BANGKOK — Thai authorities launched a sweeping investigation into 37 companies with suspected connections to the catastrophic collapse of the 33-story State Audit Office building in Bangkok.
The probe, now designated as a special case by the Department of Special Investigation (DSI), centers on two Chinese-linked firms—China Railway Number 10 and Xin Ke Yuan Steel—which investigators believe operated through an extensive network of nominee companies.
Progress was reported on April 3 when officials from the Regional Revenue Office 3 filed criminal charges against Xin Ke Yuan Company Limited, a major steel producer whose materials were used in the building’s construction.
Tax Fraud: 7,426 Illegal Tax Invoices
A Revenue Department representative stated that tax officials found evidence of illegal tax invoices. They have filed complaints against Xin Ke Yuan for using 7,426 fraudulent tax invoices worth over 200 million baht ($5.8 million) between July 2015 and March 2017 for tax credits, constituting criminal offenses under the Revenue Code within DSI’s investigative authority.
The Revenue Department noted that although the evidence predates the State Audit Office building construction, it resulted from joint operations between DSI and the Revenue Department investigating the building collapse case. The damage value meets the criteria for a special case.
Two main Chinese Firms at Center of Probe
According to information from the Ministry of Commerce announced by Commerce Minister Pichai Naripatanapan on the same day, construction material experts who collected samples from the site found that some materials came from Xin Ke Yuan Steel, raising questions about whether the entity was operating legally and possibly using nominee arrangements.
Pichai added that an in-depth investigation revealed China Railway Number 10, a construction contractor, has Chinese shareholders holding 49% of shares, with shareholders connected to 13 other companies. Xin Ke Yuan Steel has Chinese shareholders holding 80% and is connected to a network of 24 companies, which requires further investigation for potential nominee arrangements.
“This matter has gained significant public interest, and the Prime Minister has instructed us to pursue it thoroughly. We expedited meetings and ordered nominee investigations of China Railway Number 10 (Thailand) Co., Ltd. and Xin Ke Yuan Steel Co., Ltd. Preliminary findings show both companies are connected to a total of 37 companies, all of which we will investigate and forward information to DSI,” Pichai stated.
26 Gov’t Projects by China Railway
Meanwhile, the Comptroller General’s Department reported that among the 26 projects contracted to China Railway, some faced abandonment issues. The department is investigating government procurement processes, which could result in blacklisting the companies involved if abandonment is confirmed.
Deputy Commerce Minister Napintorn Srisunphang added that all ministry departments must submit information to DSI and relevant agencies for investigation:
- The Department of Business Development is investigating China Railway Number 10 (Thailand) and its connections to 13 companies
- The Anti-Money Laundering Office (AMLO) will investigate financial trails of companies, shareholders, and related parties
- The Revenue Department will audit tax payments of all companies and shareholders
- The Thai Industrial Standards Institute will examine steel and construction equipment quality
- The Department of Employment will verify work permits for foreign workers
- The Department of Industrial Works will inspect steel production facilities
- The Land Department will examine land holdings by Thai and foreign nationals
- The Comptroller General’s Department will audit procurement processes
Large Project Concerns
Regarding the 26 projects undertaken by China Railway, most are government building construction projects currently underway or already accepted, located throughout the country. One project with a budget of 11.387 billion baht ($332.6 million) was awarded for 9.348 billion baht ($273 million), prompting a recommendation for DSI to propose urgent inspections by the Ministry of Interior, Department of Public Works, and Ministry of Industry.
Napintorn stated that DSI has been continuously investigating, with the Director-General approving the investigation of these companies due to reasonable suspicion of procurement fraud. There are two areas of potential violations: government procurement fraud and nominee arrangements under the Foreign Business Act. Regarding nominees, there is already credible evidence not only against China Railway but also the 13 related companies, with DSI expanding the investigation.
Penalties under the Foreign Business Act include:
- For Thai nationals holding shares on behalf of foreigners (nominees): imprisonment up to 3 years or fines of 100,000-1,000,000 baht, or both
- For foreigners operating businesses without permission: imprisonment up to 3 years or fines of 100,000-1,000,000 baht, or both
- For foreigners conducting prohibited businesses without permission: courts can order business termination or revocation of shareholdings
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