Bangkok Building Collapse: Chinese Firms Face Probe for Fraud, Substandard Materials
Bangkok Building Collapse Spurs Multi-Agency Probe of Chinese Firms
The collapse of a partially constructed State Audit Office building in Bangkok during the March 28 Myanmar earthquake has triggered a sweeping investigation into two Chinese companies central to the project, the Ministry of Commerce reports Bangkok Post. The investigation is expanding to encompass a network of related firms, raising concerns about compliance with Thai law and construction standards.
The primary focus is China Railway Engineering No. 10 (Thailand) Co., Ltd. (CREC) and Xin Ke Yuan Steel Co., Ltd., the main contractor and steel supplier, respectively. CREC, in a joint venture with Thailand’s Italian-Thai Development Plc, was responsible for constructing the 30-story building. Xin Ke Yuan Steel supplied construction materials; preliminary tests by the Iron and Steel Institute of Thailand suggest some were substandard.
The scale of the investigation highlights its gravity. Multiple Thai government agencies are involved:
- Department of Special Investigation (DSI): Investigating potential legal violations, including those related to foreign ownership regulations.
- Anti-Money Laundering Office: Scrutinizing the financial transactions of the companies, shareholders, and stakeholders.
- Revenue Department: Examining the companies' and shareholders' tax payments. The department has filed a complaint with the DSI against Xin Ke Yuan Steel for alleged use of fake tax invoices worth over 200 million baht.
- Department of Employment: Reviewing work permits of migrant workers at the construction site.
- Department of Industrial Works: Inspecting all steel plants that supplied the project.
- Thai Industrial Standards Institute: Conducting further tests on the quality of steel and other construction materials.
The investigation has broadened to include 13 companies linked to CREC and 24 associated with Xin Ke Yuan Steel. At least 26 projects involving these interconnected firms are under scrutiny to preemptively address potential safety risks.
This incident resonates with concerns about rapid expansion and escalating debt within large Chinese construction companies, mirroring global patterns. As China Railway Group, CREC’s parent company, pursued international projects—particularly those linked to Beijing’s Belt and Road Initiative—its debt burden ballooned. According to the New York Times, the company’s liabilities nearly doubled in five years, reaching $211 billion in 2024.
“When a company has such a heavy debt burden, the pressure to generate cash flow to service debt can be quite intense.” — Victor Shih, University of California, San Diego.
The Chinese embassy in Bangkok publicly urged CREC to fully cooperate with Thai authorities and expressed confidence in a fair and thorough investigation. This statement reflects the delicate diplomatic balance surrounding the incident.
Is this an isolated incident, or does it reflect broader issues within the Thai construction industry? While the investigation centers on the collapsed building, the extensive probe into connected companies suggests authorities are examining systemic compliance and oversight issues. Could this impact other projects involving Chinese firms in Thailand? The Ministry of Transport has begun scrutinizing other projects awarded to CREC, including sections of the Thailand-China high-speed railway, indicating a broader review.
The ongoing investigations will likely significantly impact Thailand’s construction industry and potentially future collaborations with Chinese companies. Beyond immediate legal and financial consequences, the incident raises crucial questions about building safety, regulatory oversight, and the long-term sustainability of rapid infrastructure development. The ultimate outcome will depend on the findings of the various investigations and subsequent actions by Thai authorities.
