Allegations of corruption relating to the tax case have been looked into by two leading US law firms and are being investigated by federal prosecutors. This has led to a grand jury being empanelled in Texas. The claims are vehemently denied by leading Thai judges named in US media reports with criminal complaints lodged last week with both the Metropolitan Police Bureau and Crime Suppression Division by a top legal firm and senior judges named.
Thailand’s Supreme Court President, Ms Methinee Chalothorn, this week, signed an order to establish a four-member panel to report on allegations of corruption surrounding an ฿11 billion tax appeal to the Supreme Court by Toyota Motors Thailand which became the subject of bribery allegations being looked at by a grand jury empanelled in the US state of Texas at the end of May. The panel is composed of court judges and is to report within two months. The court president, the first woman to hold the position, has promised strong measures will be taken against anyone found culpable if the allegations turn out to be true.
A brewing bribery scandal linked with Thailand’s top court, the Supreme Court, has seen two former judges file complaints with the Crime Suppression Division of the Royal Thai Police last week against a New York-based news website owned by a leading American publisher.
It came as the principal of an implicated Thai law firm also filed a complaint at Huai Khwang Police Station in Bangkok.
It follows the empanelling of a federal grand jury at the end of May, in the US state of Texas, after the Toyota Motor Company in America, announced on March 18th last, that reports by top legal firms there had been submitted to both the US Department of Justice and the Securities and Exchange Commission in April 2020.
Top Office of the Judiciary official requests permission to travel to Dallas to attend the grand jury
This is an investigation into a scheme to influence Thai Supreme Court judges and to obtain a favourable outcome in the ฿10.89 billion legal appeal of a decision on a tax matter which was taken up by the court on March 29th last.
The top official with the Office of the Judiciary, Pongdech Vanichkittikul, is to request permission from authorities in the United States to travel to Dallas, Texas to attend sessions of the grand jury which has been empanelled there by federal prosecutors investigating the alleged scheme launched on behalf of the local subsidiary in the kingdom of the Toyota Motor Company.
The investigation into the allegations commenced after Toyota itself, which has its American headquarters in a northern district of Texas near Dallas, reported the matter to the US Securities and Exchange Commission and the Department of Justice last year.
The firm later disclosed the matter in a public filing as required by law.
Reports by leading US law firms detailed alleged offences under the 1977 Foreign Corrupt Practices Act
The reports to US authorities followed an internal investigation into possible breaches of the 1977 Foreign Corrupt Practices Act by the firm carried out by the prestigious American law firm, WilmerHale.
The findings of that firm were later presented to the government institutions by the New York-based law firm Debevoise & Plimpton LLP.
The matter relates to the payment of $18 million to a Thai based law firm representing Toyota Motors Thailand engaged in a legal dispute with the Thai Revenue Department over the importation of auto parts for Prius cars in Thailand.
The case dates back to the period 2010 to 2012.
Background to the current crisis is a 2015 case before the Central Tax Court in Thailand over duty to be paid on the importation of auto parts related to Prius cars
Before the Central Tax Court in 2015, officials with Toyota Motors Thailand claimed that certain auto parts imported into the kingdom for use in Prius cars qualified for 0% duty under the Japan-Thailand Economic Partnership (JTEPA).
They argued that this had already been agreed with officials and clarified in a 2013 submission.
However, customs officials at Laem Chabang countered that the imported parts were complimentary and the numbers imported in over 245 consignments into the kingdom were enough to produce and build 20,000 cars.
On that basis, they argued the shipments should be assessed for 80% duty on which a bill of ฿10.89 billion was due or $350 million going back to 2010.
The motor firm, in its court submission, took particular exception to the suggestion that it had contrived to evade taxes over a period of years.
Court ruled initially in favour of Toyota but the ruling was reversed before the Special Appeals Court
The court ruled in favour of Toyota in September 2017 but the decision was appealed and overturned subsequently by the Special Appeals Court.
The firm then appealed this to the Thai Supreme Court which on March 29th last agreed to take up the case before it.
The allegations relating to the alleged bribery scheme first came to light on March 18th this year when Toyota in the United States made public its substantial reports to both the US Department of Justice and the Securities and Exchange Commission in April 2020 concerning possible violations of the 1977 Foreign Corrupt Practices Act.
This law makes it a serious federal offence for a US firm or individual to bribe a foreign government or official.
Budget was $27 million, $18 million had already been paid with a further $9 million if Toyota won
The scheme examined by the internal company probe and subsequently communicated to US authorities involved the use of a Thai legal firm to influence judges with links to Thailand’s top court including a former chief justice and Court of Appeals judge.
In addition to the $18 million or ฿558 million paid to the law firm, a further $9 million or ฿279 million was to be paid if Toyota Motors Thailand (TMT) won its case on appeal to the Supreme Court.
The Thai judges, this week, named in the US news media reports, all vehemently denied the allegations with one even suggesting that while he handled the case at the Court of Appeal stage, he had voted against the firm’s position at a meeting of the court.
The judges are also reported to be perplexed that the Thai based motor firm has failed to issue a statement on the allegations being aired publicly.
US news site owned by a reputable publishing concern in New York failed to get a response from Thai lawyers working with Toyoyta directly linked to the affair
A well known legal news site in the United States, Law360, which is part of the highly reputable LexisNexis corporation which publishes legal research and high-quality information for professionals, has named the Thai legal firm involved as well as former legal executives who worked for Toyota Motors Thailand.
A reporter with the news site tried to contact all those involved and make them aware of the claims. All failed to substantially respond to the matter.
Law360 has also named the Thai judges who are implicated in the reports and the probe being pursued by prosecutors in the United States.
Grand jury is a step towards have an indictment being handed down or criminal charges brought
A Grand Jury panel in the United States is the precursor to an indictment or criminal legal proceedings where jurors are asked to decide if there is enough evidence before them to proceed with a criminal prosecution.
This is the process that began in the US state of Texas at the end of May based on reports from the two top US law firms and evidence already compiled by federal prosecutors.
Toyota in the USA warns that an ongoing federal investigation sparked by its submissions to authorities may result in criminal or civil proceedings
In March, the Toyota Motor Company in the United States gave some insight into the gravity and nature of the charges to be examined by the grand jury in Texas when it declared: ‘The investigations could result in the imposition of civil or criminal penalties, fines or other sanctions, or litigation by the DOJ or the SEC.’
The work of the grand jury is secret but former US prosecutors not linked to the case have told New York-based news site, Law360, that, at this stage in the process, these proceedings will be used to subpoena valuable information such as bank records and other documents to build their case.
It is reported that prosecutors are specifically investigating an attempt to bribe or influence judges of the Supreme Court in Thailand and achieve a positive outcome for the Japanese subsidiary company in the kingdom relating to its $350 billion tax bill.
Complaints to police submitted by the legal firm acting for Toyota in Thailand and judges linked to the controversy by US media reports from New York
The move has already drawn a hostile reaction from the legal practitioners involved in Bangkok including Thai judges and the legal firm identified by the media reports from New York.
On Monday last, the principal of the firm filed complaints against the New York media outlet at Huai Khwang Police Station. These are understood to be on the basis of defamation and violations of the Computer Crime Act.
Afterwards, he said that not only are the allegations untrue and without foundation but that the reports were a smear on the Thai judicial system and the courts.
At the same time, last Monday also saw two former judges, named in the American news reports, file a complaint with the Crime Suppression Division (CSD) of the Royal Thai Police.
Chief of the Crime Suppression Division has assigned a senior officer to begin a criminal investigation
One is a former Supreme Court judge while the other sat on the Appeals Court.
A third judge, a former chief justice, is also reported to be ready to make a similar move.
The complaints were acknowledged by the Crime Suppression Division Chief, Police Major General Suwat Saengnoom, who revealed he had assigned a senior officer to begin work on the case and open an investigation.
Major General Pornpimol Dokmai will first proceed to interview the former judges.
Senior court official warns that no criminal or civil proceedings have been issued yet in the United States as he sets up a working group and panel of inquiry
In the meantime, the Office of the Judiciary Secretary-general, Mr Pongdech pointed out to reporters on Friday that charges or an indictment in any potential case have not yet emerged or been handed down in the United States.
In April, the Thai court service issued a robust statement declaring that any wrongdoing established in the matter, would result in swift action.
‘We will proceed to investigate and decisively punish such acts that bring disgrace to the honour of the judge, destroy the court’s neutrality, and make the society distrust the Thai justice system,’ it said.
President of the Supreme Court sets up a fact-finding panel to report back on the affair in 30 to 60 days
The court official, in addition, announced a panel to investigate the case here in Thailand established by Supreme Court President, Methinee Chalothorn, the first woman in Thailand to hold the position after she was appointed in August 2020.
The panel is composed of four Supreme and Appeal Court judges who will be tasked with reporting its findings within 30 to 60 days.
Working group also begin work to gather information
Mr Pongdetch, in a further development, revealed a working group had been established which will reach out to all parties involved for further information.
These include Toyota in North America, the US Department of Justice, the US Securities and Exchange Commission and the US Department of State.
The court official also said he was going to email US media sites and ask them for the sources of the information on which they were publishing reports on the matter.
Toyota in the US issues statement but refuses to comment further as federal prosecutors continue to examine the allegations before the grand jury
Toyota in the United States has refused to comment further on the activities of US prosecutors at this time stating it is not in a position to do so.
The firm issued a statement saying: ‘Toyota works tirelessly to uphold the highest professional and ethical standards in each country where we operate. We take any allegations of wrongdoing seriously and are committed to ensuring that our business practices comply with all appropriate government regulations.’
Toyota Motors Thailand is a key investor and employer in the kingdom operating three production plants in two provinces, Samut Prakan and Chachoengsao.
The firm produces pickups, commercial vehicles and passenger cars with a potential annual output of up to 760,000 units.
It is Thailand’s most popular car brand, capturing no less than 33% of the market in 2019, which was one in three of all Thai cars sold.