On 6 July 2023, the SEC filed a criminal complaint against 10 offenders, comprising STARK and its former directors and executives, with DSI for colluding to falsify or consenting to the falsification of the STARK and its subsidiaries’ financial statements during 2021-2022, disclosing such presumably falsified financial statements in the registration statements and draft prospectus, and concealing the facts which should have been disclosed in the factsheets of the company’s corporate bond offering. Such actions are considered acting in the manner that dishonestly deceives the public to obtain benefits from such deceit, in violation of Section 312 and Section 281/2, paragraph 2, in conjunction with Section 89/7 and Section 89/7 in conjunction with Sections 89/24, 278, 281/10 in conjunction with Sections 300, 306, and 315 of the Securities and Exchange Act B.E. 2535 (1992) (SEA) (as the case may be)*.

As a result of the review of Mr. Nantawat’s audit work performed for the financial statements for the years 2019-2021 of STARK and two subsidiaries that are significant to the consolidated financial statements, namely Phelps Dodge International (Thailand) Limited (PDITL) and Adisorn Songkhla Co., Ltd. (ADS), the SEC found that his audit work performed for the purpose of expressing an opinion on the consolidated financial statements of STARK and its subsidiaries, and on the separate financial statements of STARK, for the years 2019-2021, constituted a serious failure to comply with auditing standards regarding risk assessment and audit planning, journal entry testing, analytical procedures, revision of the assessment of risks of material misstatement, and forming an opinion in the auditor’s report, due to a failure to obtain sufficient appropriate audit evidence relating to trade and other current receivables, inventories, revenue from rendering services and costs of rendering services.

    Criminal actions: The above failure to comply with auditing standards constituted a facilitating factor for fraud at STARK and its subsidiaries, as well as the falsification of STARK’s financial statements. In this regard, the SEC has already filed a criminal complaint with DSI concerning fraudulent acts and the joint commission of, or consent to, the making of false entries in the accounting records and documents of STARK and its subsidiaries. The SEC therefore considered that the actions of Mr. Nantawat constituted an offense under Section 287 of the SEA and filed a criminal complaint against Mr. Nantawat with DSI in connection with the audit of the financial statements for the year 2021, in order for DSI to consider further legal action. In this connection, such criminal complaint resulted in Mr. Nantawat having a prohibited characteristic for acting as a capital market auditor.

    Administrative actions: Due to Mr. Nantawat’s serious failure to comply with the auditing standards for his audits of the financial statements of STARK and its subsidiaries for the years 2019-2021, the SEC therefore resolved to revoke the approval of Mr. Nantawat as a capital market auditor for a period of six years. However, as Mr. Nantawat’s approval as a capital market auditor has been terminated due to his prohibited characteristic arising from the SEC’s criminal complaint, the SEC has set a six-year period, starting from 1 April 2026, during which his applications for approval as a capital market auditor will not be accepted**.

Following the criminal complaint filed by the SEC, the criminal enforcement process will proceed with an investigation by the inquiry official, prosecution by the public prosecutor, and adjudication by the court of justice, respectively. In this regard, the SEC will monitor the progress of the legal proceedings and cooperate fully with relevant agencies to support legal enforcement under the SEA after the criminal complaint has been filed.  

Notes:
* SEC News No. 116/2023 dated 6 July 2023 “SEC files a criminal complaint against 10 offenders with the DSI for falsifying STARK financial statements, making false statements in the registration statements, and acting in the manner that dishonestly deceives others” 
** The SEC will not accept Mr. Nantawat’s applications for approval as a capital market auditor for a period of six years starting from 1 April 2026.