Two Phuket hotels found unlicensed as nominee probe expands to 391 firms

Thai authorities have expanded an investigation into suspected foreign nominee businesses in Phuket to 391 companies, after inspections found two hotels operating without hotel licences or legally required construction permits.

Deputy Interior Minister Polapee Suwunchwee led officials from the Department of Provincial Administration and members of the Phuket Volunteer Defence Corps in inspections of hotels and other businesses in Patong on July 11.

The operation followed complaints about establishments suspected of operating illegally, being controlled by foreign investors through Thai nominees or failing to obtain the necessary construction and business permits.

Polapee said the inspections formed part of a wider effort to regulate businesses across Phuket rather than an operation aimed at any particular establishment or investor.

He was accompanied by the Phuket governor and Department of Provincial Administration officials. Discussions during the operation also identified regulations that may need to be revised where they hinder effective enforcement or the orderly licensing of legitimate businesses.

Two hotels lacked required permits

Officials inspected two hotels after receiving information that they might be operating without authorisation.

Both establishments were found to have no hotel operating licences and no construction permits issued in accordance with the law, Polapee said.

Department of Provincial Administration officers began legal procedures against the businesses following the findings. The report did not name the hotels or state what penalties they could face.

Authorities are preparing to inspect further hotels and businesses identified through information supplied by the Commerce Ministry.

Those establishments are suspected of using nominee shareholders to conceal foreign control or allowing foreigners to hold stakes exceeding the limits permitted under Thai law.

Officials will examine their ownership structures, operating licences, construction approvals and other relevant documents before deciding whether legal action is warranted.

Polapee stressed that the operation was intended to enforce the law and improve order across Phuket, particularly in cases where licensing applications or ownership arrangements might involve nominee structures.

The companies remain under investigation, and the nominee concerns have not been established against every business being examined.

Probe expands from 300 to 391 companies

The investigation initially covered more than 300 legal entities but has since been widened.

Authorities referred 353 companies to the Board of Investment for checks on whether they had received investment-promotion privileges that could lawfully permit forms of foreign ownership or provide exemptions from certain restrictions.

A further 38 companies were awaiting examination, bringing the total number under scrutiny to 391.

Polapee said direct coordination with the BOI secretary-general allowed officials to verify a company’s investment status within about two hours.

Among the 353 companies referred to the BOI:

• Eight held relevant investment-promotion privileges.
• 307 had no applicable exemptions.
• Thirty-eight remained under examination.

Authorities were instructed to pursue cases decisively where evidence showed that companies without exemptions had breached foreign-ownership or other business laws.

Holding no BOI privilege does not by itself establish wrongdoing. Investigators must still determine each company’s ownership, control and compliance with applicable legislation.

Investigators to trace money and beneficial owners

The Interior Ministry wants the Phuket operation to become a model for screening company information jointly with the Commerce Ministry in other parts of Thailand.

Polapee said enforcement should not end with the withdrawal of rights, closure of businesses or other administrative action.

The Royal Thai Police and Department of Special Investigation should also participate in tracing financial transactions and identifying the people who ultimately control companies suspected of using nominees, he added.

Investigators have also been asked to examine the origins of assets held by Thai nationals whose names appear as shareholders on behalf of foreign investors.

The objective is to determine whether Thai shareholders genuinely invested in and exercised control over the businesses or merely allowed their names to be used to circumvent legal restrictions.

Any criminal or administrative proceedings will depend on evidence gathered through the investigation.

Phuket tackles backlog of 600 hotel applications

The crackdown is taking place alongside efforts to accelerate legitimate hotel licensing in Phuket.

The province had accumulated a backlog of more than 600 applications from hotels and other accommodation businesses seeking operating approval.

Authorities have so far processed nearly 100 applications, including those involving small hotels and establishments seeking hotel licences in categories one to four.

The parallel approach is intended to distinguish businesses attempting to enter the legal system from those operating without permission or potentially concealing foreign ownership.

Officials said Phuket would continue inspecting establishments, checking corporate records and coordinating with the Commerce Ministry, BOI, police and DSI.

Companies found to have breached the law could face prosecution, while investigators will seek to identify financiers, beneficial owners and any Thai nationals involved in nominee arrangements.