Thailand's Finance Ministry will sue a former central bank governor for US$1.6 billion, blaming him for a failed defense of the baht against speculative trading that led to the 1997 Asian financial crisis, officials said yesterday.
The ministry's Financial Institutions Development Fund has completed more than three years of investigation and submitted a civil lawsuit to the public prosecutor against Rerngchai Marakanond.
But since no one expects Rerngchai to possess or pay such a huge amount -- even if ordered by a court -- the lawsuit would appear to be simply an attempt by the government to apportion blame for the region's greatest economic debacle.
Rerngchai was Bank of Thailand governor during the crucial May-June 1997 period when speculative currency trading of the baht had become rampant. The bank tried to protect the baht by using its foreign exchange reserves, which dwindled from US$32 billion to about US$800 million in a matter of weeks.
As the defense became untenable, Thailand was forced to devalue the baht on July 2, triggering the economic crisis across Asia. Thailand later had to seek a US$17.2 billion bailout from the International Monetary Fund to keep its economy afloat.
The investigation singled out Rerngchai as responsible for the part of the losses incurred from the national reserves, said Pairat Kangwansura, a government prosecutor responsible for the case.
Pairat told reporters the suit could be filed once it was approved by Finance Minister Somkid Jatusripitak.
The investigation committee found that Rerngchai would not face criminal charges as he had made honest mistakes, but instead a civil suit would seek 70 billion baht (US$1.6 billion) in damages to the state, Pairat said.
He did not say how or why that amount was decided on.
Rerngchai maintained he was innocent and was being made a scapegoat.
"Forget about 70 billion baht. I don't even have 10 million to pay back and since I did not do anything wrong why do I have to shoulder that responsibility?" Rerngchai said yesterday.
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