Another flaw revealed in Elite Card

Elite Card challenges an agreement to buy USA Today for US52,000 for an editorial and advertising package.

Thailand Privilege Card president and board member, Methavee Tunwattanapong, said the board faces a US$52,600 bill  from USA Today newspaper’s company, United World Company, due to what it called “an unauthorised verbal agreement.”

Ms Methavee alleges that TPC asked Asatsu Company to sign a contract with United World, 4 November 2008, to publish a feature on the board chairman’s president at that time, Sorajak Kasemsuwan, and twin it with an advertisement from TPC on 26 February 2009. The deal was not supported by a contractual agreement. The advertisement appeared followed by an editorial feature, 15 October 2009.

“The board at that time cancelled the order and asked Asatsu Company to inform the publiser.  United World rejected the cancellation claiming it had not met the cancellation deadline and went ahead with the advertisement and subsequently the editorial on 15 October, 2009,” she report.

“The company is now asking TPC to pay Asatsu Company, based on a verbal agreement,” said Ms Methavee. She showed the USA Today report to local media.

If Asatsu Company is acting as the United World Company representative it is highly likely it would earn a 20% commission on the sale. There is also the question of the advertising agency 15% commission.

Technically, an advertising representative company can pick up as much as 35% of the advertising rate if it also acts as an advertising agency. If a collection fee is added the local firm could earn 40%. This is certainly the case for travel trade and electronic media, but could be scaled down for a consumer publication of the size of USA Today.

The decision to allow editorial and advertising to merge is all the more surprising considering the strict laws and ethic rules governing US media on taking payment for editorial or presenting advertising in the form of an objective editorial report. If substantiated it will certainly tarnish the publication’s image and suggest double standards in how US media is sold in Southeast Asia compared with the strict rules applied in the homeland.

The TPC board has set up an investigation committee, headed by Udom Metathamrongkul,  who is member of the board and TAT advisor, to verify the details of the case and find a suitable way to negotiate with the United World.

If the case cannot be negotiated, TPC will have to pay US$52,600 from its cash flow budget of Bt317 million or about US$10.46 million.

TPC also reports another issue with Advance Information Technology Company. It has been asked to pay Bt38 million in compensation for terminating a contract over IT system support. Another team is negotiating with AIT Company to pay a smaller amount. This case also happened during the tenure of chairman, Sorajak Kasemsuwan and president, Surapong Triamchanchai, from April 2008 to March 2009.

The Elite Card project is due to be sold to a private sector bidder within three months, or it will transfered to the Tourism Authority of Thailand’s administration department to be ultimately wound down. That was the most recent decision by the Thai Cabinet. The Terms of Reference for any company bidding to take over the Elite Card will be drafted by the end of the month.