Thai Prime Minister Yingluck Shinawatra meets supporters at the Defence Permanent Secretary Office in Bangkok on May 7, 2014.
Thailand’s ousted leader Yingluck Shinawatra may be banned from politics for five years after the nation’s anti-graft agency said the Senate should impeach her for failing to stem losses from a government subsidy program.
Yingluck, 46, was forced to step down May 7 after the Constitutional Court found her guilty of abusing her power, and the National Anti-Corruption Commission ruled yesterday she was derelict in her role overseeing a rice-subsidy program that cost as much as $21 billion according to government estimates.
“Yingluck failed to prevent or stop fraud in the rice-buying program even after the NACC and other government agencies sent letters to warn her,” Commissioner Vicha Mahakun said in a televised media briefing in Bangkok.
The rulings may bring anti-government protesters a step closer to their goal of dismantling the political network of Yingluck’s brother Thaksin Shinawatra, who was ousted in a 2006 coup and whose allies have won the past five elections. Demonstrators plan to rally in Bangkok’s streets again today to pressure interim premier Niwattumrong Boonsongpaisan’s caretaker government to resign before elections that may be held as soon as July 20.
The NACC said there was enough evidence for the Senate to start impeachment proceedings against Yingluck, without explaining how she could be impeached from an office she no longer holds. Yingluck would be banned from politics for five years if three-fifths of the Senate vote to impeach her.
Yingluck endured more than six months of protests led by former opposition politician Suthep Thaugsuban, whose supporters accuse her family of crony capitalism, abuse of power and using populist policies to secure the support of rural voters. The deadlock has caused consumer confidence to slump to an almost 13-year low and credit ratings companies have warned that prolonged unrest threatens to damage an already fragile economy.
Thailand’s benchmark SET Index (SET) of stocks and the baht fell to their lowest levels in more than a month yesterday. The SET dropped 1.7 percent to 1,379.02. The baht touched 32.547 per dollar today, the weakest level since March 27.
The stalemate remains the biggest risk to Thailand’s economy, which expanded 2.9 percent last year, central bank Governor Prasarn Trairatvorakul said yesterday. The University of the Thai Chamber of Commerce said yesterday the economy may contract in the first half, after releasing data that showed consumer confidence slipped for a 13th straight month in April.
Moody’s Investors Service and Standard & Poor’s said yesterday that Yingluck’s removal was “credit negative” because it may prolong the political crisis and worsen violence that has already led to 25 deaths since late November.
“I think there is a good chance we won’t see any growth rebound towards the year-end,” DBS Bank Ltd. economist Gundy Cahyadi said yesterday by e-mail. “Pressure definitely will be apparent in markets, given the possibility of a credit rating downgrade. And should that happen, one will also start to get worried about potential implication for long-term investors.”
Yingluck’s government will have spent 880 billion baht ($27.1 billion) buying rice from farmers from October 2011 to February 2014, according to the Bank for Agriculture and Agricultural Cooperatives, including about 100 billion baht that hasn’t yet been paid. The government has recouped about 200 billion baht through stockpile sales, according to Ministry of Commerce data.
The country accumulated rice reserves of 12.8 million metric tons in 2013, or about a third of the global export market. The country’s reserves more than doubled from 5.6 million tons in 2011, when the intervention began under Yingluck’s Pheu Thai Party administration, to 14.7 million tons this year, U.S. Department of Agriculture data show.
The program, which paid farmers above-market rates for their crop to lift rural incomes, was one of Pheu Thai’s main election policies and Yingluck led a committee that oversaw the initiative. Agriculture accounts for 8.3 percent of gross domestic product in Southeast’s Asia’s largest economy after Indonesia, according to the central bank.
This week’s rulings against Yingluck will further anger her mostly rural-based supporters, known as the Red Shirts, who vowed this week to protest her ouster. The group’s leader said yesterday that the Red Shirts will avoid clashes that may give the army a justification to stage a coup.
“If they obstruct the election, so be it. No election,” Jatuporn Prompan, who leads the group whose official name is the United Front for Democracy Against Dictatorship, said yesterday in an interview with the Voice TV network.
“If they topple the government and there is a political vacuum, so be it. No government. Let’s stay like this and see who can hold on longer,” Jatuporn said, vowing to keep his supporters on the streets until an election is held.
This week’s verdict was the third by the Constitutional Court against backers of Thaksin. In 2008, the court found his allies guilty of vote buying, disbanding their party and banning another 30 executives, including then-Prime Minister Somchai Wongsawat, Thaksin’s brother-in-law. That ruling came just weeks after the court ordered Thaksin ally Samak Sundaravej to step down as prime minister for hosting a cooking show.
Yingluck said in a televised address after the May 7 ruling that she had not breached the law and was unsure if she would continue in politics. The ruling was a coordinated attempt to “destroy” the ruling Pheu Thai Party, deputy party leader Phokin Palakul said the same day.
While Yingluck’s dismissal won’t affect Thailand’s sovereign rating, “it raises the risk of violent confrontation that could ultimately involve the military, and will make any sort of rapprochement between the opposing sides of Thailand’s political divide more difficult,” S&P said in a report.
S&P said the court’s actions will reinforce the belief among Yingluck’s supporters that “the judiciary is biased toward the establishment -- made up of the urban elite, the military, and royalists.”
Thailand is rated Baa1 by Moody’s Investors Service, the third-lowest level of investment grade, and an equivalent BBB+ by Standard & Poor’s. India is ranked two steps lower at Baa3 and BBB-.
The Red Shirts have announced plans to rally tomorrow, while leaders across the spectrum and the army chief have warned a politically-divided Thailand is at risk of civil war.
The government has had limited powers since December, when Yingluck dissolved parliament and called elections in a bid to end the protests. A February poll was invalidated by a court on the grounds the vote did not take place across the country on the same day, something that wasn’t possible as protesters blocked voting in some areas.
The government and the Election Commission have agreed to the new poll on July 20, though a decree has yet to be submitted for royal approval. The Democrat Party has threatened to boycott that vote, as it did in February. Thaksin-allied parties have won the past five ballots, while the Democrats haven’t won a poll in more than two decades.
“The reality of the situation is either side cannot have an outright victory,” Democrat leader Abhisit Vejjajiva said yesterday in a Bloomberg Television interview from Bangkok. “It’s time to build on common ground, which are reforms and elections. All sides have to make sacrifices.”