Thai officials are investigating whether a suspected nominee network is using naturalised citizenship to disguise foreign ownership of businesses in Phuket and several other provinces.
The Interior Ministry has ordered checks on more than 100 Phuket companies and a wider list of 361 firms nationwide, following a raid on August 6 that saw eight locations searched and 16 people prosecuted.
Deputy Interior Minister Polapee Suwunchwee said the pattern raises concerns for the country’s economic resources and sovereignty.
“This could be a new form of security threat gradually impacting economic resources and sovereignty,” he said.
He spoke after an inspection of Chabad House in Patong.
Early checks found something in common. Some people involved in the businesses hold Thai ID cards despite being born abroad and having only recently naturalised and gained citizenship.
Polapee named three directors and shareholders of The Kosher Place (Thailand) Co Ltd, which operates in Patong. All three hold Thai ID cards without being native-born, and two were naturalised on November 21, 2017.
The company is registered with 30 million baht in capital, is headquartered on Sukhumvit and runs 10 branches.
Officials are checking whether its Thai shareholders are real investors or cover for foreign capital. Records from the Department of Lands, the Interior Ministry and the Commerce Ministry have produced a list of 361 companies to examine.
The Interior Ministry has separately ordered a financial trace on more than 100 Phuket companies suspected of links to foreign nominee networks. Between them, they took more than 5 billion baht in revenue last year.
Investigators want to know where the founding capital came from, and whether foreign investors are running the businesses through Thai shareholders.
The inquiry also covers how some of those shareholders got citizenship in the first place, including their paperwork, backgrounds and the approval process.
Polapee said suspected nominee structures have turned up well beyond Phuket, in Bangkok, Samui, Koh Pha-ngan, Pai and Chiang Mai. The government is weighing whether investment and naturalisation law needs rewriting to close the gaps.
The Chabad House inspection took place on July 26, at the premises on Rath-U-Thit 200 Pi Road in Patong.
Officials looked at fundraising, land ownership and the business structure behind the building. They found a donation box and are checking whether collecting donations there required permission under the Fundraising Control Act of 1944.
They confirmed the building is used for Jewish religious ceremonies.
On an earlier visit, Polapee told reporters a local person had described the site to him as “Israeli territory”. He rejected the description.
“Chabad is not extraterritorial,” he said. “It’s Thai territory that must be managed by Thai law.”
The Phuket News, which reported the remarks, says it has seen no video confirming anyone said this. The visit was filmed from every angle by a large group of Thai media.
Polapee also questioned why access to the five-storey building was restricted, arguing that a religious site should be open to anyone regardless of faith. Chabad administrators disputed that.
Governor Chotinrin has drawn a line between the two halves of the story. The nominee investigation and the question of how individuals were granted citizenship are separate matters, he said.
Phuket officials hold a list of people and companies under investigation for possible nominee arrangements, and site visits are continuing.
Citizenship is not theirs to review. That sits with the central government under the Nationality Act of 1965 and the Department of Provincial Administration.
“We are acting within our authority. Anything outside our jurisdiction must be referred to the central government or the relevant authorities,” Chotinrin said.
He added that investigations have to follow legal procedure and cannot rest on allegations or tip-offs alone.
Patcharee Channatho, a Thai national associated with Chabad House Phuket, defended the security at the building. It is not a claim to special status, she said, and it does not exclude Thais.
She compared it to a hotel, where visitors usually need a reason to come in and may be asked to identify themselves. She also rejected the idea that Chabad was claiming to be Israeli territory.
On the nominee allegations, Patcharee said she could not confirm whether the structure amounts to a nominee arrangement. She did acknowledge Israeli investment in the business.
She described The Kosher Place as a family business supplying kosher food to Jewish visitors, and denied it was a front.
“Some of the suspicions and media coverage are greatly distorted,” she said.
Chabad has also faced scrutiny over its donations, she said. Gifts to Patong Hospital were reported as an attempt to buy or take over the hospital. Chabad is considering an open house so media and the public can see the premises.
The Chabad inquiry sits inside a much larger sweep. In an operation launched on August 6, Phuket police raided eight locations and prosecuted 16 people. They were 10 Thais, two Canadians, three Russians and one Kazakhstani.
The businesses covered vehicle rentals, car washes, language and international schools, restaurants, IT companies, electronics shops and traditional medicine pharmacies.
Police are working through 361 companies with the Phuket Provincial Land Office and its Thalang branch. So far, 114 have been sued and 31 nominee cases prosecuted.
Phuket has 32,024 registered legal entities with about 240.6 billion baht in registered capital. Of those, 11,078 are classed as foreign-owned, and 6,682 businesses across six sectors have been flagged as high risk.
Companies with foreign investment now face extra checks, covering bank statements, the source of investment funds, shareholder identities and the business premises themselves.
What does this mean if you run a business in Thailand?
A nominee is a Thai person who appears on paperwork as an owner while a foreigner actually controls the company and the money. Doing that is illegal under the Foreign Business Act, for both sides.
The law exists because foreigners cannot hold a majority stake in many types of Thai business, and generally cannot own land at all. A Thai-majority company is the usual way around both limits, which is why authorities look hard at who those Thai shareholders really are.
Naturalised citizens are what makes this case different. Someone who holds a Thai ID card is legally Thai, so their shares count as Thai shares. Investigators are now asking whether that status is being used as a shortcut rather than a genuine change of nationality.
Nothing about this changes the rules for foreigners who own businesses properly. What has changed is the paperwork. If your company has foreign investment, expect officials to ask where the capital came from and to want bank statements. They will also check that your registered address is a real place of business.
The advice from lawyers here has been the same for years. Keep records showing your Thai shareholders actually paid for their shares and actually participate. A shareholder who cannot explain their own investment is what draws attention.
None of the allegations in this story has been tested in court. Being on a list of companies under examination is not a finding of wrongdoing. Both the governor and Chabad have made that point.
Related news
- 2 Thai, 2 foreigners arrested for illegally operating international schools in Phuket
- Thailand expands nominee checks to post-registration changes
- 6 Pattaya officials suspended for collecting unofficial fines from foreigners
The story Hundreds of Phuket firms face fresh ownership checks as seen on Thaiger News.
