New companies 'may be front for pyramid scheme'

Corporate October 21, 2014 01:00

By Petchanet Pratruangkrai
The N

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The Business Development Department is closely inspecting new registrations of firms suspected of being fronts for pyramid schemes to trick villagers into buying stakes in holding companies that have no real operations.



Director-general Pongpun Gearaviriyapun said her department had recently found some firms had been set up to cheat people by registering new bogus companies and then raking in investments from “shareholders”.
The department was alerted by a significant rise in new business registrations in Li district, Lamphun province. While registering mostly as construction firms, they construct nothing. People in the district complained to the police that they had been lured to invest sums of money in such new businesses, but never saw any return. All they got was a document showing that the company was duly registered, but the “entrepreneurs” merely took the money and disappeared.
“Fraudsters deceive people by allowing them to hold shares in a company and partly own the business by asking for initial investment capital. These frauds tell them that they will benefit from the government’s construction mega-projects, and they do register the new firm with the department, but actually these businesses do nothing,” Pongpun said.
To solve this problem, the department is closely inspecting newly registered firms to see if they are really operating. If not, the department will probe these companies in cooperation with local police, chief district officers, and the Department of Special Investigation.
The Business Development Department suspects about 120 firms in Lamphun of running pyramid schemes. Pongpun warned people to consider carefully whether to give money to individuals claiming to be offering good investments, as they could be deceived.
Meanwhile, the department reported that the number of newly registered companies rose sharply, by 17 per cent year on year, to 6,079 firms in September. The value of initial capital investment increased by 9 per cent to Bt30.11 billion.
In the first nine months, the number of new registrations also improved, to 46,341 companies.
Pongpun said that with recovering economic growth, the number of new firms this year would exceed 60,000.
The department also reported that 10,206 companies shut down in the first nine months. In September alone, 1,643 companies closed down.

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