Integrity Legal

19th August 2018

It recently came to this blogger’s attention that the Department of Special Investigations in Thailand have undertaken a raid on various offices of those reportedly engaged in the maintenance of corporate structures utilized for the sole purpose of allowing foreigners to enjoy use of Thai real estate. The text of the announcement from DSI was originally published in Thai. We have undertaken a translation of the announcement in order to provide clarity for what could be considered an important issue for expats in Thailand. The translation is below:

DSI in collaboration with the Institute of Communication Science and the Board of Investment are currently investigating a group of Law Offices in the Phuket, Suratthani and Bangkok area that seem engaged in ‘camouflaged’ corporate structures acting as nominees on behalf of foreign shareholders.

As per government policy to actively pursue foreign investors using Thai nominee companies to own land in order to protect the nation’s interests.  On the 15th of August 2018, Police Colonel Paisit Wongsmuang, the head of DSI; and Police Major Suriya Singhokmol, his second in command; in collaboration with The Institute of Communication Science and the Board of Investment obtained a warrant to search 4 offices as follows:

  1. The first team led by Piya Watnawarangul (special agent investigating civil embezzlement) searched the premises of the Office’s Phuket Branch located at 393/4-5 Moo 1 Soi Bantao 1 Srisuntorn Rd., Chengtalay Subdistrict Thalang District, Phuket.  The premises appeared to be the work place of the Thai Nominees and a suspected location for falsifying documents for the purpose of camouflaging nominee activities.
  2. The second team led by Worapoj Maihom, searched the premises of the Office’s accounting branch located at 123/9 Moo 5 Chengtalay Subdistrict Thlang District, Phuket.  The office appeared to provide accounting services for the Nominee companies.
  3. The third team led by Jakrapop Klinhom searched the premises of the firm’s Samui branch office located at 17/10 Moo 1 Taweeratpakdee Borpud Sub district, Koh Samu District, Suratthani .  The premises were apparently the work place of the Thai Nominees and a suspected location for falsifying documents for the purpose of camouflaging nominee activities.
  4. The fourth team led by Mr. Taweewat Surasit, searched the premises of the Bangkok Branch located at Rajanakarn Building, 3 Floor AA Sathorn Rd, Yannawa Subdistrict, Sathorn District Bangkok, and the work place of the Foreign Managing Directors.

The search yielded copies of documentation, computer data and hardware that will be used as evidence in court proceedings.

Additional information found at each premises showed that the foreign investors seemingly purchased over 80 plots of real estate, consisting of land, vacation homes and houses.

Sources also reveal that the firms seem engaged in nominee activities that allow a large number of foreign investors to buy and sell land in Southern Thailand such as Surat Thani, Pangna, Phuket and Krabi with such activities grossing over 2 billion baht per year.

The investigation has found that the group has used Thai employees to incorporate Thai companies.  These Thai Corporate Entities in turn are used to hold shares in other companies for the purpose of allowing foreign investors to buy land.  These activities are in violation of the foreign business act (1999).  Using Nominees to hold land on behalf of foreign persons or entities has a negative impact on national interests and the real estate industry.  DSI will continue to actively pursue and shutdown such activities.

Please note that the above translation should not be viewed as a definitive interpretation of the underlying announcement and is solely for informational purposes. It should also be noted that the matter has yet to be fully settled via adjudication and the final outcome of the case remains to be seen.

The reader of this posting should note that Thai authorities are becoming increasingly efficient and sophisticated in their law enforcement endeavors. This is clear from the increasing number of immigration raids and the heightened scrutiny of officers throughout the Thai civil bureaucracy on issues ranging from revenue assessment to traffic ordinances. Clearly, it is a time to be mindful not only of the formalities inherent in the letter of relevant laws, but the policy considerations which embody the spirit of those laws as well.


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