PHUKET: The Department of Special Investigation (DSI) has raided a legal accounting firm based in Chalong that is now under investigation for its involvement in facilitating nearly 70 foreigners illegally operating companies with holdings worth an estimated total of B440 million.
DSI Director General Pol Maj Suriya Singhakamol was in Phuket yesterday (June 15) to lead the raid at 10:30am.
While none of the official reports of the raid identified the law firm raided, photos posted with one official report clearly identified the office as ST Accounting Plus Solutions, located on Chao Fa East Rd in Moo 8 Chalong.
The office is located in a small shop/office complex about one kilometre north of Chalong Circle, and right next door to the Mueang Phuket 2 Area Revenue Branch Office.
The owner of the company is a Thai woman with a British husband. There are about 40 employees and officers in the company, said one official report of the raid.
Joining the raid was Thawewat Surasit, Director of the DSI’s Bureau of Financial and Banking and Money Laundering Crime.
Present to enforce the raid were officials from the Department of Business Development and police from the Institute of Forensic Science.
Maj Suriya explained to the press that three offices of the company were raided, with boxes of files seized as evidence. Photos taken during the raid showed that among the evidence seized was a pile of passports.
Maj Suriya told the press that “almost 70 foreigners” were found to be involved in the companies under investigation for using nominee shareholders to illegally allow foreigners to control such companies.
He said the practice of using nominee shareholders was illegal under the Foreign Business Act and brought “much economic harm to the country”.
In total, 44 real estate companies, eight tourism companies and 14 other service companies, were under investigation, Maj Suriya confirmed.
“Each of the 44 real estate companies has real estate holdings to the value of B10-20 million, which is equivalent to approximately B440mn in real estate sales business,” he said.
“Accordingly, from the evidence found and as a result of previous investigations, we have found that the law firm set up almost 100 companies for foreigners, of which about 44 companies are related to land,” Mr Suriya said.
“Most of the customers are Russians. Each company carries out some of the business activities that are prohibited for foreigners, such as the possession of real estate or land or occupying and renting or trading [real estate],” he added.
“There is also evidence of foreigners working in occupations that are also prohibited,” he said. “The investigation also found [the company] has been operating for over 15 years but has never been raided.”
“This type of offence is widespread in Phuket, Chiang Mai and tourist areas in the east, and is an area of high value. Foreigners have come to rely on this method of acquiring or possessing high-value land, which causes the state to lose a lot of revenue due to land trading through a nominee company, not normal trading,” Maj Suriya said.
Maj Suriya said that the root cause of the wrongdoing comes from law firms that prepare the accounts. “It is the starting point to persuade some foreigners to believe [that the practice is legal]. Meanwhile, some people already know that it is illegal, and come to use the services of a law firm in submitting a company registration,” he said.
“This results in the right to occupy and hold the land as well as real estate and other ‘mutually beneficial’ businesses as well,” he added.
DAMAGE DONE
Officers had yet to determine the extent of the “damage done” by the companies under investigation for using nominee shareholders, Maj Suriya said.
Such companies were prone to tax evasion by not reporting transactions, he said.
“According to the regulations, there will be various taxes and fees [on transactions] of approximately 10% on each purchase. Especially in provinces where land is highly valued, foreigners trade by changing shareholders to avoid paying taxes. Most of the problems that follow are that the land will belong to foreigners,” he said.
“The state loses taxes and fees in conducting these transactions. Through the Land Office alone, which requires about 8% each time [with each land transaction], the state has lost about B35mn in revenue from fees.
With a large volume of land transactions going unreported to the Land Office, the state could have lost revenues totalling as much as B200mn, Maj Suriya said.
MORE ACTION
Following the raid, Maj Suriya together with Mr Taweewat met with Phuket Vice Governor Amnuay Pinsuwan at Phuket Provincial Hall at 3pm yesterday.
“There are guidelines to consider for both prevention and suppression [of companies using nominee shareholders] in order to reduce the economic damage caused by the business of foreign companies in the form of nominees,” Maj Suriya said.
“There is a policy for officials to expedite the suppression to all provinces throughout Thailand because of such cases. It is a matter that seriously affects the stability and economic system of the country. It cuts off business opportunities for Thai entrepreneurs,” he added.
“From the discussions, Phuket [provincial officials] will work with the business sector, such as the provincial chamber of commerce to hold a seminar so that [business] operators understand the nature of foreign business operations and comply with Thai law.,” the DSI noted in its own report of the raid.
“The Department of Special Investigation is to also take part in the aforementioned forum,” the DSI report noted.
