Opinion – Govt.’s move to extradite STARK’s Chanin should help boost investor’s confidence in rule of law

Listen to this story

The move to bring Chanin Yensudchai, former CEO of Stark Corporation Plc (STARK), back to Thailand, despite there being no extradition treaty between the government of Thailand and United Arab Emirates, is a move that should be applauded and would likely bring back some lost confidence in the capital markets of the country.

Chanin, who has been accused of embezzlement scandal to the tune of billions of Baht, was arrested in Dubai and deported back to Bangkok over the weekend.

A lot of questions were being raised on why and how the deportation of a person can happen despite the 2 countries not having any kind of ‘extradition’ treaty.

Sources tell Thai Enquirer that the move to bring Chanin back to face trial in Thailand was something that the government of Prime Minister Srettha Thavisin had been working behind the scenes because this was the 1st major case that impacted the investor’s sentiments and has been blamed as one of the main causes for the continued erosion of both domestic and international investor’s sentiments.

The Department of Special Investigation accepted the case for investigation against seven STARK employees and five related companies for forgery, fraud, embezzlement, and money laundering under the Securities and Exchange Act in June last year and later recommended legal action.

Chanin was one of the suspects, and the DSI had asked Interpol to issue a red notice for him after he failed to report to acknowledge his charges.

The fraud scheme includes faking sales records, overvaluing assets, and hiding liabilities to boost the company’s stock price and secure loans and investments. More than 4,704 shareholders have been affected, and the damages have been estimated at 15 billion Baht.

PM’s Office Minister Jakkapong Sangmanee has come out to say that he was working behind the scenes to extradite Chanin back to Thailand as a way to show that offenders cannot just abscond the rule of law.

Reciprocity Rule

Although both Thailand and UAE do not have an extradition treaty, the fact that Chanin was arrested in UAE and deported back to Thailand, was based on what is called as ‘reciprocity’ agreement.

“There is a likelihood that we (Thais) would have to one day pay back with a request from UAE for their help they offered in this case,” said a source who declined to be named.

Reciprocity, the source said, can be done if there is a will from the agencies involved, and in this case the government and the various agencies all wanted to make sure that the extradition does take place.

Although seldomly used, the reciprocity is something that was not used against former Prime Minister Thaksin Shinawatra or his sister Yingluck while they were living in Dubai. There is no explanation on why, but sources tell Thai Enquirer that such reciprocity has to have the agreement from both governments, in this case Thailand and UAE.

The case of the Shinawatras may have been that the governments in the past had not pushed the envelope far enough and even if it was pushed from Thailand’s side, the government in UAE may have not agreed to the move requested from the Thai side.

Investor’s Confidence

STARK’s case was the 1st one that happened that eroded the market sentiment and created a lack of confidence among investors.

The fact that despite the charges laid against the executives of STARK, Chanin managed to get out of the country and was living in UAE, in hopes that like the Shinawatras, he too would be immune to the rule of law of Thailand, despite all the shenanigans he undertook here in Thailand.

Fears of accounting books being cooked to show better sales figure and other numbers may be more widespread than that people know and those perpetuating these kinds of things could simply fly out of the country to escape their possible prison sentences, made many investors fear and thus eroding the confidence.

The loss of confidence coupled with a slower than expected economic growth momentum has pushed the trading on the Stock Exchange of Thailand (SET) to fall to levels not seen in nearly 5-years (during covid era) and the exodus of foreign investments have been at scale not seen in decades. Problems of STARK came to surface in March of last year and since then the SET Index has dropped by more than 18%.

Foreign investors, who constitute to be a big part of the investments into the country, have been net sellers for the past year (net sell of 192.49 billion Baht). Year-to-date they have continued their selling spree with a net sell position of 109.35 billion Baht.

The extradition of Chanin back to face the musical chair for what he has done to more than 4,000 of his company’s investors, not to mention the 1,000s of employees of the firm, and the overall confidence in the capital markets of Thailand, is something that needs to be applauded.

The government is sending clear signal that such action by anyone cannot be tolerated and would also send clear signal to other potential executives who may have been committing fraud that there is no escaping from prosecution because the government is determined to bring to justice those who break the law no matter where they try to hide, even if there is no extradition treaty with that country.

COVID-19

Ivermectin not effective in treating Covid-19, joint Mahidol-Oxford study shows

Ivermectin is not shown to be effective against Covid-19 in clinical trials according to the findings of a joint...

Latest article