Thailand: Bring Your Spreadsheet And Bulletproof Vest

Delivering bad news to indebted Thai companies gets risky

Thailand, to the outside world, may seem a tourist haven punctuated with smiles. But there's another aspect of the country familiar to those who do business there: the death threat. Foreigners don't usually get exposed to this dicey practice. But that's changing. On Mar. 10, leading Australian insolvency specialist Michael Wansley, 58, was assassinated in broad daylight. Police have arrested a suspect. Authorities say Wansley, a Deloitte Touche Tohmatsu employee, was peering too closely at the books of a sugar mill whose executives were allegedly diverting funds while they owed $450 million in debt.

The murder of the highly regarded auditor has shocked the foreign business community. What's disturbing is the sentiment that underlies the violence. As Thailand struggles with the massive bankruptcy and huge corporate debts caused by years of reckless business practices, the country has developed an acute case of "blame the messenger." That will undoubtedly make it more difficult for the country to get the expertise it needs as it recovers from economic crisis. "People will say, `I'm not being paid enough to make the risk worth it,"' says Elizabeth M. Wood, a Hong Kong-based managing partner at headhunters LAI International.

Global institutions are also coming under attack. Goldman, Sachs & Co. faced the wrath of a Thai parliamentary committee after issuing a report critical of the country's largest bank, Bangkok Bank, where bad loans make up 48% of its portfolio. Legislators voted Mar. 12 to bar Goldman from underwriting an upcoming $2 billion government bond offer. The author of the Goldman report had quoted Finance Minister Tarrin Nimmanhaeminda as saying Bangkok Bank was the biggest danger to Thailand's financial system. Tarrin denied he ever made such a statement, and Goldman apologized--but not before the controversy flared.

SELF-INTEREST? The sentiment is especially ugly in Parliament, where legislators debating bankruptcy laws have lashed out at foreigners. Parliament has had to pass new laws as a condition of getting $17 billion International Monetary Fund aid. But the process has been slow, and resentment has built. So far, only 5 of 11 bills have been passed. Passage has been held up by wrangling among members of Parliament who--heavily in debt themselves--would be affected by any laws they passed.

Blaming foreigners is a theme that now runs deep through corporate Thailand. Prachai Leophairatana, CEO of Thai Petrochemical Industry, one of Thailand's biggest companies, blamed the IMF rather than corporate practices for his $3.4 billion in debt. He told BUSINESS WEEK in January that the Thais were the victims of a "dirty agenda" by the IMF: "There was nothing wrong with our projections until they were sabotaged by the IMF. It was not our mistake."

The government is quick to reassure foreigners that the rhetoric is not official policy, and that safety measures are being taken. Says Thai government spokesman Akapol Sorasuchart: "I want to assure all expatriate businesspeople that those who are facing difficulties, or are suspected to be under threat, that we will give them full security." Corporations are taking their own precautions, however. Deloitte Touche employees met with those of Arthur Andersen Thailand, KPMG Peat Marwick Suthee, and PricewaterhouseCoopers on Mar. 16 to discuss what to do.

If Wansley, who was working on several debt restructuring projects, worried about his safety, he kept it quiet. In a talk with BUSINESS WEEK two months before his death, he expressed frustration at getting bankrupt Thais to face up to their debts. "Once you become grossly insolvent you're not supposed to be in a position of great strength, but here they think they are," he said. Strong enough, perhaps, to strike back.

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