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Somsak Jeamteerasakul refutes Crown Property Bureau (CPB)’s Annual Report

The Crown Property Bureau (CPB) released its 2010 Annual Report (downloadable here). The report’s postscript particularly challenges the report by Forbes magazine which claims His Majesty the King of Thailand is the richest monarch in the world. It is well known that Forbes’s asset appraisal includes “crown property” under the charge of the CPB. In essence, the postscript of the report says:

“Crown property is state property and public property, for which the government through the Minister of Finance as the Chairperson is responsible, and which the CPB takes care of.”

The statement is not true, de jure and de facto.  “Crown property” has never been under the charge of the “government”. No government has any power to control or manage crown property. For decades, crown property and the CPB have never fallen under the responsibility of the government or Parliament. The fact is well known in business and public circles. Such a postscript by the CPB definitely distorts the facts. It simply wants to challenge Forbes by saying that crown property (including its value added) is controlled by the government and is a state property.  It therefore should not be included in any calculation of the “wealth” of the Thai monarch as Forbes did. To put it simply, it intends to say that “crown property” is subject to the authority of the government, not the monarchy.

Legal provisions
Let us start from the Crown Property Act, B.E. 2479 (1936) which prescribes that;

Section 4 bis. 3  There shall be the “Crown Property Bureau” to perform duties under Section 5 paragraph two.

The Crown Property Bureau shall be juristic person.

Section 4 ter. 4  There shall be a “Crown Property Board” consisting of the Minister of Finance as ex officio Chairperson and not less than four members as appointed by the King whereby one among them shall also be appointed by the King to be the Director-General of the Crown Property Bureau.

The Crown Property Board shall have the powers and duties to supervise generally the Crown Property Bureau’s affairs.

The Director-General of the Crown Property Bureau shall have the powers and duties as entrusted by the Crown Property Board and shall have the power to sign for and on behalf of the Crown Property Bureau.

Section 5.5  Public property and all crown properties for household use shall be under the care of the Bureau of the Royal Household.  Crown property other than as mentioned in the preceding paragraph shall be under the care and management of the Crown Property Bureau.

First of all, let us take a look at the “powers and duties” of the “Crown Property Board” as prescribed loosely in Section 4 ter. 4 as “to supervise generally” the “Crown Property Bureau’s affairs”. However, it says nothing about the power to control or make any decision regarding either crown property or its value added. In reality, at best, such a committee can simply be an “advisory board” to the CPB whereas the real powers regarding crown property rest with the Director-General appointed by the King. In addition, in the committee, there exists only “one representative from the government” which is the Minister of Finance as the Chairperson. The remaining four members are appointed by the King (including the CPB Director-General). 

As shall be further explained, in the past few decades, in any deliberation regarding the status of CPB, the role of the “Crown Property Board” has barely been mentioned. The existence of such a committee therefore has no bearing whatsoever when one wants to find out if either the crown property or CPB is subject to the oversight and responsibility of the government or not. In any result of such review so far, it can be construed that neither the crown property nor the CPB falls under the charge, oversight or responsibility of the government. It is simply subject to the sole discretion of the King. In other words, the existence of such a committee chaired by Minister of Finance puts neither crown property nor the CPB under the oversight or responsibility of the government. 
 

That the postscript of the 2010 CPB Annual Report mentions the existence of the Crown Property Board chaired by Minister of Finance ex officio and claims it proves that “the government…is in charge” is simply an intentional distortion of facts.

On the contrary, the law speaks succinctly about the exclusive rights to crown property and any interest, which have nothing to do with the government.

Section 6  All income derived from crown property under section 5 paragraph two shall be paid, with His Majesty’s approval, exclusively for binding obligations, salaries, gratuities, pensions, rewards, current expenses, incidental expenses, investments and royal charities.

Income left after deducting the expenditures made under the preceding paragraph may be paid at the King’s pleasure whatever the case,…

In other words, any income derived from crown property (after deducting operational “costs”) shall be expended in any way “at the King’s pleasure”. In this regard, such property could simply be interpreted as the “King’s private property”. Such a right is given exclusively and without reservation (in fact, even the expense of any operational “cost” has to be “approved solely by the King”).  

This shows how the dividing line between “crown property” and “the King’s private property” was blurred with the advent of the law in 1948 by the royalist party led by the Democrat Party which ascended to power through the coup to topple the People’s Party government in 1937. In the original Crown Property Act promulgated in 1936, the government had the exclusive power over all crown property, and even the King’s private property was put under the oversight of the Bureau of the Royal Household which was controlled by the government.

Interpretation of the Office of the Council of State (OCS)

These provisions have been causing problems since by common sense, “crown property” should be treated as state property and according to modern democratic and modern state concepts, it should be subject to the exclusive oversight of the government (and parliament) elected by the people. They should have the sole power to decide how to make use of the property. But the incumbent law simply bestows exclusive rights on this matter to the King.

Therefore, over the past three decades, issues have arisen and interpretations have been requested since 1975 to determine if the CPB is a state agency or a state enterprise under the oversight and responsibility of the government or not. Five requests for interpretation have been made to the Office of the Council of State (OCS). According to the OCS' first four interpretations, the CPB is neither a state agency nor a state enterprise and does not fall under the oversight or supervision of the government. However in its last interpretation, the OCS changed from its previous stand and admitted that the CPB is a “state agency”, but it also stated that the CPB is not subject to the oversight of either the cabinet or any Ministry. 

I will not go into detail of each interpretation made by OCS, since it will take too long. If you are interested, you can read my article “What is the Crown Property Bureau?” published in “Fah Deaw Kan”, Vol. 4, Issue 1 (January – March 2006). The main issues covered in the article include the following;

First interpretation (1975) A problem arose as to whether the Crown Property Bureau (CPB) should be treated as a “state enterprise”.  The OCS opined that the CPB is not a state enterprise, but “has been established without using any government expenditure and has the duty to oversee and manage income derived from crown property”, and it can “operate independently...and is not subject to the control or oversight of the government”. Its income after expenses “shall be returned to the King and can be expended at his pleasure”. 

The Crown Property Bureau.... cannot be treated as a state enterprise since the term “state” and “King” are different. And no provisions in the Crown Property Act, B.E. 2479 (1936) (as amended in 1948) prescribe for the state to get involved and to oversee and manage any benefits from the property since the operation of CPB has not been made possible by y government expenditure or any public subsidy.

Second interpretation (1988) A problem arose as to whether the Counter Corruption Commission (CCC) (or Office of the National Anti-Corruption Commission, as at present) is authorized to investigate any corruption case against CPB. This requires interpretation as to whether the CPB is a “state agency, a government agency, or a state enterprise” or not. (If so, then the CCC was authorized to investigate them). 

The details of this interpretation are quite interesting (please read my article in Fah Deaw Kan). The opinions were divided and representatives from the CPB were asked to give explanations at the meetings. Eventually, it was concluded by majority vote that the crown property law intends to “exclude any government agencies from the management of crown property ... and no provisions prescribe that the CPB shall be treated as a government agency.” And the “appointment of members [of the Crown Property Board] is an exclusive right of the King and the government needs not make any recommendation. That the Prime Minister is obliged to countersign the King’s order is simply a procedure to make it comply with the constitutional procedural requirements. It does not imply that the Crown Property Bureau is a state agency or a state enterprise”. In essence, the CCC was barred from investigating any corruption complaint concerning the CPB (has there been any agency under the oversight of the government (as claimed in the CPB 2010 Annual Report) that is exempt from such a corruption investigation?)

Third interpretation (1993) A problem arose as to whether or not the Crown Property Bureau (CPB) should be treated as a “private” entity as per the Act on Private Participation in State Undertakings B.E. 2535 (1992).  The law defines “private entity” as “any individual not subject to the control or oversight of the government”. The OCS concluded that the CPB is a “private” entity as per this definition. In its order, OCS stated:

Most of the members of the Crown Property Board (with the exception of the Chair which belongs to the Minister of Finance ex officio) are personally appointed by the King. ... The CPB’s operations therefore do not fall under the control or oversight of the government. Thus, it can be treated neither as a government agency as per the State Administration Act B.E. 2534 (1991) nor a state enterprise as per the Budget Procedure Act B.E. 2502 (1959) (Section 4). And it is not an agency under the government since it is not subject to the control or oversight of the government and is not obliged to act in accordance with the purposes set out by the government.  The business operations of the Crown Property Bureau aim to manage the benefits derived from the assets set aside for the exclusive use of the monarchy. And insofar as the holding of shares in any state enterprise by the Crown Property Bureau is done as a private investor, the shares cannot be treated as state property or the property of any state enterprise. Based on these reasons, it is deemed fit to treat the Crown Property Bureau as a “private” entity as per the Act on Private Participation in State Undertakings B.E. 2535 (1992). 

Fourth interpretation (2001) A request was made by the Bank of Thailand for the OCS to determine whether or not the “status of the Crown Property Bureau is equivalent to that of a ministry or a government department, and whether the government should be obliged to take responsibility for any debt or liability incurred by the Crown Property Bureau”. In response, the OCS determined that the CPB is “not a state agency under the control and oversight of the government” and is therefore not equivalent to any ministry or government department, and “therefore the government is not obliged to be held accountable for any debt or liability incurred by the Crown Property Bureau”.   

Fifth interpretation (2001) The Office of the Ombudsman, a new independent organization set up by virtue of the 1997 Constitution, received a complaint from a tenant in property owned by the CPB regarding the operation of the CPB. The problem was whether the Office of the Ombudsman, which has the power to investigate the performance of officials in any government agency, state agency, state enterprise or local administration agency, has the power to investigate any case related to the CPB. It is not clear if the CPB should be treated as a state agency, a government agency or a state enterprise and the OCS was asked to rule on this inquiry. For the first time in decades OCS gave the interpretation that the CPB “is neither a government agency…nor a state enterprise”, but it “should be treated as a state agency since it is subject to the oversight of the King.” Different from previous interpretations, the OCS reversed its position and stated that the CPB is a state apparatus (see the first interpretation already mentioned). Therefore, the Office of the Ombudsman was authorized to carry out the investigation. 

Previously, the OCS refused to acknowledge any state-related status of the CPB (as a state enterprise, state agency or government agency). But this time, OCS changed its position and ruled that the CPB is a “state agency”. But this interpretation simply confirms that the postscript in the 2010 CPB Annual Report is misinformation. It claims that crown property is “state property” and is under the “supervision” of the government and is therefore not the King’s private property (and as a result, Forbes cannot include it as part of the Thai King’s “wealth”). The reason that the OCS determined the status of the CPB as a “state agency” is because the CPB falls under the supervision of the King and since the King is part of the state, therefore the CPB is a “state agency” (as quoted from Mr. Meechai Ruchuphan, Chairperson of the OCS Subcommittee to deliberate the issue “the Crown Property Bureau falls under the supervision of the King and is entirely at his pleasure and is therefore considered being under the oversight of the state”.) In other words, the postscript in the 2010 CPB Annual Report is an attempt to distort the meanings of “responsibility” and “oversight” of the government. Most importantly, though the OCS ruled this time that CPB is a “state agency”, it did also insist, as in previous interpretations, that that CPB does not fall under “the oversight of the cabinet, or any ministry or government department”.

It should be further pointed out that the last ruling of the OCS treats the CPB as a “state agency”, which implies that the Office of the Ombudsman has the power to investigate any case related to CPB. But such an interpretation bears very little practical impact since it is very unlikely that any outside organization or public organization will be able to hold the CPB accountable. On the contrary, it simply confirms that crown property and the CPB do not at all belong to or fall under the oversight of the government through the Minister of Finance.  (If so, it should be subject to investigation just like other agencies under the oversight of the government.) In its ruling regarding whether or not the Office of the Ombudsman has the power to investigate any operation by the CPB, the OCS also reiterated:

The inquiry made by the Office of the Ombudsman regarding the operations of the Crown Property Bureau has to be conducted in light of the special status of the CPB, particularly with respect to the fact that its operations are carried out at the King’s pleasure and at the King’s approval. Any inquiry shall be made in such a manner that may not infringe on the King’s power. 

After the ruling was made, the Office of the Ombudsman issued a letter to the CPB asking it to “provide an explanation” regarding the complaint. In reply, CPB wrote a letter to affirm that it has been conducting its business in compliance with regulations. After receiving this reply from the CPB, the Office of the Ombudsman “decided to halt any investigation as per the complaint”. In sum, the “inquiry” made by the Office of the Ombudsman into the operations of CPB resulted in two letters of question and answer from each party, from the “inquirer” and the “inquired” (see my aforementioned article in Fah Deaw Kan).

Postscript: An embarrassing fact?
That crown property and the Crown Property Bureau fall under the exclusive oversight of the King (and are accountable to no one else) is a fact known for a long time in all sectors, business or government, and even in public. It is therefore incredible that the 2010 CPB Annual Report tries to distort the fact by saying that CPB is under the “resonsibility” of the government.

By common sense, “crown property” should be state property and this is normal practice in a democracy, not an absolute monarchy. It should imply then that the property shall be subject to the control and oversight of the government elected by the people and should be held fully accountable to public, just like any public property.

But the current status of CPB has some historic roots (as explained above). Over 60 years ago, after ascending to power by overthrowing the People’s Party government led by Mr. Pridi Banomyong, the royalist government led by the Democrat Party made amendments to the Crown Property Act basically reverting its content to the era of absolute monarchy. The “use” any income derived from the property is allowed to be made “at the King’s pleasure in any case”. As a result, the status of “crown property”, instead of being state property, has literally been reverted to be the “King’s private property”. 

Actually, in light of the Crown Property Act amended in 1948 by the royalist government led by the Democrat and still applicable nowadays, there is simply no difference between the “King’s private property” and the “crown property

The King’s private property shall be managed and made use of at the King’s pleasure.

Income left after deducting the expenditures paid under the preceding paragraph may be paid at the King’s pleasure whatever the case …

There is essentially no significant difference between the two terms. What is added to “crown property” is merely related to “regular expenditures” (“for binding obligations, salaries, gratuities, pensions, rewards, current expenses, incidental expenses, investments and royal charities”). Also, it requires the establishment of the “Crown Property Board” and the “Crown Property Bureau”, the appointment of which is subject solely to the discretion or the “approval” of the King. As described by Mr. Meechai Ruchuphan, “the Crown Property Bureau falls under the supervision of the King and is entirely at his pleasure”.

 

Translated by Pipob Udomittipong

Source: 
<p>http://www.prachatai3.info/journal/2011/06/35539</p>

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