Pasuk Phongpaichit: Unflappable Crusader (int'l edition)

BUSINESSWEEK ONLINE : JUNE 14, 1999 ISSUE

INTERNATIONAL -- ASIAN COVER STORY

Pasuk Phongpaichit: Unflappable Crusader (int'l edition)

Beneath her soft-spoken academic demeanor, Pasuk Phongpaichit is a tigress. And she has seized on the corrupt among Thailand's political and business establishment, refusing to let go. The Cambridge University-trained economist spent six years researching corruption in Thailand. The result is an explosive book, Guns, Girls, Gambling, Ganja: Thailand's Illegal Economy and Public Policy. Released at the end of 1998, the book is shaking Thailand's foundations.

The reason is that Pasuk has documented with detailed research what Thais themselves had long suspected: that many of their police, politicians, and businesses are linked in an overwhelmingly corrupt web of self-interest. And not only that: Their gambling dens, prostitution rings, and other illegal activities are big business, raking in billions of dollars a year. ''These actions involve politicians up to the ministerial level, and some high bureaucrats, police, and military,'' says Pasuk, 53. ''This finding frightens me. If some of our politicians at high levels are involved in these activities, we won't get very good social and economic policies.''

EMBOLDENED. But there's hope. As a result of Pasuk's book, Thailand is changing in major ways. A Parliamentary committee was set up to study how to control illegal activities. The police force, formerly part of Thailand's powerful Interior Ministry, has been realigned to answer directly to the Prime Minister. And Thailand's press--already among the freest in Asia--has been emboldened to write about corruption, bringing the debate into the public domain. Many journalists, who previously found it hard to find public figures to speak out on the issue, now quote Pasuk.

Pasuk's motivation comes from a single incident in 1992, when Thai generals seized power in a military coup. The generals told the Thai public that they were overthrowing the elected government because it was corrupt. ''That angered me,'' says Pasuk. ''What angered me even more was that [the generals] had the reputation for being as corrupt, if not more corrupt, than the government. It made me want to understand corruption.''

So Pasuk, who was born in a small village more than an hour's trip upriver from Bangkok, spent the next two years probing business transactions in the Thai countryside. She found that local politicians and businessmen had front businesses, such as construction, but generated most of their revenue from illegal sidelines. And importantly, all roads led to Bangkok--the trafficking center for the country's drugs, women, and smuggled goods. With that finding, she took her research back to the city and assembled a team at Bangkok's Chulalongkorn University, where she has taught economics for 28 years.

HARASSMENT. The researchers expected to find that drugs were the largest illegal activity in Thailand, given the country's location as the exit point for the Golden Triangle. But surprisingly, gambling topped the list, followed by prostitution--then drugs, contraband arms, smuggling of diesel oil, and trafficking in laborers and women. These activities totaled 8% to 13% of gross national product between 1993 and 1995. Pasuk's team left out illegal logging, trading in endangered species, and smuggling of other goods. If it hadn't, the total likely would have reached 20% of GNP, she says. ''Once you start on the topic of corruption, it seems only a scratch,'' says Pasuk. ''This book is just the tip of the iceberg.''

When her findings first came out, at a national conference in 1996, Pasuk and her team became subject to harassing surveillance, threats, and a libel suit from police, subsequently dropped. They were angered at the findings that gambling dens were paying police protection money. The Prime Minister had to intervene. He telephoned the university rector and asked him to speak to the police chief about his men. ''We didn't realize we were cracking the rice pot of some local police,'' Pasuk says with studied aplomb. ''We were a little bit naive.''

Pasuk hopes that others are now inspired to carry on her pioneering work. For herself, she is planning to move on to another topic--fostering democratic ideas among the country's middle class. ''I want to broaden people's view of our society and to encourage them to think democratically,'' she says. If Pasuk's approach is anything like her attack on corruption, watch for even more openness and reform in Thailand.

INTERNATIONAL -- ASIAN COVER STORY

The 1992 Coup 'Made Me Want to Understand
Corruption' (int'l edition)

Pasuk Phongpaichit is an economist and author of Guns, Girls, Gambling, Ganja: Thailand's Illegal Economy and Public Policy. Pasuk's book, the product of six years of research, has made her a celebrity, uncomfortably so at times, in Thailand. Business Week Asia Editor Sheri Prasso recently interviewed the 53-year-old academic and writer at her home in Bangkok. Here are edited excerpts of their conversation:

Q: Your book has been causing a lot of commotion in Thailand. Tell me about it.
A: It's been a top seller at Asia Books. It's a continuation of my previous book, in 1994, on Corruption and Democracy in Thailand, which had a chapter on local influence, people in local areas in Thailand, as being part of the local corruption package. I discovered many big persons, big businessmen, have businesses, both legal and illegal. For example, they may have a business in construction, but behind that, they have smuggling rings, illegal gambling dens, underground lotteries, illegal logging. It appeared their major money-making businesses were illegal ones. They were like laundering fronts. That led us to wonder how big is the illegal business in Thailand.
As economists, we became curious about the impact of the illegal economy on economic decision making. We found that economic policymaking cannot be that effective, because those policies will come up against the kinds of policies these politicians want to preserve to further their business interests, rather than the interests of the economy. Their policies are distorted by these illegal activities. We wanted to understand the size of it, what can be done about it. I had a research team of three from Chulalongkorn University.

Q: What were your findings?
A: There were six activities that accounted for 8% to 13% of average GNP from 1993-95. Oil, prostitution, trafficking in labor and women for profit -- particularly Thai women to Japan. Thailand is both an importer and exporter of labor, arms, drugs. Also we looked a illegal gambling. The research was funded by the Asia Foundation and the Thailand Research Fund. Contrary to our earlier belief that the drug trade would be the largest, in terms of illegal income generated it was illegal gambling, such as casinos, football, gambling dens.

We did not cover illegal logging, trading in endangered species, other goods' smuggling, and trafficking of women other than to Japan, or other types of illegal gambling, such as on horses, on boxing, on cockfighting, or on the last two digits of the stock market index closing.

We estimated that if all these things were included, it could be as big as 20% of GNP. It's not unique to Thailand to have an underground economy. [We were able to compile information] because we have an open democracy. I can't imagine a similar study being done in Indonesia or Malaysia.

Q: How big is the web?
A: All are interlinked, the players involved as businessmen, are linked very closely. These actions involve politicians up to the ministerial level and some high bureaucrats, and police and military. There is quite a big protection racket. The worrying thing is the extent of involvement of some MPs [members of Parliament] and politicians in the Cabinet in this country which you may not find in other countries to the same extent.

This finding frightens me. We're not interested in their names. But the worry is that if some of our politicians in high levels are involved in these activities, we won't get very good social and economic and political policies.

Q: Which area was the biggest?
A: In this order: gambling, then prostitution, drugs, contraband arms, smuggling of diesel oil, and then trafficking in people.

Many people think that prostitution in Thailand is allowed. Prostitution is technically illegal. But the problem is the law. To suppress it, you have to catch someone in the act of prostitution. The police are not serious about suppressing it.

I used to be against decriminalizing of prostitution, but I changed my view. In talking with many women, they consider prostitution as an honest job, and they raise the question why they're not protected like any other job. They bring foreign exchange to Thailand, and they create jobs for themselves, but they are subject to much abuse. They said, "This is their job. Why shouldn't they be protected?" We should consider decriminalizing.

Bangkok has become a center for trafficking of labor and women, both in and out of the country. It is controlled by groups of foreign gangsters, Russians, Pakistanis, Chinese. Why? Because our police are very corrupt. Chavalit, the ex-Interior Minister, once mentioned himself that if one is serious about solving police corruption, there would be no police at all.

Q: What kind of legal problems and threats have you encountered?
A: The leader of a big political party wanted to sue for libel. Two parties have filed a libel complained with the police, but the police haven't brought the charge.

We found that gambling dens pay off the police. The second person on our research team did a study. And one policeman decided to lodge a personal complaint, in 22 police stations. Our office received a fax with a picture of a bullet on it [in 1996, when the findings were first released at an academic conference]. The police started hanging around the faculty, our colleagues' houses. We felt very threatened. When we expressed that, the police said they were just there to protect us. But instead we were protected by public sentiment. The Prime Minister had to intervene to stop things from getting out of hand. He asked the rector of the university, because we felt we couldn't work, to talk to the police chief, and in the end the policeman withdrew the complaint. You never know whether the younger police will feel threatened and do something silly. Someone could bump you off at night on the way home. We were a little bit naive. We thought this was something the public should know in order to think what to do about the situation. We didn't realize we were cracking the rice pot of some local police. We didn't think about that. As a result, the police admitted that they are trying to cope with corruption. Before, they denied it.

Q: What other tangible effect has your book had?
A: It has started a debate about what to do with illegal gambling. Also, the study urged serious reform in the police. The study has given legitimacy or confidence to journalists and other media to report on this problem more openly. I am often quoted in the press. And there was a Parliamentary Committee on illegal activities and how to suppress them set up in 1996.

I wonder if our urging the government to reform the police contributed to the attempt to change the structure of the police department this year. The police department used to be under the Ministry of the Interior. Now, there is a National Police Bureau that answers directly to the Prime Minister. It suggests it may be a first step to wean the police from the Ministry of the Interior. That ministry is very powerful. It is going to be a long process.

Q: Why did you want to study corruption?
A: The turning point was the coup in 1992. The military toppled Chatichai, saying the government was too corrupt. It really angered me enormously that the military still thinks in this day and age that they can make a coup to topple an elected government. What angered me even more, they had a reputation of also being as corrupt, if not more corrupt, than the government. So how could they explain they were doing this for reasons of corruption? It made me want to understand corruption.

At that time I was Director of the Political Economy Center at Chulalongkorn University, and had been there 28 years, as an associate professor of economics. I felt this was a big topic, and I couldn't do it alone. I collected some friends [Sungsidh Piriyorangsan, Nualnoi Treerat]. Once you start on the topic of corruption, it seems only a scratch. This book is just the tip of the iceberg. It's difficult to find researchers on this. Most people think it's dangerous, because we have had two incidents with politicians and police. Other researchers became wary of working with us.

Q: What is your background?
A: I was born in a small village 1 1/2 hours away. It used to be one day's travel by steamboat down the river to Bangkok. I came to study in Bangkok, to live with relatives, at age six. I got a scholarship to study economics in Australia at Monash University in Melbourne. I earned a BA and MA in Economics. I came back in 1971 to teach a Chulalongkorn and then did a PhD in Economics at Cambridge.

Q: What will you tackle next?
A: I am starting a new project on social movements: famers, women, small producers, corruption, environmental, and cultural. I want to show change in our society must come from people's participation, demands, and organization. I don't have too much hope of expecting politicians to change things by themselves. People must participate and press for change. The future of Thailand will depend on these social movements. I would like to understand how some succeed better than others.

Our democratic history is very recent. The period of continuous parliamentary democracy is short and often interrupted by military coups. A lot of people do not really appreciate democracy and don't think democratically. The middle class is still very afraid of ordinary people and unwilling to share an open political space. They see a lot of these [farmers'] movements as a threat, a nuisance. It's a very patronizing attitude. I want to broaden people's view of our society and to think democratically.
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