DBD intensifies crackdown on foreign proxy-owned businesses
The Department of Business Development (DBD) is ramping up its fight against illegal foreign proxy-owned businesses, blacklisting thousands of firms and exposing a massive network of local accountants acting as nominees for foreign investors.
Poonpong Naiyanapakorn, director general of the DBD at the Ministry of Commerce, revealed yesterday that recent on-site inspections across 11 economically significant provinces, including Bangkok, Phuket, Chiang Mai, Surat Thani and Krabi, identified 3,294 firms showing signs of proxy ownership.
The targeted sectors span accounting firms, construction, tourism, restaurants, industrial factories, fruit wholesale markets and the steel industry.
Following an extensive audit of their financial statements, the DBD has forwarded data on over 14,000 related entities to law enforcement and regulatory bodies, including the Revenue Department, the Land Department, the Anti-Money Laundering Office (AMLO) and the Department of Special Investigation (DSI), for further legal action.
Poonpong highlighted a growing trend, wherein foreign nationals use local professionals to bypass the Foreign Business Act, saying that foreign investors are increasingly using accountants, law firm employees or even their own Thai staff to hold shares on their behalf.
An expanded investigation targeting accounting firms across eight tourist-heavy provinces, Chon Buri, Chiang Mai, Mae Hong Son, Prachuap Khiri Khan, Surat Thani, Phuket, Krabi and Phang Nga, uncovered 29 accounting firms and 140 accountants acting as shareholders in more than 2,040 foreign-investment joint ventures.
The total value of these shares amounts to 2.52 billion baht. In one case, a single individual was found holding shares in as many as 212 companies, with a combined value of over 247 million baht.
To address this systemic issue, the DBD has called a meeting on June 30 with professional accounting councils and relevant state agencies to establish stricter regulatory oversight for accountants.
The latest disclosure follows Phase 3 of a crackdown in Phuket, Phang Nga and Krabi, which successfully dismantled a major proxy network.
That operation uncovered 29 nominee-owned companies, leading to the court issuing 59 arrest warrants and 60 search warrants.
Over the past eight months, the DBD has issued four orders and two edicts tightening regulations against nominee share-ownership arrangements.
According to Poonpong, these preemptive measures have successfully reduced the number of such companies by over 65%.
To seal remaining loopholes, the department plans to roll out stricter financial tracing measures, to become effective on August 1.