The international transactions made via internet has increased exponentially due to the lack of mobility caused by the covid-19 pandemic. The personal meetings seem not to be necessary as the deal could start and be closed simply by a mere email conversation, even the value of the transaction reach millions of dollars or euros.
Due to the “new normal” and restrictions to travel, most business people may take less time and care to check the background of their business partners. Recently, H&P lawyers in Bangkok have alerted on a surge of fraud cases as we found that some of the foreign purchasers end up with huge losses because they made transactions without knowing that another party was involved in fraud schemes.
In this scenario, the perpetrators have developed more sophisticated techniques, used a more complicated scheme to increase its credibility. For example, using the real name of an existing company and its directors, providing fake documents which are mostly identical to the authentic documents issued by the Thai officials, creating a professional logistics website where you can track the delivery of products, showing fake information combining accurate facts with some that are misleading and posting offers of different goods under the market prices. In some cases, the perpetrator even conducts the fraud through a company incorporated in Thailand but without any actual business operation.
Although no investigation can uncover all potential risks, however, there is a way to effectively eliminate possible risks for your transaction, which is to engage a law firm in Thailand such as H&P to conduct a comprehensive investigation of the company that you are purchasing the products from. In our professional opinion, conduct a company due diligence is today an essential tool for protecting your interests before making any transaction. In other words, the basic function of company due diligence is to access all possible information of the seller company in Thailand and check whether that transaction is real and not part of a fraud scheme.
What can H&P lawyers check in a Due Diligence?
1. Corporate Documents, Financial Statement
All companies incorporated in Thailand must be registered at the Department of Business Development (DBD). Our lawyers can check all public information of the entity including, the registered capital, authorized director, address, shareholder, and financial statement as all companies must go through an annual audit.
2. Public Documents
In most cases, the perpetrator provides the fake document claiming that it is issued by government agencies, such as the certificate of origin or documents from the Thai Chamber of Commerce. Our lawyers can check the authentication of documents with the official. If you found that the document is fake, then the rest step would not be necessary, and you should immediately avoid engaging in business with the seller in Thailand.
3. License and Permits needed for proposed products
Apart from reviewing the document and primary investigation, we believe that visiting the factory and having personal meetings with your seller is also a key factor to protect you, assuring that the seller’s company operates the business and has the proposed products in warehouses.
In H&P professional legal practice, our lawyers found common patterns. For example, when the fraud involves big sums of funds, then the perpetrators use existing companies but usually these companies have no real activity and a Thai lawyer can check and confirm this to you before you do any business.
When the transaction only reaches a few thousand euro or dollars, the fraudsters use personal bank accounts of Thai Nominees or even Western Union as a platform to receive the money from abroad before disappearing. The pressure on the victims is big and the buyer think that they can miss a good business opportunity if they don’t accept the terms of the sellers.
In many occasions the fraudsters in Thailand claim that the goods are experiencing problems with Customs and the buyer needs to pay more and in other cases they even impersonate Thai IT Police officers to claim for more money to the victims.
If you need to conduct a legal investigation on a company in Thailand before entering into business, please contact our lawyers in Bangkok at [email protected]
