Thai PM defends negligence charges as economy falters

By Amy Sawitta Lefevre BANGKOK (Reuters) - Thai Prime Minister Yingluck Shinawatra on Monday defended herself against negligence charges linked to a ruinous government rice pledging scheme that could lead to her removal from office, the latest development in a political crisis that has gripped the country for months. As the country stumbles along, the central bank said Southeast Asia's second-largest economy, heavily reliant on tourism, was expected to contract in the first quarter after consumption and investment fell. Yingluck has been charged with dereliction of duty for overseeing the rice-buying scheme, a policy that brought her to power in the 2011 election with the help of the rural poor but that has since run up huge losses and left hundreds of thousands of farmers unpaid. The charges were brought against her by the National Anti-Corruption Commission (NACC) which, should it forward the case to the Senate for possible impeachment, would mean Yingluck being suspended from official duties. It was unclear when such a decision would be made, but it could take weeks. Yingluck spent 30 minutes at the commission's headquarters. Her legal team carried three cardboard boxes filled with documents to present to anti-graft officials. Her main defense document was 150-pages long. Yingluck asked for more time to call on 10 witnesses and to submit further documents to support her defense, NACC member Prasart Pongsivapai told reporters following the meeting. The commission will decide on Tuesday whether to extend the deadline. "The prime minister submitted documents in her defense and gave a short statement," said Prasart. "We have to consider whether (those) witnesses and documents relate to this scheme. The commission will act with justice toward the prime minister and in a straight-forward manner." Yingluck has come under pressure over the past five months from protesters who have occupied state offices and parts of Bangkok in a bid to remove her and rid the country of the influence of her brother, ousted former premier Thaksin Shinawatra. Protesters disrupted a February 2 general election, halting voting in parts of Bangkok and the south. The Constitutional Court nullified the election this month, throwing Thailand into deeper turmoil and leaving Yingluck in charge of a caretaker government with severely restricted powers. TOLL ON TOURISM The protests have also taken a heavy toll on the tourism industry with visitors staying away from the normally bustling capital. Mathee Supapongs, senior director with the central bank, said he expected tourism to pick up if there was no further violence from street protests. Twenty-three people have been killed and hundreds wounded in sporadic violence since the protests kicked off in November. The Bank of Thailand's private consumption index dropped 1.2 percent in February from January and 2.5 percent from a year earlier. Its private investment index was 1.9 percent lower on the month and was down 7.7 percent on the year. Mathee told a news conference that growth could contract in the first quarter from the fourth but might rebound in the second quarter. "Overall economic activities in February 2014 softened further from the previous month owing to prolonged political protests. Households and businesses continued to hold back spending, while imports and manufacturing production contracted," the Bank of Thailand said in a statement. Kasikorn Research cut its full-year growth forecast to 1.8 percent on Monday, down from 3 percent in January. It also predicted an economic contraction of about 2 percent in the first quarter of 2014 from the previous three months. Thailand has really been in crisis since Thaksin was ousted in a 2006 coup. The conflict broadly pits the Bangkok-based middle class and royalist establishment against the mostly poorer, rural supporters of Yingluck and Thaksin. Yingluck criticized the NACC last week for not giving her enough time to gather evidence and for fast-tracking the investigation. Government supporters accuse the courts and independent agencies, including the NACC, of bias and say several judges are aligned with the conservative establishment. Her allegations prompted the anti-graft commission to issue a statement defending the way it has handled Yingluck's case. "As there were suspicions that Yingluck abused her position... the NACC has had to investigate the suspicions to get to the truth," the NACC said in statement. "Yingluck has received just and fair treatment (by the NACC) under the framework of the constitution." Thais voted on Sunday for half of the country's 150-seat Senate in a key test of Yingluck's government. A Senate dominated by anti-government politicians could hasten her exit but any decision to remove Yingluck would require the votes of three-fifths of the senators. The results are expected in a week. (Additional reporting by Aukkarapon Niyomyat, Pracha Hariraksapitak and Kitiphong Thaichareon; Editing by Nick Macfie)