Cabinet, Loxley differ on compensation calculation; GLO suspends project, waits for panel decision
The State Enterprise Policy Office has urged the government to move cautiously on the controversial online-lottery issue, with a possible legal war looming between the Cabinet and Loxley due to huge differences in calculating compensation.
Director-general Supa Piyajitti said the government had to handle the issue carefully, otherwise the Government Lottery Office (GLO) would have to pay compensation if it lost the legal battle with its counterpart regarding the lottery contract.
"Taxpayers' money should not be wasted," she added.
A source from the Finance Ministry admitted there would be a legal complication if the contract were terminated. "If this could be terminated without complications, the ministry would not have pushed it this far."
According to a source at Loxley, which holds a 51-per-cent stake in Loxley GTech Technology (LGT), there are three legal possibilities for ending the five-year contract signed in August 2005:
- If LGT breaks the contract before operations.
- If the GLO wants to terminate it after the service is in operation, but that would require notification a year in advance and compensation equivalent to a year's revenue.
- If the dispute goes to the Supreme Administrative Court and the court rules in favour of termination.
A government source yesterday insisted the GLO would have an advantage if the contract with LGT were to be cancelled.
According to this source, item 12.1 in the 17-page contract states that "the hirer shall have the right to terminate the contract by informing the hired party in writing at least 12 months in advance. In an event that the government has a policy to scrap this project or has any need to scrap it, the hirer shall offer partial compensation to the hired party at an amount equivalent to the average monthly service fee, which shall be calculated from the total service fees during a 12-month period preceding the termination of the contract. The hired party shall have no right to seek any more compensation".
Asked about the possibility that LGT might seek billions in compensation if the contract were scrapped, Prime Minister Abhisit Vejjajiva said yesterday it would be better for LGT to consider various other options with the government.
"The contract clearly states that if the government has the policy to stop this project, the contract can be terminated," he said, "We will make the decision based on the contract."
The GLO board yesterday convened an urgent meeting and agreed to suspend the project until a working panel, appointed by Abhisit, reaches a conclusion on the controversial issue. The panel, headed by Thailand Trade Representative Kiart Sithi-amorn, is scheduled to come up with a decision within 30 days.
"The suspension will prevent further damage," GLO board chairman Sathit Limphongphan said yesterday after the emergency meeting.
Vending machines installed by LGT, delayed since 2006, were scheduled to start functioning next month. The contract, signed in August 2005, is for LGT to provide equipment and service for the national online-lottery scheme for a five-year period.
Sathit said the GLO would fully cooperate with the Kiart-headed panel. "We will talk to LGT to ensure that it understands the situation."
He added that the GLO would study legal aspects of the contract to find the best way out if it were unable to honour the deal. "The best way out should ensure that the GLO can avoid a lawsuit," he said.
Declaring a firm stance against the project, Abhisit cited the project's social impact as the grounds for his decision to scrap it. He yesterday said his government would persuade LGT to solve social problems together and would ensure that LGT did not suffer any damage. "The panel headed by Kiart will explore various possibilities and offer options. Vending machines provided by LGT can be used in many other ways," he said.
The premier insisted that LGT would get a fair deal.
Meanwhile, Thaksin Shinawatra criticised Abhisit's decision which, he said, would benefit underground-lottery operators as the authorities failed to solve the problem of overpriced government lottery.
"You are throwing away Bt10 billion a year," he said, referring to the estimated revenue from underground lottery, which could have been earned by the government with the use of lotto machines. He was speaking in his weekly radio broadcast.
From : The Nation
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