Employee or Agent Bribes an Official, the Company Is Liable Too: Section 176 and the Internal Controls You Need

What Section 176 says

The anti-bribery law every company in Thailand needs to know is Section 176 of the Organic Act on Counter Corruption B.E. 2561 (2018). The principle dates from B.E. 2558 (2015), when it appeared as Section 123/5 of the previous Act.

Paragraph 1: the offence of the giver. Anyone who gives, asks to give, or promises to give property or any other benefit to a state official, a foreign public official or an official of a public international organisation, in order to induce them to act, not to act, or to delay an act contrary to their duties, faces imprisonment of up to five years, or a fine of up to THB 100,000, or both.

Paragraph 2: the offence of the juristic person. A company is also guilty when all 3 of the following are met:

1. The person who gave the bribe is a person associated with the company.
2. The bribe was given for the company's benefit.
3. The company had no appropriate internal controls to prevent it.

Element 3 is the one the company can control. The NACC has explained that a juristic person is not liable if it has appropriate internal controls. The question in a case is therefore not "did management know?" but "did the company have a system that actually works?"

The law applies both to juristic persons established under Thai law and to foreign juristic persons doing business in Thailand.

Who counts as a "person associated with the company"

The law is drafted broadly: a representative of the juristic person, an employee, an agent, an affiliated company, or any person acting for or in the name of the juristic person, whether or not they have the duty and authority to do so.

In practice, the group that companies most often forget is outside parties who deal with government agencies on their behalf:

• Customs brokers or shipping agents who deal with Customs for you
• Contractors who apply for licences, certificates or official documents
• Consultants who help with tax matters or inspections
• Distributors or sales representatives who sell to government agencies
• Subcontractors and joint venture partners

The words "whether or not they have the duty and authority" mean that the excuse "the employee did it on their own without the company's instruction" does not work.

Penalties and consequences

• The company is fined one to two times the damage caused or the benefit obtained. There is no monetary ceiling. Whatever the contract or licence obtained through the bribe is worth, the fine is tied to that value.
• The person who gave the bribe faces imprisonment of up to five years, or a fine of up to THB 100,000, or both. Section 144 of the Criminal Code also makes bribing an official an offence, with the same level of penalty.
• A foreign parent company may also be subject to its home country's anti-bribery laws, such as those of the United States and the United Kingdom. That is why parent companies often send policies and certification forms to their Thai subsidiaries.

Section 176 covers only giving to public officials, whether Thai, foreign or of international organisations. Thai law has no general offence of bribery between private parties. But paying under the table to a customer's purchasing staff may fall under other offences, and it breaches the policy of almost every business partner. A company's policy should therefore prohibit both.

The NACC's 8 guidelines

The NACC has issued a guide on appropriate internal controls for juristic persons to prevent bribery of Thai officials, foreign public officials and officials of international organisations. It sets out 8 principles:

1. Bribery prevention must be a key policy from the top management level.
2. There must be a risk assessment of bribing state officials.
3. Measures for high-risk situations must be set out in clear detail.
4. The measures must be applied to the company's business associates.
5. There must be a sound accounting system.
6. There must be human resources practices consistent with the anti-bribery measures.
7. There must be measures that encourage reporting of wrongdoing or suspicious cases.
8. The measures must be reviewed, audited and evaluated periodically.

The NACC states that the guidelines apply to every type and size of juristic person as appropriate. A mid-sized company does not need a system as extensive as a listed company's, but it needs one that fits its own risks and that it can prove it actually uses.

Where companies are often exposed

Facilitation payments, or "tea money". Small sums paid so an official works faster. Thai law has no specific exception for such payments, and an official who demands or accepts money for doing their job commits an offence even if the work itself was proper. Company policy should prohibit them with no exceptions, other than where an employee's life or safety is threatened, which must be reported immediately.

Gifts and hospitality. Under the NACC Notification on the Criteria for State Officials Accepting Property or Other Benefits by Custom B.E. 2563 (2020), an official may accept up to THB 3,000 per person per occasion from a non-relative. That figure is a limit for the recipient, not a licence for the giver. A gift intended to influence a pending matter is risky whatever the amount.

Donations and sponsorships. A donation to an agency, foundation or event linked to an official who is considering the company's matter should be approved, the recipient vetted, and a receipt obtained.

Unusual agent compensation. Excessive service fees, a large success fee on winning a licence, requests for cash, requests to pay into a third party's or an overseas account, or invoices that say only "processing fee".

Hiring relatives or people an official recommends. A benefit is not limited to money. Giving a job, or a contract to a company owned by an official's relative, can also be a benefit given to influence.

A system a mid-sized company can realistically run

A written policy. Approved by the directors, in language employees understand, stating what is prohibited and who approves what, and that an employee who refuses to pay a bribe will not be penalised even if the company loses business or time.

A risk assessment based on contact points with the state. Go through which agencies the company deals with, such as Customs, the Revenue Department, factory or business licences, labour inspections, and government procurement, and rank which points are riskiest.

A register of gifts and hospitality. Set a ceiling and approval levels, and record every item both given and received.

Vet agents before appointing them. Look at ownership, relationships with officials, track record, and whether the fee is reasonable, then include the necessary contract terms:

• A promise not to bribe and to follow the company's policy
• Itemised invoices, and no cash withdrawals without documents
• The right to inspect documents relating to the company's work
• No subcontracting without consent
• The right to terminate immediately and withhold payment if bribery is found

Accounting controls. Pay only into the counterparty's bank account, allow no unsupported "miscellaneous expenses", and check unusual items periodically.

Link it to HR. Put bribery in the work rules and disciplinary penalties, train high-risk staff, and consider it in managers' performance reviews.

A reporting channel that employees and business partners can use without going through their direct supervisor, with an investigation procedure and protection for reporters from retaliation.

Review every year and keep evidence, such as training records, risk assessment results and audit reports, because if something happens, these documents are what show that the company had appropriate measures.

Certification from the Thailand's Private Sector Collective Action Coalition against Corruption (CAC) or the ISO 37001 standard is not an exemption from liability under the law, but it helps build the system and is weighty evidence.

When you find that a payment has been made

1. Stop all pending payments and suspend the work of the agents involved.
2. Preserve emails, messages, invoices and transfer records. Do not delete or alter them.
3. Appoint an investigator with no stake in the matter and interview those involved systematically. See the employee misconduct investigation service.
4. Consult a lawyer before deciding on reporting to authorities, informing the parent company, and disciplining employees.
5. Fix the gaps in the system that allowed it to happen, and record the fixes.

Anti-bribery measures checklist

1. A directors-approved anti-bribery policy, communicated to all employees.
2. A risk assessment of the company's contact points with government agencies at least once a year.
3. Facilitation payments prohibited in the policy without exception.
4. A register of gifts, hospitality, donations and sponsorships, with ceilings and approvers.
5. Agents, customs brokers and consultants vetted before appointment, with a clause prohibiting bribery.
6. Payments made only into the counterparty's account, with unusual items checked.
7. Bribery included in the work rules, and high-risk staff trained.
8. A secure reporting channel and an investigation procedure.
9. The system reviewed every year, with evidence kept at every step.

Further reading

• A foreign customer sends a Supplier Code of Conduct to sign
• Customs post-clearance audit: what importers must do in the first 30 days
• Do you need a Thai company to sell here?
• Service: Corporate legal retainer
• Service: Drafting and reviewing contracts and business documents
• Service: Employment contracts, pay structure and employee handbooks