Samsung Executives Arrested In Thailand

[LaoPo]

Samsung Executives Arrested in Thailand

BANGKOK, Thailand -

Two top executives for Samsung Electronics subsidiary in Thailand were arrested Friday on complaints of fraud, police said.

Park Kwang-kee, managing director of Thai Samsung Electronics Co. Ltd., and Kim Chung-jun, the company's general manager, were arrested in Bangkok and turned over to the police's economic and cyber crime division.

Police Lt. Col. Phuthorn Pritsanananthakul said two Thai companies had filed fraud charges against the two executives.

One, Sam Corp., filed a criminal complaint alleging losses of $1.9 million because of fraud by Samsung, he said.

Another company, Triple A Prompt, filed a civil suit against Samsung last week, demanding compensation of $17.3 million, he said.

Kim, allowed to speak to reporters at a news conference at the economic and cyber crime division, denied the allegations and said they were the result of a business dispute.

"We are restructuring our strategy in order to better serve the Thai market," he said. "During this restructuring, maybe some of our business partners lose some benefits."

He said the matter was under investigation and was expected to be resolved soon in court.

"We are very sure that we will win the case," he said. It was not immediately known whether he and Park would be granted bail.

http://www.forbes.com/feeds/ap/2007/09/07/ap4092894.html

LaoPo

[Solosiam]

Yep our experience of the Samsung supply chain is not a good one, forged receipts, no VAT etc...

[cclub75]

Yep our experience of the Samsung supply chain is not a good one, forged receipts, no VAT etc...

Really ? Could you be more specific ? You mean Samsung directly or its distributors ?

I mean we are not talking here about a little, shaddy company if I may say...

Samsung. And those 2 guys are korean. Okay okay it's not a proof... but this whole story is strange. And rather shocking.

What worries me is : you are foreign executive, you have a "business dispute" with THAI companies... And the police can arrest you like a drug dealer, or a criminal.

It's amazing.

I mean if Samsung and/or the 2 guys have comitted fraud, what are those methods ?

Another good point to... put at ease the foreign business community.

[Mobi]

This is a totally wild guess, but I wonder if the so called "restructuring" is related to the FBA and the nominee shareholder issue, and that Samsung have 'disenfranchised' some of their nominee Thai shareholders; and those Thai shareholders decided that they didn't like what was happening to them?

Just a thought.....

This could be scary for other multinationals operating in LOS, who must be planning to get their corporate structures within the law, and a further nail in the coffin for future foreign investment.

[taxexile]

Samsung executives arrested on cell phone fraud charges

BANGKOK, Sept 7 (TNA) - Two Bangkok-based Korean cellphone executives have been arrested on fraud charges involving an estimated Bt2 billion damage, Thai police said Friday.

The police's economic and cyber crime division arrested Park Kwang-kee and Kim Chung-jun, managing director and general manager, respectively, of the Thai Samsung Electronics Co, located in the Sathorn area, on charges of defrauding a number of cellphone distributors who had separately lodged damage lawsuits against them.

The Korean executives, who had allegedly proclaimed themselves as the authorised dealer of Samsung cellphones in Thailand, had allegedly compelled the Samsung vendors to buy outdated stocks of the Korean cellphone and falsely offered to provide them a US$1 million promotion package in return.

The sales volumes of the outmoded cellphones had been quite low, and the Korean businessmen had allegedly refused to compensate the Thai companies for the losses, police said.

Both suspects denied all charges and chose to fight in court. The Koreans pair were released on Bt 3 million bail each.

One of the Samsung cellphone vendors said he planned to lodge a Bt500 million damage lawsuit and to petition the South Korean embassy in Bangkok. (TNA)-E008

[cclub75]

The Korean executives, who had allegedly proclaimed themselves as the authorised dealer of Samsung cellphones in Thailand, had allegedly compelled the Samsung vendors to buy outdated stocks of the Korean cellphone and falsely offered to provide them a US$1 million promotion package in return.

The sales volumes of the outmoded cellphones had been quite low, and the Korean businessmen had allegedly refused to compensate the Thai companies for the losses, police said.

Both suspects denied all charges and chose to fight in court. The Koreans pair were released on Bt 3 million bail each.

The story becomes more and more weird.

The executives of Samsung Thailand who "had allegedly proclaimed themselves as the authorised dealer of Samsung cellphones in Thailand" ?

And then "had allegedly compelled the Samsung vendors to buy outdated stocks of the Korean cellphone" ?

Anyway, TNA is usually close to the absolute zero for clarity... I think we need some reports in foreign medias... Especially from Korea in order to get to the point

[Carmine6]

Seems like these guys might have been embezzling funds or maybe skimming inventory. From bangkokpost.com:

http://www.bangkokpost.com/breaking_news/b...s.php?id=121441

(BangkokPost.com, Agencies) - The Korean managing director and general manager of Samsung Electronics in Thailand were arrested Friday, after a number of Samsung distributors complained the firm had not paid them after they sold the company's products.

The Korean firm's executives said the arrests were the result of a business dispute, and said they would win any criminal or civil court case.

Pol Lt Col Chumphon Phumphuang told reporters that Park Kwang-kee, managing director of Thai Samsung Electronics Co. Ltd., and Kim Chung-jun, the company's general manager, were arrested separately on Friday.

A warrant was previously issued for the arrests. Officers turned them over to the custody of the Economic and Cybercrimes Crimes Division.

Two Thai companies had filed fraud charges against the two executives, police said.

One, Sam Corp., filed a criminal complaint alleging losses of $1.9 million because of fraud by Samsung, a spokesman said. Another company, Triple A Prompt, filed a civil suit against Samsung last week, demanding compensation of $17.3 million, he said.

Kim, allowed to speak to reporters at a news conference at the economic and cyber crime division, denied the allegations and said they were the result of a business dispute.

"We are restructuring our strategy in order to better serve the Thai market," he said. "During this restructuring, maybe some of our business partners lose some benefits."

He said the matter was under investigation and was expected to be resolved soon in court.

"We are very sure that we will win the case," he said. It was not immediately known whether he and Park would be granted bail.

The Associated Press reported it had received a phone call from a woman who claimed to represent TWZ Corp, a Thai distributor of Samsung mobile phones. Previously known as Telewiz, TWZ is a subsidiary of the country's leading cellphone network operator, Advanced Info Service.

She told the news agency that TWZ was one of 20 Thai companies which filed complaints with police after Park's Thailand-based office failed to pay money owed them.

Her account could not immediately be confirmed, and police released no other details, the AP reported, adding that Park also could not be reached for comment.

[Tony Clifton]

I'll bet plenty of foreign companies are scratching their heads when looking at the local yearly budgets of their Thai manufactures, wondering <deleted> is going on.

From what I've observed and been shown, I have no idea how some companies keep afloat and why locally they hesitate to press criminal charges against their own corrupt employees. Most I've known about were "dismissed" while the ones who escaped scrutiny went on taking double bites instead, ripping off company money and eating away the yearly performance bonuses of their already low paid and hard working co-workers.

The scams went from substituting chemicals in strict product "recipes" to purchasing overpriced promotional items and receiving kickbacks, fake expenses on company trips including fake company trips, anything goes. The winner was a department for an industrial product that ended up with 11 million profit in a year when it should have been in the hundreds of millions, like the previous year.

[Johpa]

There are some games that only Thais are allowed to play in the Kingdom.

[cclub75]

Seems like these guys might have been embezzling funds or maybe skimming inventory.

Oh non... I think we start to see a totally different pattern....

" Thai Samsung Electronics yesterday issued a statement saying some mobile phone distributors filed deceit lawsuits against the firm because the distributors were dissatisfied that Samsung last month changed its mobile phone distribution channels which caused the distributors to lose some business.

The firm also claimed that after the changes, some distributors resorted to the use of price dumping, illegally importing mobile phones, and filing lawsuits against the company."

Bangkok Post

Business dispute. Thai distributors fired from the candy store... Angry....Bulsshit serial lawsuits... and eventually they make the police arrest you, like drug dealers.

It makes perfectly sense, unfortunatly...

[cclub75]

There are some games that only Thais are allowed to play in the Kingdom.

Really ? I think they are trying to bite a too big fish for them...

Samsung... Can you imagine ? All those little thais... if they can't buy anymore the Last Samsung Narak Mobile Phone... ? !

I mean, there is only one escape to such a desesperation : to jump naked into the Chao Praya River.

Anyway. We can be sure that Samsung is going to follow the story.... very closely. And it will probably make, once again, some headlines around the world...

Thailand does need promotion, right ?

Edited September 7, 2007 by cclub75

[chinthee]

There are some games that only Thais are allowed to play in the Kingdom.

Yes indeed. This is the crux of the matter. Foreign scam artists are not allowed to operate in Thailand unless they're scamming other foreigners.

This is probably a simple case of a scam or business dispute gone wild.

[judgedredd]

One of the business associations that I trade with is a Japan-Singaporean network that has Korean connections. The rumour going around in the electronics community is this:[/font][/size]

1.)For several reasons some Thai distributors lost their franchises;

2.)There was a restructuring within Samsung-Thailand after the Thai government got (even more) foreigner unfriendly with foreign corporations;3.)The Big One - - The Franchisees got caught. The rumour says that one of the many Thai scams against Samsung-Thailand worked like this: (a.)The Thai dealers got franchises wherein they promised to sell “X” number of Samsung phones per month; (b.)On the sly, the Thai dealers then bought 10 times that quantity of fake Chinese-manufactured Samsung look-alike phones; (c.)The franchisees then sold all phones (genuine and counterfeit) as “real” Samsung phones; (d.)When the fake phones came back to the central warranty shop for repair, the Koreans figured out what was going on; (e.)The Thais got caught, and lost face; (f.)There is a never-ending cat and mouse game in the electronics industry, wherein Korea and Japan sell high-end electronics to China, our biggest market, but then we have to battle with the counterfeiters that produce the knock-offs in factories on the Chinese mainland; (g.)One of the unwritten rules of the game is that you must avoid angering China if you can, so not too much is said in the open about the extensive Chinese counterfeiting industry that includes basically every name brand item on the planet.I will guarantee you that the real truth behind this story is even more twisted and convoluted that you can imagine (This is Thailand) and the whole truth will never come out in the open.Why foreigners still invest here is beyond my understanding.

Judge Dredd

[Prakanong]

"Why foreigners still invest here is beyond my understanding."

Hmm the nail hit on the head there methinks - many company's are looking at Thailand now and thinking <deleted>.

Maybe individuals are starting to think also - is the house of cards shaking in some area's ie look at the property market in Samui and Pattaya with runners done, work stopped and small investors looking like losing their money - the Ponzi schem and happy days always had an endpoint - are we seeing this in some area's?

[wpcoe]

I will guarantee you that the real truth behind this story is even more twisted and convoluted that you can imagine (This is Thailand) and the whole truth will never come out in the open.

What you wrote sounds entirely plausible ... both the scam relating to counterfeits being sold side-by-side with authentics, and the part I quoted here.

Based on your chosen wording, I wonder just how high in the Thai business/political/social world the tentacles of this debacle reach.

This could become interesting. I doubt that the Samsung execs in S.Korea want their name and image sullied, but how far can/will they go to clear this up?

[Khun ?]

Sounds like the poor if not worthless investments being sold by foreigners ( mainly farangs) with pages of small print covnants. Buyer beware and you wonder why they do notr operate in markets where pay 10 x more. Their fakes

in unregulated markets. They are selling products but list themselves as advising.

[Solosiam]

Yep our experience of the Samsung supply chain is not a good one, forged receipts, no VAT etc...

Really ? Could you be more specific ? You mean Samsung directly or its distributors ?

I mean we are not talking here about a little, shaddy company if I may say...

Samsung. And those 2 guys are korean. Okay okay it's not a proof... but this whole story is strange. And rather shocking.

What worries me is : you are foreign executive, you have a "business dispute" with THAI companies... And the police can arrest you like a drug dealer, or a criminal.

It's amazing.

I mean if Samsung and/or the 2 guys have comitted fraud, what are those methods ?

Another good point to... put at ease the foreign business community.

I wont go into specifics but the stituation was that we were in the process of being set up as a Samsung dealer, in the interrim we were told we could order direct but would pay a higher price. We made the order (directly we thought) and got the products alongside hand-written non VAT receipts from some shop in Krabi. The sales rep must have been ordering it through a friendly shop and pocketing the profit himself. We forced the issue and after a lot of crap finally got proper VAT receipts from Samsung, Never heard from them again - which is probably for the best.

[cclub75]

I wont go into specifics but the stituation was that we were in the process of being set up as a Samsung dealer, in the interrim we were told we could order direct but would pay a higher price. We made the order (directly we thought) and got the products alongside hand-written non VAT receipts from some shop in Krabi. The sales rep must have been ordering it through a friendly shop and pocketing the profit himself. We forced the issue and after a lot of crap finally got proper VAT receipts from Samsung, Never heard from them again - which is probably for the best.

"We made the order (directly we thought)"... that seems to be the point : from whom actually you bought the goods ? From Samsung Thailand ?

I can imagine that a "samsung dealer" or "shop" doesn't buy directly from Samsung Thailand, but from a distributor. Right ?

[Old Man River]

I wont go into specifics but the stituation was that we were in the process of being set up as a Samsung dealer, in the interrim we were told we could order direct but would pay a higher price. We made the order (directly we thought) and got the products alongside hand-written non VAT receipts from some shop in Krabi. The sales rep must have been ordering it through a friendly shop and pocketing the profit himself. We forced the issue and after a lot of crap finally got proper VAT receipts from Samsung, Never heard from them again - which is probably for the best.

"We made the order (directly we thought)"... that seems to be the point : from whom actually you bought the goods ? From Samsung Thailand ?

I can imagine that a "samsung dealer" or "shop" doesn't buy directly from Samsung Thailand, but from a distributor. Right ?

Solosiam, in your original posting when you mentioned the Samsung supply chain it looked as if you were saying that Samsung was directly involved in forged receipts etc. Apparently, that is not the case. In the past, for several years, I did business directly with the Samsung people in Thailand and Seoul. While nobody will ever accuse them of being easy negotiators, I never once saw any indications that they were directly involved in these kinds of issues. I highly doubt they are now.

[cclub75]

Other details, thanks to AFP (and a picture), here.

"Police have received about 1,000 complaints that the two executives had deceived them with false business promises," said Police Major General Visuth Vanichabutr.

The two Korean executives were later released on bail, police said.

If found guilty, they face up to two years in jail or a fine of 6,000 baht (175 dollars) or both, police said."

[Solosiam]

I wont go into specifics but the stituation was that we were in the process of being set up as a Samsung dealer, in the interrim we were told we could order direct but would pay a higher price. We made the order (directly we thought) and got the products alongside hand-written non VAT receipts from some shop in Krabi. The sales rep must have been ordering it through a friendly shop and pocketing the profit himself. We forced the issue and after a lot of crap finally got proper VAT receipts from Samsung, Never heard from them again - which is probably for the best.

"We made the order (directly we thought)"... that seems to be the point : from whom actually you bought the goods ? From Samsung Thailand ?

I can imagine that a "samsung dealer" or "shop" doesn't buy directly from Samsung Thailand, but from a distributor. Right ?

Solosiam, in your original posting when you mentioned the Samsung supply chain it looked as if you were saying that Samsung was directly involved in forged receipts etc. Apparently, that is not the case. In the past, for several years, I did business directly with the Samsung people in Thailand and Seoul. While nobody will ever accuse them of being easy negotiators, I never once saw any indications that they were directly involved in these kinds of issues. I highly doubt they are now.

So why have the Managing Director and General Manager been arrested? 20 companies had registered complaints with the Police, regarding fraud.

In my experience even if it's subsiduaries, or distributors that are corrupt, it reaches always to the top - whether it's a blind eye, or everyone sharing a piece of the corruption pie, it's unlikely that the main company is unaware.

[Solosiam]

I wont go into specifics but the stituation was that we were in the process of being set up as a Samsung dealer, in the interrim we were told we could order direct but would pay a higher price. We made the order (directly we thought) and got the products alongside hand-written non VAT receipts from some shop in Krabi. The sales rep must have been ordering it through a friendly shop and pocketing the profit himself. We forced the issue and after a lot of crap finally got proper VAT receipts from Samsung, Never heard from them again - which is probably for the best.

"We made the order (directly we thought)"... that seems to be the point : from whom actually you bought the goods ? From Samsung Thailand ?

I can imagine that a "samsung dealer" or "shop" doesn't buy directly from Samsung Thailand, but from a distributor. Right ?

If its Samsung headed paper, and the guy has a Samsung badge, and we get receipts (eventually) from Samsung Thailand, then I assume it is Samsung in one guise or another.

I myself am a distributor of products, I know how sales channels work - two of our 6 channels had severe corruption issues, both Thai based. The other company we took the fight to the German HQ, emailing and sending a registered letter of complaint to the CEO of the 100+ year old company - his answer was "we have full trust in our subsiduaries" even when confronted with solid evidence.

[Johpa]

Other details, thanks to AFP (and a picture), here.

"Police have received about 1,000 complaints that the two executives had deceived them with false business promises," said Police Major General Visuth Vanichabutr.

Are we to believe that Thailand has 1,000 distributors, not retailers but distributors, of Samsung phone products?

[Old Man River]

I wont go into specifics but the stituation was that we were in the process of being set up as a Samsung dealer, in the interrim we were told we could order direct but would pay a higher price. We made the order (directly we thought) and got the products alongside hand-written non VAT receipts from some shop in Krabi. The sales rep must have been ordering it through a friendly shop and pocketing the profit himself. We forced the issue and after a lot of crap finally got proper VAT receipts from Samsung, Never heard from them again - which is probably for the best.

"We made the order (directly we thought)"... that seems to be the point : from whom actually you bought the goods ? From Samsung Thailand ?

I can imagine that a "samsung dealer" or "shop" doesn't buy directly from Samsung Thailand, but from a distributor. Right ?

Solosiam, in your original posting when you mentioned the Samsung supply chain it looked as if you were saying that Samsung was directly involved in forged receipts etc. Apparently, that is not the case. In the past, for several years, I did business directly with the Samsung people in Thailand and Seoul. While nobody will ever accuse them of being easy negotiators, I never once saw any indications that they were directly involved in these kinds of issues. I highly doubt they are now.

So why have the Managing Director and General Manager been arrested? 20 companies had registered complaints with the Police, regarding fraud.

In my experience even if it's subsiduaries, or distributors that are corrupt, it reaches always to the top - whether it's a blind eye, or everyone sharing a piece of the corruption pie, it's unlikely that the main company is unaware.

I didn't say that I didn't think the heads of Samsung were not aware of these accusations, just that I doubt Samsung was actually involved in fraud in Thailand. Remember SK is one of those countries that actually puts heads of corporations in Seoul in jail so they do follow these things.

On the arrests, you are confusing unsubstantiated accusations with hard proof that they are guilty. It is interesting that Thailand arrests foreign businessmen after unproven accusations, but lets someone who has already been adjudged guilty by the courts and given a yet to be served two year jail sentence to head a political party with the hopes of becoming the country's next PM.

Edited September 9, 2007 by Old Man River

[Old Man River]

Politics aside. Reality sets in. PTT has awarded Samsung Engineering a USD 1.1 billion contract.

[LaoPo]

Politics aside. Reality sets in. PTT has awarded Samsung Engineering a USD 1.1 billion contract.

Correct:

http://uk.reuters.com/article/oilRpt/idUKSEO26622420070909

LaoPo

[judgedredd]

Same name, different company.

Example: Hyundai Heavy Industries (HHI) is the world’s largest and most successful shipbuilder, but Hyundai Group, run by a different part of the Korean “chaebol”, builds the Hyundai cars and trucks. So, if you have a complaint with how your Kia Truck runs, you will get nowhere complaining to HHI, right? (Different companies.)

Same with Samsung.

(1.)Samsung Financial (Banking)

(2.)Samsung Insurance (Insurance)

(3.)Samsung Heavy Industries (Shipbuilding)

(4.)Samsung Engineering and Construction (Process Plants)

(5.)Samsung Electronics (Power Toys)

(6.)Samsung Motors (Autos, part owned by Nissan and Renault)

Six different companies . . .

Another example: In the Korean Daewoo Group, Daewoo Automotive is partially owned by General Motors of the USA. Yet, Daewoo Engineering and Construction, legally a separate company, builds projects for Americas growing list of “enemies”, in such diverse places as Burma and Cuba.

Maybe the name “Samsung” will help these two exec’s that are being burned by the Thai legal system, but most likely it will hurt them - - The Thai’s smell money, and I’ve never met a Thai in business that couldn’t use the Thai system to take advantage of a falang with money.

Judge Dredd

[Old Man River]

Same name, different company.

Example: Hyundai Heavy Industries (HHI) is the world’s largest and most successful shipbuilder, but Hyundai Group, run by a different part of the Korean “chaebol”, builds the Hyundai cars and trucks. So, if you have a complaint with how your Kia Truck runs, you will get nowhere complaining to HHI, right? (Different companies.)

Same with Samsung.

(1.)Samsung Financial (Banking)

(2.)Samsung Insurance (Insurance)

(3.)Samsung Heavy Industries (Shipbuilding)

(4.)Samsung Engineering and Construction (Process Plants)

(5.)Samsung Electronics (Power Toys)

(6.)Samsung Motors (Autos, part owned by Nissan and Renault)

Six different companies . . .

Another example: In the Korean Daewoo Group, Daewoo Automotive is partially owned by General Motors of the USA. Yet, Daewoo Engineering and Construction, legally a separate company, builds projects for Americas growing list of “enemies”, in such diverse places as Burma and Cuba.

Maybe the name “Samsung” will help these two exec’s that are being burned by the Thai legal system, but most likely it will hurt them - - The Thai’s smell money, and I’ve never met a Thai in business that couldn’t use the Thai system to take advantage of a falang with money.

Judge Dredd

Thanks,but I am very much aware of the corporate structure of the Korean chaebols.

The Samsung companies, while separate legal entities, are all part of the same chaebol. Fraud is not a corporate practice of Samsung, regardless of which group company it is.

[LaoPo]

From: The Korea Times Biz/Finance:09-09-2007 16:54

Thai Police Question 2 Samsung Officials

By Kim Yoo-chul

Staff Reporter

Two executives from Samsung Electronics’ Thai subsidiary were questioned by Thai police in Bangkok Friday over alleged fraud, but were later released on $160,000 bail, the company said Sunday.

``Kim Chung-jun and Park Kwang-ki, the general manager and the managing director of Thai Samsung Electronics were released last Friday on bail of $80,000 each,’’ said an official from Samsung Electronics.

On Sept. 7, Thai police arrested the two Samsung executives separately after two Thai companies filed fraud charges against the two.

One Thai firm Sam Corp. filed a criminal complaint alleging losses of some $1.9 million due to fraud by Samsung, while another company named Triple A Prompt, also filed a civil suit against the company, demanding compensation of $17.3 million, foreign news wires reported, citing Thai police.

The charges allege that the two Samsung officials failed to make good on promises to compensate Thai resellers for the sale of old Samsung mobile phone stock. Thai Police have received about 1,000 similar complaints, according to reports.

But Samsung just denied the allegations.

``Our executives voluntarily appeared to the Thai police to explain the business disputes. We are in the situation of diversifying our distribution channels with other vendors,’’ said the Samsung official.

``We will respond in a very mature manner and also we are very sorry the Thai media made an otherwise minor case into a serious one,’’ the official added.

http://www.koreatimes.co.kr/www/news/natio...9/123_9817.html

More search results at Google:

http://news.google.com/news?hl=en&ncl=...9/123_9817.html

LaoPo

[cclub75]

``Our executives voluntarily appeared to the Thai police to explain the business disputes. We are in the situation of diversifying our distribution channels with other vendors,’’ said the Samsung official.

``We will respond in a very mature manner and also we are very sorry the Thai media made an otherwise minor case into a serious one,’’ the official added.

That's fascinating !

"voluntarily appeared to the Thai police to explain". And on the other hand, medias said they were arrested friday.

Another exercice of -asian- face saving ?