BANGKOK—A former adviser to a Thai bank has been sentenced to 10 years in prison and ordered to pay US $36 million in fines and compensation for embezzlement that helped spark the 1997 financial crisis.
Bangkok’s Criminal Court ruled on Friday that Rakesh Saxena “damaged the country’s economy” and its financial and banking systems.
Saxena, an Indian national, was an adviser to the now defunct Bangkok Bank of Commerce which made fraudulent loans to cronies of its management.
The bank had $3 billion of unrecoverable loans on its books at the time it collapsed. Saxena’s role in those deceptions helped him to accumulate a small fortune of 1.66 billion baht ($52.6 million).
The bank’s failure exposed the weaknesses of the Thai financial system and helped trigger the devastating 1997-98 Asian financial crisis.
The court found Saxena guilty of assisting Krirkkiat Jalichandra, the bank’s ex-president, to organize dubious loans in 1995. Krirkkiat was sentenced to 20 years in prison on embezzlement charges in 2007.
The court ordered Saxena to pay a fine of 1 million baht ($32,000) and compensation of 1.13 billion baht ($35.9 million) to Bangkok Bank of Commerce, which was absorbed by government-owned Krung Thai Bank in 1998.
Dubbed the “Monetary Wizard” by the Thai media, Saxena is in poor health after suffering a stroke in 2008. Clad in an orange prison uniform, he appeared at the court Friday in a wheelchair.
The 61-year-old denied guilt and said he will appeal the verdict.
“Nobody in this country knows the financial laws. It’s the Bank of Thailand and the prosecutors who are to blame,” he told reporters outside of the courtroom. “This is absolutely wrong.”
Prior to the 1997 financial crisis, Saxena was a pioneer in Thailand of aggressive deal making as the country’s rapid economic growth produced a boom in mergers and acquisitions. He counted among his associates Saudi arms dealer Adnan Khashoggi, who was involved in some of his Thai business deals.
Saxena was charged in 1996 but fled to Canada, where he was arrested later that year in the British Columbia ski resort town of Whistler. He was extradited to Thailand in 2009 after losing a 13-year extradition battle, one of the longest in Canadian history.
The court has ordered an additional two-year prison term for Saxena if he fails to pay compensation to the bank.