MAY 15, 2000 VOL. 156 NO. 19

Yvan Cohen for TIME I make no apologies: Chatu Mongol

WEB-ONLY EXCLUSIVE
'I'm Here To Do a Job'
Outspoken Bank of Thailand Governor Chatu Mongol Sonakul pulls no punches
By ROBERT HORN

Other Interviews:
Thailand's Finance Minister Tarrin Nimmanahaeminda

He's brash, outspoken and aristocratic. Bank of Thailand governor Chatu Mongol Sonakul has played a critical role in leading his country out of Asia's economic crisis. He makes no apologies for being confrontational as he cleans up the scandal-plagued bank and battles for its independence. In doing so, he has clashed frequently with Finance Minister Tarrin Nimmanahaeminda, who is also interviewed by TIME The bank governor spoke with TIME reporter Robert Horn about his goals and tactics, and his future. "Maybe I'll go to Singapore and throw chewing gum wrappers on the pavement just to show it can be done," he says. Excerpts from the interview:

TIME: How important is it to make the central bank independent?
Chatu: The collapse came from here [the bank]. This was the crucial part which failed to hold up, so no doubt about it, the keystone of the New Economy must be the Bank of Thailand. Without this place being re-engineered and being strong, there could be another collapse. This underpins the whole thing.

TIME: Why has there been so much friction lately between you and Finance Minister Tarrin Nimmanahaeminda?
Chatu Mongol: Two or three years after an economic collapse is an interesting time. When you are rescuing things, everyone can agree on remedies quite easily. When you're putting out a fire, you don't have to be very careful: you get a bucket of water and throw it on the fire. Now comes the time to rebuild and some people want to build more and some people want to build less.

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TIME: Why was the central bank so quiet when the Minister of Finance needed information on the level of nonperforming loans at Krung Thai Bank?
Chatu: Basically, we cannot be seen to be working hand in hand with the government. We're supposed to be independent.

TIME: Controversy also arose when the finance ministry asked you to report on the whereabouts of the money from the Thai Help Thai campaign that was donated to the government. Why didn't you answer?
Chatu: We had difficulties again, doing what people tell us, basically. We're trying to be independent. The other problem was our understanding that the gold conformed to bullion. But since it was not bullion, as it turned out, there was some difficulty in determining what it was and where it was.

TIME: Did the central bank have trouble finding the information on Krung Thai Bank?
Chatu: Yes. There was no database on Krung Thai Bank. There actually was no database on financial institutions. People do not realize that the Bank of Thailand wasn't auditing financial institutions for four or five years because it just assumed they were good or something. All information at the central bank at that time was on individuals. So I changed that: now every financial institution must be on-site audited once a year. But it still hasn't worked. We've also put up a training school and certification process so there is a standardized approach.

TIME: In your recent speech at the Merrill Lynch Investor's Conference in London, you said the "powers that be have taken a reactionary stance" when it comes to central bank independence. Who did you mean by the "powers that be?"
Chatu: If I meant someone that I could name then I wouldn't say the "powers that be" (laughs). Actually, there are a split of opinions. Either the Bank of Thailand will be independent inside the government or independent from the government. Every country has the same problem--that when push comes to shove, the government is going to have to provide the money. So the relationship should be a cooperative and cordial one.

TIME: Has it been cooperative and cordial?
Chatu: Well, we're in very difficult times and nobody sees eye to eye on anything. Basically, it's very difficult.

TIME: But can you be more specific about what reactionary measures these "powers that be" have taken?
Chatu: Nope. I was as specific as I wanted to be at the time. It was done with a purpose. If everything was going fine, I would have said everything was going fine. It was done to highlight issues, which I think it has done, and things are changing.

TIME: You said in your London speech that you were deliberately creating controversies. Why?
Chatu: I did. I'm just trying to get the issues addressed instead of things being decided by one group or person without being discussed. These issues should be discussed because it's important to the country.

TIME: In creating controversies, however, obviously some people's feelings get bruised.
Chatu: Probably mine (laughs).

TIME: Although there might be differences of opinion over the independence of the central bank, some of the people who have been upset are essentially your allies. By getting them upset, are you risking turning your allies against you?
Chatu: No. I don't think they're my allies (laughs). I practically have no allies.

TIME: Still, by causing controversies, don't you risk turning some of those who support independence, against you?
Chatu: I think they already don't like independence. If they liked independence then I would have kept very quiet.

TIME: Do you and Tarrin Nimmanahaeminda see eye-to-eye on independence?
Chatu: I probably want more independence than Khun Tarrin, but that is not the major issue. The draft [copy of the Bank of Thailand Act that we were asked to write] stated the governor could not be fired for doing the right thing. But now, in its current form, a governor can be removed for six reasons. Now, if you list six reasons why a governor can be removed, that's asking for him to be removed. It's a matter of balance.

TIME: The press reported that you sneaked out the side door of the central bank last week to avoid meeting Tarrin, but the minister said you actually had met. Why didn't you tell the press?
Chatu: It's their job to find out. They love making up stories. I don't aim to win a popularity contest. I'm here to do a job.

TIME: The minister said, however, that by being silent, you're creating public confusion.
Chatu: Well, he causes confusion. Everybody causes confusion, and most of all the press causes confusion. It's a very difficult job handling the press. I compare them to a mad elephant: you get out of the way and it will still come and stampede on you.

TIME: The press, however, can create an atmosphere in which pressure might build for the government to remove you. Does that concern you?
Chatu: I'm just trying to get things done. I can last forever agreeing with the government on everything, doing what they wish, and come and go with the government. Is that good for the country?

TIME: A lot has been made of the fact that you filed fraud charges against Tarrin's brother, Sirin, relating to a bad loan at Krung Thai Bank. People said you did this because you were on the verge of being fired, and so made it impossible for them to remove you because it would have been seen as retribution.
Chatu: If I wanted to fix the case I would have fixed it a hell of a lot better than that. The central bank's legal department is almost an independent prosecutor.

TIME: Tarrin said that you sent him a letter months ago agreeing to contribute some of the bank's excess reserves to pay off the debt of the Financial Institutions Development Fund [an entity established by the central bank to assist in the rehabilitation of insolvent financial institutions]. Is that true?
Chatu: We always had an agreement, in principle. Quite frankly, we have a rough time getting out a credible estimate on the numbers.

TIME: But if the numbers still aren't clear, isn't there the potential for more conflict in the future?
Chatu: Absolutely.

TIME: Some people argue that, because of they way the central bank mishandled the defense of the baht and started the economic crisis, that the bank has not yet earned independence.
Chatu: We don't have the same system in place. I think any central bank would have collapsed if faced with that regime and faced with the politics and the economics of the past 10 or 15 years. An independent central bank might have got sensible and asked to change the (fixed exchange rate) regime. I don't know.

TIME: But they say that things weren't done right at the central bank, and so...
Chatu: Absolutely. But unless the central bank is independent, they'll never be done right. That's why I have to be controversial, to get these issues out.

TIME: How many more people will the central bank file charges against in relation to the economic crisis?
Chatu: I think all the cases will be completed this year.

TIME: What do you want to achieve in your time at the central bank?
Chatu: I want to lay a strong foundation for restructuring the bank, and I think I'm close to having done that.

TIME: If you're close, does that mean you won't stay as governor much longer?
Chatu: It's hard to say. There are other things I want to do in my life. I want to do something about the way Bangkok looks. There are other things for me to do, where things need changing. Maybe I'll go to Singapore and throw chewing gum wrappers on the pavement just to show it can be done. Maybe I'll be here another 20 years. I don't know. I'm a very untypical central banker. If I wasn't, I wouldn't be giving this interview to you (laughs).

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