Authorities in Phuket have arrested two foreign nationals and two Thai nationals in connection with the illegal operation of international schools. The arrests are part of a broader enforcement effort targeting businesses suspected of violating Thai law, particularly concerning foreign ownership and nominee arrangements.
Crackdown on Illegal Business Practices
Phuket Provincial Police, in collaboration with Chalong Police Station, conducted a targeted operation in the Chalong and Rawai areas. The investigation focused on foreign-owned businesses suspected of operating in contravention of Thai regulations. During their inquiry, law enforcement officers identified three international schools that were allegedly operating in violation of the Foreign Business Act. This act governs the extent to which foreigners can own and operate businesses within Thailand.
Allegations of Nominee Arrangements
Investigators allege that the schools were being operated through nominee arrangements. In such schemes, foreign individuals effectively control businesses, while Thai nationals are used to register and own the companies on paper to circumvent foreign ownership restrictions. According to the police, two foreign nationals were identified as the primary controllers of these businesses, with two Thai nationals allegedly facilitating their establishment and registration. This practice allows foreign entities to operate businesses that would otherwise be legally prohibited or restricted for them under Thai law.
Arrests and Ongoing Investigation
Following the gathering of evidence, arrest warrants were secured for the four individuals involved: two foreign nationals and two Thai nationals. The identities and specific nationalities of the foreign suspects were not disclosed by the authorities at the time of the arrests. On Tuesday, August 5, law enforcement officers executed raids on the premises of the implicated schools as well as the residences of the suspects. All four individuals were apprehended and subsequently transferred to investigators for legal proceedings. They are being charged under the provisions of the Foreign Business Act.
The police have indicated that the investigation is ongoing. Authorities are working to identify any additional individuals or companies that may have been involved in these illegal operations or similar nominee schemes. The aim is to ensure full compliance with Thai business regulations.
Warning to Nominees and Business Operators
Chalong Police Station issued a stern reminder to foreign business operators, urging them to adhere strictly to Thai laws. Furthermore, Thai nationals were strongly cautioned against allowing their names to be used as nominees for foreign businesses. Police emphasized that individuals found to be complicit in such arrangements, whether by facilitating or participating in them, could face the same severe legal penalties as the foreign business operators found to be in violation of the law.
Authorities have pledged to continue their rigorous enforcement of the Foreign Business Act. This includes targeting illegal business operations and prosecuting those who enable or facilitate nominee schemes. The public is encouraged to report any information regarding similar illicit activities by contacting the police hotline at 191 or Chalong Police Station directly at 076-381247.
New Regulations on Foreign Investment
This operation aligns with new measures introduced by the Department of Business Development (DBD) under the Ministry of Commerce, which came into effect on August 1. These new regulations are designed to enhance scrutiny of nominee arrangements in foreign investment. Under the updated rules, companies with foreign investors are now required to provide concrete evidence of the source of investment funds used by their Thai shareholders.
In addition to proving the origin of funds, applicants seeking to establish or operate businesses under these regulations must submit a detailed written explanation of the investment. This documentation must be accompanied by bank statements from the Thai investor or the legal entity providing the funds, covering a period of three months. These stringent requirements aim to increase transparency and prevent the misuse of Thai nationals as nominees to circumvent foreign ownership laws.
Conclusion
The arrests in Phuket underscore a concerted effort by Thai authorities to combat illegal business operations and ensure fair competition. The focus on nominee arrangements and the introduction of stricter regulatory measures signal a commitment to upholding the integrity of Thailand’s business environment and protecting its economic interests.
