Lawyer Exposes How Charities Steal Millions Through Shell Companies
A Thai lawyer reveals how charities embezzle millions by routing funds through shell companies and inflated invoices rather than simple cash withdrawals, making fraud difficult to detect even with proper documentation.
On September 7, lawyer Sitthira Biabangkoet released a video explaining how charity fund embezzlement works. He noted that some charities report receiving around 200 million baht, spending approximately 100 million, with hundreds of millions remaining, while accountants confirm no cash withdrawals—leading people to assume no theft occurred. However, Sitthira explained that the absence of cash withdrawals does not end the financial trail investigation. Charity funds can disappear through invoiced expenses for goods, services, accommodation, consulting fees, contractors, projects, or payments to partner companies.
"This isn't just about presenting stacks of documents and crying that it was done for the public good," Sitthira said. "When dealing with hundreds of millions of baht, people don't use simple withdrawal methods." He emphasized that the public wants to know how money was actually spent and where it ended up. A correctly processed withdrawal from the account doesn't guarantee proper use of funds. In accounting, if a charity pays for purchases, services, or projects, these can be recorded as legitimate expenses. However, what must be verified is whether the transaction is reasonable—documents confirm a transaction occurred, but not whether it was justified or involved conflicts of interest.
Sitthira highlighted this as the critical point in auditing any organization or foundation: auditors must look beyond whether accounts are correctly recorded and examine what actually happened behind the numbers. Many cases involve complete documentation but irregular transactions inside.
Using an intermediary company with added markup: Sitthira cited a foreign case involving a hundred-million-dollar U.S. charity where a finance official routed money through an intermediary company. The actual working company issued an invoice, but when collected through the intermediary, the amount increased before being sent back to the charity for payment. The U.S. Department of Justice found the markup ranged from 17-66 percent. In another case, a company invoiced approximately 120,000 dollars, but after passing through the intermediary, the amount returned was 146,000 dollars—an increase of 20,000 dollars for work the intermediary company did nothing on. Critically, the intermediary was connected to the finance official who approved all invoices. "Do you see how they defraud? When auditing finances, you must ask whether a company is connected to someone with spending authority, because sometimes the benefit isn't in the organization's direct employee name but in the company of someone they know."
Receiving money without doing the work: Sitthira noted another type of fraud involves a real company with real invoices and real transfers, but the work claimed to have been done never actually occurred.
