NCPO attacks local budget graft

The suspension of local elections by the National Council for Peace and Order (NCPO) may have imperiled grassroots democracy, but the military government insists the move is necessary to clean up local administration organisations (LAOs).

The May 22 coup put a general election on hold for at least a year, and now the same is happening to local elections, after four NCPO announcements made early last month.

The announcements suspended the elections of Bangkok city councillors, members of provincial administration organisations and tambon administration organisation members nationwide.

The announcements stirred debate over the possible repercussions for a fragile democracy.

However, the NCPO maintains that martial law is not conducive to the organising of polls.

The NCPO says a more pressing issue is flushing out malpractice in the disbursement of LAOs' budgets.

The junta says some of the budgets have been exploited and misused by members of parliament, who spend them on canvassing costs.

Apart from putting elections on the back burner, the announcements have also led to the creation of a panel to scrutinise the budget allocated to grassroots organisations.

LAOs is a broad term covering provincial administration organisations, municipalities, tambon administration organisations and specially administered local administration organisations (Bangkok and Pattaya).

The allocation of a state budget to LAOs is mandatory under the constitution and was first introduced in the 1997 charter. This charter made decentralisation of power a priority.

The issue of money is paramount to understanding the NCPO’s motive for suspending local elections.

More precisely, the balance sheet of the LAOs has to be put under the microscope to look for potential loopholes which politicians can exploit to finance their rise to higher office.

The LAOs’ revenue structure is broken into income which the organisations generate and collect themselves, income which the central government collects for the organisations, a budget which the state allocates to the organisations, and a budget called the state-allocated special allocation grant (SAG).

The income made by most LAOs covers land, household and billboard taxes, while the income which the government collects for the LAOs takes the form of value-added tax and excise tax.

In the previous fiscal year, the 7,853 LAOs nationwide made 572.67 billion baht of combined revenue, of which the SAG makes up the largest slice at 236 billion baht, or 41%, up 10% from the 2012 fiscal year.

It is also this portion of the fund which is most prone to exploitation by politicians and offers myriad opportunities for abuse.

Unlike other portions of the revenue which are strictly reserved for the organisations, the SAG goes into projects connected to the well-being of locals.

The projects can serve as instant publicity machines for politicians in their attempts to win the hearts and minds of the people, according to Prapaipit Muthitacharoen, a journalism specialist at Thammasat University.

The SAG is injected into local projects with national politicians’ names stamped on them.

The grant is earmarked for general and localised purposes, such as the construction of water pump stations, procurement of school stationary and road maintenance.

The costs for the projects can be anywhere from three million to 54 billion baht.

The amount of money channelled into local projects underscores the NCPO’s concerns about possible, unwarranted use of funds.

The concerns were addressed in Order No.88, which appointed a panel to scrutinise the SAG money provided to the LAOs. The NCPO says it wants the fund to be “distributed fully and fairly”.

Meanwhile, Order No.104 allows for LAO spending on projects intended to alleviate hardship to be placed under close scrutiny by provincial governors and district chiefs.

Spending irregularities have grown as procurement or development projects require the signatures of local politicians who collude with state officials to calculate the amount of “loose change” that can be shared among them.

The trail of projects leads all the way back to parliament, where MPs in budget scrutiny panels determine the spending for local projects under the charge of the LAOs.

The expenditure is then put to a House debate before it is approved.

The next step is finding contractors for the projects. Bids for the projects are often submitted by firms which may be close to politicians with professional, and sometimes personal, connections to state officials.

They calculate the amount of “loose change” and add it to the median price of the project, bloating the cost by sometimes as much as 50%, said Pisit Leelawatchiropat, the acting auditor-general.

Mr Pisit said the country needs far fewer LAOs, as some are inefficient. The fact that there are more than 7,000 of them makes budget scrutiny all the more difficult.

“It’s fine if we can catch corrupt politicians. They are lucky if we can’t,” he said.

He noted that Bangkok and Pattaya have better systems of accountability in place than many other areas, as powers to approve projects are evenly distributed. In Bangkok, for example, small projects are overseen by each district, whereas larger ones fall under the charge of the departmental agencies.

Mr Pisit said some LAOs spend for the sake of spending. They build observation decks that no one visits, museums that lie empty, and road sweepers for villages without footpaths.

Many LAOs are viewed as easy vehicles for graft as they are thought to permit, or even collude with, politicians in abusing their budgets.

In the next fiscal year, starting in October, the overall budget for LAOs is expected to top 646 billion baht — 30% of the national budget.

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