Curse of the Shinawatras: Yingluck faces wipeout with billion dollar fine

Photo: Moritz Hager/CC BY-SA 2.0

A panel formed by the Thai military government has ruled former leader Yingluck Shinawatra is liable for a 20% share of the disastrous rice-pledging scheme. Critics allege it is actually a ploy to finally eradicate her family’s political influence.

By Tan Zhi Xin

Thailand’s government is demanding former prime minister, Yingluck Shinawatra, pays for damages incurred by her rice-pledging programme which resulted in a substantial loss of 178 billion Baht (US$5.13 billion) between 2013 and 2014. The government’s panel has ruled that Yingluck’s negligence was responsible for 20% of the total loss, or 35.7 billion Baht (US$1.03 billion). For her part, the former leader dismissed the accusations and maintained that she is a piece on the political chessboard.

Man proposes, God disposes

Looking back, Yingluck’s scheme had good intentions but was also a reckless and over-ambitious scheme that left a disastrous impact on the Thai economy. The idea was to take advantage of Thailand’s large market share and manipulate global rice prices to stimulate the economy. Under the programme, the government promised to procure rice from farmers at an inflated price – THB 15,000 (US$450) per tonne. This was 4,000 Baht above the previous rate, and almost 50% higher than global market price.

The grand strategy was to stockpile this rice, thereby reducing global supply and driving up prices, then reselling at a higher price. All this seemed feasible as Thailand controlled up to 30% of the global rice market. However, the plan backfired. Nobody, including Yingluck, had expected that India and Vietnam would fill the void in the global supply.  As a result, estimates say costs incurred in the first year alone ranged from $8 billion to $20 billion.

Since Yingluck was the highest authority overseeing the rice-pledging programme, it makes sense to hold her responsible for the substantial losses. However, she maintains that the primary motivation for the project was to help poor farmers who had been neglected by wealthy business elites for years.

In that sense, it was meant to be a form of public investment, not a profit-making venture. In fact, losses by the state were to the benefit of the farmers. Ultimately, the Thai economy still benefitted. Above all, it was passed and approved by the parliament. Why then is Ms Yingluck being held solely liable for losses that the elected house was also responsible for?

Political persecution

“(In) the same way you wish to ensure justice and protect your brother, the law must be exercised without bias against my side,” said Ms Yingluck concerning a recent scandal involving prime minister, Gen Prayut and his nephew. In response, current Prime Minister Prayut asks, “So would someone like to dodge the legal process and let my government take the blame instead?”

“The trial (serves) to pin Yingluck down – not to be set free but not to be punished at the same time,” commented Pavin Chachavalpongpun, a Thai politics expert at Kyoto University. It was evidently a political persecution, and someone has to take the blame for the huge loss the country suffered. Shinawatra is the perfect candidate. By holding Yingluck responsible, the military junta could snuff out the political influence of the Shinawatra family.

In light of the new moves, the military’s attempt to politically strangle Ms Yingluck is clearer than ever. The rice scheme was not the first unprofitable scheme the government implemented. Policies concerning the Bangkok Mass Transit Authority and State Railway of Thailand also incurred hundreds of billion Baht, yet nobody was held responsible. Is this not clearly a double standard?

But why?

Thailand’s political scene has always suffered from pendular swings between the military-backed royalist elite and parties tied to Thaksin Shinwatra. Parties associated with Thaksin might have won the previous three elections, but they all were all ousted by the military soon after.

Yingluck and her brother are the figureheads of the country’s democratic movement, and they enjoy massive popularity – especially among rice farmers in the north. Even though they might have been ousted by the military each time they held power, their ability to even win an election worries military-backed elites.

The army is now in power, but it has no intention of sharing that control or giving way to democratic institutions. Its landslide victory in the recent constitutional election suggests that it is now very determined to entrench itself and prevent any form of opposition.

And with the next election drawing near, it makes sense to think that the military is taking each opportunity it has to wring out every little bit of political influence and popularity Ms Yingluck and her brother have. Besides that, the Thai government is also in need of money. Thailand’s ambitious economic plan – Thailand 4.0 – requires an enormous amount of funding, but the Thai economy is still experiencing sluggish growth despite emerging from economic stagnation. Currently, the economy is predicted to grow by just 2% in 2016.

What happens now?

According to Section 8 of the 1996 law governing liabilities in the state sector, damage compensation should be shared by all debtors in the same case. As such, a separate committee will be formed up to seek compensation for the remaining 80% percent of the losses incurred by Ms Yingluck’s rice-pledging scheme.

Ms Yingluck has submitted a petition to the prime minister via her lawyer because the investigation process is illegal. But the chances are that she will not get the justice she wants. With her brother still living in exile and the entrenched power of the military, it seems like the political future for the Shinawatra siblings is gloomier than ever.