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Suvarnabhumi » King Power denies its contracts abused law

Sunday, July 20th, 2008

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Chulchit BunyaketuKing Power International Group denies its contracts to operate duty-free shops and commercial areas at Suvarnabhumi airport bypassed a law designed to specifically govern public-private joint investments. The firm would pursue justice from the government for cancelling its contracts, said deputy chairman Chulchit Bunyaketu. However, it had no plans to file for emergency protection from the Administrative Court.

Vichai Raksriaksorn, King Power chief executive officer, said he will explain to the media tomorrow how the contracts were awarded to the company.

Mr Vichai has insisted he never discussed court protection in public, according to Mr Chulchit. Mr Chulchit said the company is awaiting documents from the Airport of Thailand to confirm its two contracts have been scrapped.

The AOT board on Thursday decided to axe King Power’s contracts on the grounds the company intentionally avoided scrutiny by keeping its investment amounts below one billion baht in each contract.

The 10-year investment contract between King Power and AOT, for running duty-free shops at Suvarnabhumi, was worth 813.8 million baht. The other commercial space contract was worth 846.6 million baht. Both were valid until 2015.

The AOT board agreed to the Council of State’s ruling on March 16. The state’s legal arm questioned why King Power included depreciation of its facilities in its two investment projects. The AOT board said, excluding depreciation, investment in the two projects would have been more than one billion baht each.

Under the Public-Private Joint Venture Act, all investments worth at least one billion baht must be approved by a panel representing all agencies involved.

Mr Chulchit said the company had followed correct bidding procedures.

Before signing the contracts, the company had asked the previous AOT board to find out whether the contracts would have to be approved under the act, he said.

He said the previous AOT board decided the contracts would not be subject to scrutiny under the act, citing the findings of the Chulalongkorn University Intellectual Property Institute.

He said the company had already paid four billion baht to AOT. The money was offered as a share of the company’s projected income paid in advance under the contracts.

Mr Chulchit said he believed the contracts reached with the previous AOT board were legitimate and lawful.

When the new board was appointed by the military government, it launched an investigation into the validity of the contracts.

As a damaged party, the company must proceed to demand justice from the military  government, Mr Chulchit said.

Despite the decision to terminate the contracts, the AOT board will allow King Power to run its business at the airport until it receives guidelines from the Office of the Attorney-General (OAG).

A source said the board will have to seek legal advice from the OAG tomorrow before officially informing Transport Minister Theera Haocharoen of the termination of the contracts.

Mr Chulchit said the company has agreed to comply with the policies of the military government and the new AOT board.

The company has now removed parts of its duty-free shop which obstructed the way to an immigration checkpoint at Suvarnabhumi airport, he said.

Mr Chulchit said termination of the contracts has had a far-reaching impact. The company’s business alliances and its commercial operators have begun to lose confidence in it.

He said he also had to talk to some product suppliers, who suspected there might be foul play involved.

Currently more than 6,000 employees of King Power are now expressing concern about their future.

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