Sector Collective Action against Corruption”.

The Thai CAC was co-founded by eight of Thailand’s leading private sector organizations: the Thai Chamber of Commerce, the Joint Foreign Chambers of Commerce in Thailand, the Thai Listed Companies Association, the Federation of Thai Industries, the Federation of Thai Capital Market Organizations, the Thai Bankers’ Association, the Tourism Council of Thailand, and the Thai Institute of Directors (Thai IOD). The Thai IOD serves as the secretariat of the Thai CAC and takes a leading role in driving the program.

The CAC conference included three panel discussions which covered the topics of “Overcoming Anti-Corruption Challenges: International Experiences”, “Anti-Corruption Progress: How to Keep the Momentum Rolling”, and “Leveraging the Power of Collective Action”, and also included a powerful lunchtime presentation “Addressing Corruption Together – Strategy for Thailand.”

The CAC conference was concluded with a powerful and moving Closing Remarks presentation by His Excellency General Prem Tinsulanonda, President of the Privy Council. General Prem stated that corruption is the most severe problem plaguing Thailand, and a most shameful matter for the country. He also stated that taking part in corrupt schemes is equivalent to robbing the country. “Those involved are thieves.”

Currently the Thai CAC has 521″Signatory Companies” which have signed a “Declaration of Intent”, and 122 Certified Companies who have implemented and audited anti-corruption programs.

I strongly encourage both Thai-owned and Foreign-owned companies operating in Thailand to join the Thai CAC and complete the certification process. Fighting corruption is a difficult task, and very few companies successfully escape the cruel sting of corrupt acts. Yes, your company may successfully avoid corrupt acts such as facilitation payments to government officials. However, your company is still subject to internal corruption, such as kickbacks to purchasing officers, kickbacks to maintenance personnel, fraudulent invoices, etc.

A well designed, communicated, and enforced anti-corruption program acts as a vaccination to inoculate a company against infection by corrupt influences. Sounds dramatic … but I firmly believe it.

The managers of foreign-owned companies often tell me that they already have compliance programs in place for FCPA (the US Foreign Corrupt Practices Act) and UKBA (the UK Bribery Act). I don’t disagree that compliance with FCPA and UKBA is important. However, I also remind these companies that they are operating in Thailand, which has a very strong cultural identity. Thailand is proud to have never been colonized, and correctly believes that its culture is unique and valuable. Adopting and complying with a Thailand based anti-corruption initiative is a far more powerful motivating force than asserting compliance with a foreign initiative, which has the effect of imposing foreign laws upon Thai nationals and organizations.

Corruption is a difficult problem to solve. No single tool will be sufficient to fix this problem; a full toolbox of powerful tools, and the skill and experience to use them, will be required to eliminate corruption. Join the Thai CAC, become a signatory, and diligently work towards CAC certification. Your company, as well as our Thai community, will benefit greatly from this anti-corruption initiative.

Frank T.