BANGKOK, Thailand -- After guests toasted a princess during a royal banquet inside the Grand Palace, dinner talk turned to Thailand's troubled, five-month-old government, stumbling from crisis to crisis, including its newest decision which places one of its cabinet members in the cross-hairs of the U.S. Treasury Department.

Inside the grand ballroom of the palace's Borom Raja Sathit Maholarn Hall, which sits about 150 guests at long, white-clothed banquet tables under massive chandeliers, a small orchestra played "Somewhere Over the Rainbow" as dinner and wine was served.

After some guests chatted about Thailand's gorgeous orchids, ambitious medical system, poor education policies and other topics, they were asked about Prime Minister Yingluck Shinawatra who was elected in July with a large mandate.

A handful of Bangkok-based Thai guests -- including a teacher, a media director, a doctor and other senior professionals -- condemned Mrs. Yingluck's handling of the July-to-December floods which killed more than 800 people.

Two million people suffered from massive rain-fed water which caused rivers to overflow across one-third of this Southeast Asian nation, tormenting cities with floods up to two meters (six feet) deep.

"I knew Yingluck when she was a business executive, and I taught her, but she was always, 'Oh look at this, it's so beautiful,' and 'Oh look at that, it's so nice'," said one guest, referring to Mrs. Yingluck's public superficiality which she also sometimes displayed as prime minister.

"She is not stupid, but she is not qualified to be a prime minister because she cannot handle the complicated things of managing a country," the guest said as other diners nodded.

They dreaded the likelihood that the deadly floods may surge again this year.

Mrs. Yingluck had virtually no political experience before suddenly becoming prime minister when she was boosted into power by her fugitive brother, former Prime Minister Thaksin Shinawatra who was overthrown in a 2006 military coup.

Based in Dubai, Mr. Thaksin is dodging a two-year prison sentence for corruption committed during his popular, authoritarian administration.

Mr. Thaksin orchestrated his supporters to vote for Mrs. Yingluck's Pheu Thai ("For Thais") party, describing his sister as his "clone."

Mr. Thaksin is widely seen as manipulating her coalition government from overseas, despite denials.

The nearby banquet guests expressed disgust for Mr. Thaksin, reflecting the often violent divisions within this country which have worsened during the past six years.

Mrs. Yingluck and her brother, however, remain popular among their supporters -- especially in the countryside -- though some complain about a lack of real reforms.

Many supporters want tribunals for military leaders who led the 2006 coup and then, in 2011, crushed a pro-democracy insurrection by Red Shirts which left 91 people dead, mostly civilians, during street clashes.

Mrs. Yingluck, however, said she is willing to work with Army Commander-in-Chief Gen. Prayuth Chanocha, who led the military's crackdown against the Red Shirts and earlier played a key role in the 2006 coup when he was 1st Army Region commander.

The nearby banquet guests, spooning an icy dessert of zalaccas and strawberries, did not trust Mrs. Yingluck's make-nice gestures towards the mostly anti-Thaksin military.

But Mrs. Yingluck's newest problem erupted on Jan. 18 when she appointed -- as her office minister -- Nalinee Taveesin who is banned by the U.S. Treasury Department from doing business with Americans.

Ms. Nalinee allegedly facilitated financial transactions for Zimbabwean President Robert Mugabe's wife and several others in Mr. Mugabe's thieving "kleptocratic" regime, according to a November 25, 2008 decision by the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC).

"OFAC is designating Nalinee 'Joy' Taveesin, a Thai businesswoman who has facilitated a number of financial, real-estate, and gem-related transactions on behalf of Grace Mugabe, Gideon Gono, and a number of other Zimbabwean Specially Designated Nationals (SDNs)," the U.S. Treasury statement said in 2008.

The Treasury posted the designation on its website. (

"Ironically, Nalinee Taveesin has participated in a number of initiatives on corruption and growth challenges in Africa and Southeast Asia while secretly supporting the kleptocratic practices of one of Africa's most corrupt regimes," the Treasury's OFAC statement said.

Ms. Nalinee denied acting illegally and said her "social relations" with the Mugabe couple did not involve "business transactions."

"I never thought a friendship could have had such a tremendous impact on my life, especially when I stepped into the political arena," Ms. Nalinee said at a recent news conference.

Widespread condemnation poured in from Thai media, opposition politicians, Americans and others demanding Ms. Nalinee resign.

"U.S. businesses doing business with the government of Thailand should be wary, and make sure that Ms. Taveesin has no connection with, or involvement in, the transaction," advised Clif Burns, a lawyer at Bryan Cave in Washington, DC, and a Georgetown University Law Center adjunct professor of law.

The Treasury's "OFAC has, at least in the case of the Palestinian Authority, held that the presence of sanctioned individuals in a government agency or body could prevent transactions with the government agency itself, effectively eliminating any notion that someone can be sanctioned vis-à-vis their private activities but not their official governmental activities," Mr. Burns wrote on Jan. 19 his ExportLawBlog. (

Mr. Burns "focuses his practice on international business transactions, export controls, economic sanctions, customs and international intellectual property matters," his website said.

"Have you been a naughty little girl who has been sanctioned by the U.S. for your alleged business links to Zimbabwean President and all-around tyrant Robert Mugabe?" asked Bangkok Post satirist Sumati Sivasiamphai in her weekly column on Jan. 27.

"That's so kinky of you, so let's give you the position of a Prime Minister's Office minister!"

Ignoring the outcry, the prime minister then asked Ms. Nalinee to oversee the National Identity Office which, according to its website, promotes "the unique and noble values that distinguish Thailand from others, that form the foundation of society and makes it one that is complete with quality, morals, wisdom, thirst for knowledge, generosity and fraternity."

Inside the Grand Palace on Wednesday (January 25), meanwhile, banquet guests applauded Princess Sirindhorn as she gave annual Prince Mahidol Awards of $100,000 each to three foreign medical experts for their work.

The winners included two Americans, Aaron T. Beck and Dr. David T. Wong, and an Australian, Dr. Ruth F. Bishop.

For the past 100 years, Thailand's monarchs have not resided in the Grand Palace, which is mostly used for royal ceremonies and also to contain funeral relics of their deceased relatives.

Construction of the Grand Palace began in 1782, and it forms part of a complex which includes the Temple of the Emerald Buddha.

The royal family lives in Dusit Palace's Chitrlada Villa, in a different area of Bangkok.