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AOT scraps King Power contracts

BackMar 23, 2007

Outlets allowed to carry on for now

Airports of Thailand (AoT) last night terminated its contracts with King Power International Group, the firm given sole authority to run duty free shops and commercial areas in Suvarnabhumi airport. The ruling came after six of the 15 board members involved in the process of awarding the contracts to the company voluntarily left the meeting in order to give the others freedom to make the decision. A source on the AoT board said it only took about half an hour to reach the decision after the six left the meeting room.

Saprang: The meeting unanimously agreed

''The meeting unanimously agreed on the termination of the duty free contract and commercial contract,'' board chairman Gen Saprang Kalayanamitr said after the talks. The decision was made on the grounds that each of the two deals were worth more than one billion baht and thus they should have been approved under the Public-Private Joint Venture Act, he added.

King Power was authorised by AoT to run the two projects for 10 years, to 2015. Its commercial contracts were leased to food outlets and other retailers.

The board reached the decision after the Council of State ruled on March 19 that King Power intended to keep the investment cost of each contract to below one billion baht, so the deals did not have to be scrutinised by state agencies under the act. The act requires all projects worth upwards of one billion baht to be approved by state agencies and the ministries involved, and the cabinet must be informed to fend off corruption and collusion.

The investment for the duty free shop was set at 813.8 million baht, while another one on commercial use, which enabled the firm to lease space to shopkeepers, was 846.6 million baht.

The Council of State questioned why the firm included depreciation costs in its calculation of the investments.

The state's legal advisory body forwarded its ruling to AoT on Monday, for the airport agency to use as grounds for a decision. AoT passed on the ruling to King Power on the same day.

King Power will not immediately cease its operations at the new airport, said AoT board spokesman Chermsak Pinthong. The AoT board agreed yesterday to send its decision to the Office of the Attorney-General (OAG) to consider further action, including informing AoT of how to deal with King Power. The decision will also be sent to the Transport Ministry, which oversees AoT.

''We will not do anything yet and will let King Power carry on its business for the time being,'' said Mr Chermsak. The board would wait for the OAG's guideline.

King Power could not be reached for comment last night.

Gen Saprang said AoT would take action against officials involved in the approval of the deals, and did not rule out the possibility of forwarding the case for investigation by the Assets Scrutiny Committee.

A source on the board said it had assigned former attorney-general Khampee Kaewcharoen, a board member, to thoroughly study the advice of the Council of State since Monday and present it to yesterday's meeting.

With six board members involved in the process leading to the contracts for King Power, there was concern that the meeting would be lenient. But that did not happen, after the six volunteered to leave the meeting, the source said.

The six included acting president of AoT Kulya Pakakrong and Suvarnabhumi airport director Serirat Prasutanond.

Also yesterday, the board rejected for the second time an AoT proposal to approve payment worth 507 million baht for 58 projects at the new airport.

The projects were undertaken under a special procurement process on the grounds that they were urgent, as Suvarnabhumi was close to opening.

But Mr Chermsak said the board could not approve any project under the special procurement process which had already been completed


Source: Bangkok Post by Amornrat Mahitthirook
Friday March 23, 2007