Andrew MacGregor Marshall
King Vajiralongkorn is making another brief visit to Thailand on Thursday to change the clothes of the Emerald Buddha and attend the cremation rites for Vichai Raksriaksorn, the duty free billionaire who was killed in a helicopter crash after a Leicester City football game last year.
It's extraordinary to see Vichai being honoured with royal attendance at his funeral, because he was an unremarkable businessman who became exceptionally wealthy due to corruption and cronyism. The billions he earned were basically stolen from Thai taxpayers.
Vichai donated very heavily to Vajiralongkorn — the wealthiest monarch in the world — and this is one reason for his royal treatment. His vast donations also prompted the previous monarch, King Bhumibol, to give him a special surname, Srivaddhanaprabha, in 2012.
Vichai was not born into significant wealth — like most of Thailand’s business elite, he was ethnic Chinese, but he was not from one of the older Chinese business clans in Thailand that built up power and influence over several generations.
He founded duty free retailer King Power in 1989 when he was just 31. The name was chosen to honour the Thai monarchy — it’s common for aspiring Thai tycoons to make ostentatious displays of reverence and donations of cash to the monarchy, to help ingratiate themselves into the royalist elite.
The first King Power store was called TAT Duty Free in Mahatun Plaza in central Bangkok. It was a rather tatty souvenir shop selling Thai handicrafts to tourists. Back in those days retail in Thailand was much less developed and the Mahatun Plaza store was the place tourists were usually recommended to go to get souvenirs.
Later Vichai also managed to get a concession to open a small retail outlet at Don Muang, which back then was Bangkok’s international airport. It was the first time a private company had won a concession to sell duty free goods in Thailand. Until then, duty free sales had been handled by the lumbering and inefficient national airline, Thai Airways.
Business success in Thailand tends to be heavily dependent on political connections. The usual pattern is that ethnic Chinese businessmen form symbiotic relationships with powerful patrons in politics, the military and the police. The patrons help the businessman secure lucrative deals and concessions, cut through bureaucracy, and when necessary flout laws and regulations. In return, the businessman funnels a large share of his profits back to the patrons.
Duty free retail is an industry in which success depends to an unusual degree upon a company’s political connections and patrons. Duty free concessions are awarded by the state, often on monopoly terms. The secret to getting a concession is knowing the right people, and promising them a cut of the wealth the concession will generate.
Because there is little or no industry competition, and Thailand is an extremely popular tourist destination, with Bangkok a major regional and global travel hub, being awarded a duty free concession is basically a licence to print money.
Vichai was very astute, and very lucky, with his choice of main political ally — Newin Chidchob, one of the most notorious crooks in Thai politics, whose family dominates the province of Buri Ram near the Cambodian border.
After Thaksin Shinawatra became prime minister in 2001 following a landslide election victory, Newin quickly became one of his key henchmen.
One of Thaksin’s main infrastructure projects was the construction of the new international airport at Suvarnabhumi, which opened in 2006. The whole project was riddled with immense corruption, even by Thai standards. Newin was able to get lucrative contracts awarded to many of his cronies, due to his close links with transport minister Suriya Jungrungreangkit.
King Power was awarded exclusive monopoly rights to duty-free sales and control of the whole retail area at Suvarnabhumi, without any competitive bidding process.
As academics Pasuk Pongpaichit and Chris Baker wrote in an article about corruption at the airport: "An airport is like a moderate-sized city centre. Over 100,000 people pass through Suvarnabhumi Airport every day. In effect, one company was put in charge of the commerce of this city."
King Power occupied over twice the amount of space it was supposed to have been allocated at Suvarnabhumi, and also constructed a corporate HQ building that allowed people and goods to get into the terminal without customs or immigrations checks. It was a channel for smuggling contraband, and the authorities never cracked down on it.
King Power soon got a monopoly for duty free sales at Don Muang too.
With monopolies for duty free at both of Bangkok's international airports — plus a smuggling channel via the King Power HQ at Suvarnabhumi — Vichai began to get rich.
He also started actively ingratiating himself with the palace and the royalist elite, who by this stage were increasingly hostile to Thaksin. Vichai copied the concept of the yellow rubber wristbands that Lance Armstrong had used for his Livestrong charity, producing millions of them printed with the slogan “We Love HM the King” for the celebrations of 60 years of King Bhumibol’s reign in 2006. The wristbands were hugely popular and raised a large amount of money which Vichai ostentatiously donated to royal charities.
Vichai also suddenly developed an interest in polo — he founded the Thailand Polo Association and sponsored expensive tournaments, using this as a vehicle to allow him to socialise with the wealthy elite in Thailand and around the world, including British royals, which hugely impressed the Thai upper class.
So Vichai was benefiting from the corruption of the Thaksin regime but also ingratiating himself with Thaksin’s royalist enemies and the so-called “Yellow Shirt” anti-Thaksin protest movement.
In 2007 he was ranked by Forbes as Thailand’s 21st wealthiest businessperson, worth about $200 million.
However, his duty free monopoly seemed to be in serious danger after Thaksin was toppled in a military coup in September 2006. The new military-backed government despised Thaksin and Newin. A high profile investigation was launched into corruption at Suvarnabhumi. The Airports Authority of Thailand said it was voiding all contracts with King Power, and kicking the company out of the airport. Meanwhile, Thaksin had fled the country, and Newin had been given a five-year ban from politics. So things were not looking good for Vichai.
However, King Power managed to delay its eviction by launching various legal manoeuvres, and then when the military regime allowed elections in late 2007, Thaksin's People's Power Party won the most votes and quickly put together a coalition government. Newin was not able to formally join the government because he had been banned from politics, but he quite openly had a large bloc of MPs in his pocket — known as the “Friends of Newin” faction — so he was able to exert massive influence.
King Power was not kicked out of the airport. Instead, the Airports Authority of Thailand board was replaced.
By late 2008, government was desperately embattled, facing mass protests by the royalist “Yellow Shirt” movement and relentless sabotage by the royalist elite.
If the government fell, Vichai could have been in trouble. But his political patron Newin Chidchob was playing both sides in the political conflict, hinting to the military and the royalists that he might be willing to betray Thaksin.
In late 2008, Yellow Shirt protesters stormed Suvarnabhumi and Don Muang airports, blockading them for more than a week and preventing international flights from taking off or landing. The army tacitly allowed the airport occupation, refusing to clear the protesters. The airport occupation did massive damage to Thailand’s economy.
The protesters caused chaos at the airport but curiously, the King Power outlets were untouched. Company staff were allowed to enter the airport to secure the shops, and nothing was looted — even though King Power was known to be linked to Newin, who was hated by Yellow Shirt protesters.
The reason was that Newin and Vichai had made a deal with the Yellow Shirt leadership for King Power to be protected.
Soon the scale of Newin’s double-dealing became clear — he made a pact in December 2008 with the military and anti-Thaksin political parties, agreeing that his “Friends of Newin” bloc of MPs would withdraw support for the government. The government was dissolved by Thai judges in a "judicial coup" and Newin’s faction became part of a new ruling coalition.
During the negotiations between Newin and crooked Democrat Party political godfather Suthep Thaugsuban, to agree the price for Newin to agree to order his bloc to switch sides, Vichai was also present, and the negotiations took place in Vichai’s Pullman King Power Hotel in Bangkok.
As part of the deal, Newin’s faction — renamed as the Bhumjai Thai party — was given control of three of the most lucrative Thai ministries for corruption, including the Transport and Communications ministry. So Thailand’s airports remained part of Newin's fiefdom, and King Power was able to operate its monopoly unhindered.
During Red Shirt rallies against the government in 2009 and 2010, Vichai and Newin were involved in murky incidents that undermined the protesters.
By the time of his death, Vichai's net worth was more than $3 billion. This figure is likely to significantly understate the amount of profit generated by the monopoly concessions at Suvarnabhumi and Don Muang. It also represents Vichai's wealth after payment of vast kickbacks to Newin and others.
Obviously, if a businessman is able to extract more than $3 billion from a government-awarded monopoly concession in just a decade, this is a clear sign that the concession was not awarded at the appropriate price and under the appropriate terms. It’s pure rent seeking.
Vichai didn't get rich because he was a business genius. He got obscenely wealthy because he was given monopoly concessions that literally made it impossible not to earn vast amounts of money.
This money should not have gone into the pocket of one man. It should have benefited all Thais.
Vichai is being mourned as if he was a great man. But in fact, he was just a crook.
King Vajiralongkorn is making another brief visit to Thailand on Thursday to change the clothes of the Emerald Buddha and attend the cremation rites for Vichai Raksriaksorn, the duty free billionaire who was killed in a helicopter crash after a Leicester City football game last year.
It's extraordinary to see Vichai being honoured with royal attendance at his funeral, because he was an unremarkable businessman who became exceptionally wealthy due to corruption and cronyism. The billions he earned were basically stolen from Thai taxpayers.
Vichai donated very heavily to Vajiralongkorn — the wealthiest monarch in the world — and this is one reason for his royal treatment. His vast donations also prompted the previous monarch, King Bhumibol, to give him a special surname, Srivaddhanaprabha, in 2012.
Vichai was not born into significant wealth — like most of Thailand’s business elite, he was ethnic Chinese, but he was not from one of the older Chinese business clans in Thailand that built up power and influence over several generations.
He founded duty free retailer King Power in 1989 when he was just 31. The name was chosen to honour the Thai monarchy — it’s common for aspiring Thai tycoons to make ostentatious displays of reverence and donations of cash to the monarchy, to help ingratiate themselves into the royalist elite.
The first King Power store was called TAT Duty Free in Mahatun Plaza in central Bangkok. It was a rather tatty souvenir shop selling Thai handicrafts to tourists. Back in those days retail in Thailand was much less developed and the Mahatun Plaza store was the place tourists were usually recommended to go to get souvenirs.
Later Vichai also managed to get a concession to open a small retail outlet at Don Muang, which back then was Bangkok’s international airport. It was the first time a private company had won a concession to sell duty free goods in Thailand. Until then, duty free sales had been handled by the lumbering and inefficient national airline, Thai Airways.
Business success in Thailand tends to be heavily dependent on political connections. The usual pattern is that ethnic Chinese businessmen form symbiotic relationships with powerful patrons in politics, the military and the police. The patrons help the businessman secure lucrative deals and concessions, cut through bureaucracy, and when necessary flout laws and regulations. In return, the businessman funnels a large share of his profits back to the patrons.
Duty free retail is an industry in which success depends to an unusual degree upon a company’s political connections and patrons. Duty free concessions are awarded by the state, often on monopoly terms. The secret to getting a concession is knowing the right people, and promising them a cut of the wealth the concession will generate.
Because there is little or no industry competition, and Thailand is an extremely popular tourist destination, with Bangkok a major regional and global travel hub, being awarded a duty free concession is basically a licence to print money.
Vichai was very astute, and very lucky, with his choice of main political ally — Newin Chidchob, one of the most notorious crooks in Thai politics, whose family dominates the province of Buri Ram near the Cambodian border.
After Thaksin Shinawatra became prime minister in 2001 following a landslide election victory, Newin quickly became one of his key henchmen.
One of Thaksin’s main infrastructure projects was the construction of the new international airport at Suvarnabhumi, which opened in 2006. The whole project was riddled with immense corruption, even by Thai standards. Newin was able to get lucrative contracts awarded to many of his cronies, due to his close links with transport minister Suriya Jungrungreangkit.
King Power was awarded exclusive monopoly rights to duty-free sales and control of the whole retail area at Suvarnabhumi, without any competitive bidding process.
As academics Pasuk Pongpaichit and Chris Baker wrote in an article about corruption at the airport: "An airport is like a moderate-sized city centre. Over 100,000 people pass through Suvarnabhumi Airport every day. In effect, one company was put in charge of the commerce of this city."
King Power occupied over twice the amount of space it was supposed to have been allocated at Suvarnabhumi, and also constructed a corporate HQ building that allowed people and goods to get into the terminal without customs or immigrations checks. It was a channel for smuggling contraband, and the authorities never cracked down on it.
King Power soon got a monopoly for duty free sales at Don Muang too.
With monopolies for duty free at both of Bangkok's international airports — plus a smuggling channel via the King Power HQ at Suvarnabhumi — Vichai began to get rich.
He also started actively ingratiating himself with the palace and the royalist elite, who by this stage were increasingly hostile to Thaksin. Vichai copied the concept of the yellow rubber wristbands that Lance Armstrong had used for his Livestrong charity, producing millions of them printed with the slogan “We Love HM the King” for the celebrations of 60 years of King Bhumibol’s reign in 2006. The wristbands were hugely popular and raised a large amount of money which Vichai ostentatiously donated to royal charities.
Vichai also suddenly developed an interest in polo — he founded the Thailand Polo Association and sponsored expensive tournaments, using this as a vehicle to allow him to socialise with the wealthy elite in Thailand and around the world, including British royals, which hugely impressed the Thai upper class.
So Vichai was benefiting from the corruption of the Thaksin regime but also ingratiating himself with Thaksin’s royalist enemies and the so-called “Yellow Shirt” anti-Thaksin protest movement.
In 2007 he was ranked by Forbes as Thailand’s 21st wealthiest businessperson, worth about $200 million.
However, his duty free monopoly seemed to be in serious danger after Thaksin was toppled in a military coup in September 2006. The new military-backed government despised Thaksin and Newin. A high profile investigation was launched into corruption at Suvarnabhumi. The Airports Authority of Thailand said it was voiding all contracts with King Power, and kicking the company out of the airport. Meanwhile, Thaksin had fled the country, and Newin had been given a five-year ban from politics. So things were not looking good for Vichai.
However, King Power managed to delay its eviction by launching various legal manoeuvres, and then when the military regime allowed elections in late 2007, Thaksin's People's Power Party won the most votes and quickly put together a coalition government. Newin was not able to formally join the government because he had been banned from politics, but he quite openly had a large bloc of MPs in his pocket — known as the “Friends of Newin” faction — so he was able to exert massive influence.
King Power was not kicked out of the airport. Instead, the Airports Authority of Thailand board was replaced.
By late 2008, government was desperately embattled, facing mass protests by the royalist “Yellow Shirt” movement and relentless sabotage by the royalist elite.
If the government fell, Vichai could have been in trouble. But his political patron Newin Chidchob was playing both sides in the political conflict, hinting to the military and the royalists that he might be willing to betray Thaksin.
In late 2008, Yellow Shirt protesters stormed Suvarnabhumi and Don Muang airports, blockading them for more than a week and preventing international flights from taking off or landing. The army tacitly allowed the airport occupation, refusing to clear the protesters. The airport occupation did massive damage to Thailand’s economy.
The protesters caused chaos at the airport but curiously, the King Power outlets were untouched. Company staff were allowed to enter the airport to secure the shops, and nothing was looted — even though King Power was known to be linked to Newin, who was hated by Yellow Shirt protesters.
The reason was that Newin and Vichai had made a deal with the Yellow Shirt leadership for King Power to be protected.
Soon the scale of Newin’s double-dealing became clear — he made a pact in December 2008 with the military and anti-Thaksin political parties, agreeing that his “Friends of Newin” bloc of MPs would withdraw support for the government. The government was dissolved by Thai judges in a "judicial coup" and Newin’s faction became part of a new ruling coalition.
During the negotiations between Newin and crooked Democrat Party political godfather Suthep Thaugsuban, to agree the price for Newin to agree to order his bloc to switch sides, Vichai was also present, and the negotiations took place in Vichai’s Pullman King Power Hotel in Bangkok.
As part of the deal, Newin’s faction — renamed as the Bhumjai Thai party — was given control of three of the most lucrative Thai ministries for corruption, including the Transport and Communications ministry. So Thailand’s airports remained part of Newin's fiefdom, and King Power was able to operate its monopoly unhindered.
During Red Shirt rallies against the government in 2009 and 2010, Vichai and Newin were involved in murky incidents that undermined the protesters.
By the time of his death, Vichai's net worth was more than $3 billion. This figure is likely to significantly understate the amount of profit generated by the monopoly concessions at Suvarnabhumi and Don Muang. It also represents Vichai's wealth after payment of vast kickbacks to Newin and others.
Obviously, if a businessman is able to extract more than $3 billion from a government-awarded monopoly concession in just a decade, this is a clear sign that the concession was not awarded at the appropriate price and under the appropriate terms. It’s pure rent seeking.
Vichai didn't get rich because he was a business genius. He got obscenely wealthy because he was given monopoly concessions that literally made it impossible not to earn vast amounts of money.
This money should not have gone into the pocket of one man. It should have benefited all Thais.
Vichai is being mourned as if he was a great man. But in fact, he was just a crook.
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