Thailand’s Securities and Exchange Commission has requested a criminal probe into the activities of Mitsuji Konoshita, the chief executive officer of Group Lease Plc., suspended it from trading as of Oct. 16, the Stock Exchange of Thailand has announced.

The company has intrigued Thai investors who have bought its stock on the theory that its business is built on the healthy growth of motorcycle and agricultural sales in the countries in the ASEAN region. Earlier this year, Group Lease officials in a press release said they were considering extending the business into Cyprus and other parts of the Middle East. However, its core hire purchase business in Thailand is believed to have been deteriorating and its growth has instead been built on a series of investments and acquisitions that are ambiguous at best.

Group Lease has been the subject of a series of Asia Sentinel stories on its activities since earlier this year.  On Oct.13, the company was hit by a devastating report by a mysterious organization calling itself Anonymous Equity that said Group Lease was actually worth a fraction of its share price and could well in effect be little more than a Ponzi scheme.

In a prepared release, the SET said in somewhat tortured English that it had filed on Oct. 16 with Thailand’s Department of Special Investigation against the company’s officers and executives including Konoshita “for falsification and corporate fraud. As a result, the aforesaid Mitsuji Konoshita is unqualified for holding the positions of directors and executives in any issuing and listed companies throughout the prosecuted period.”

The SEC asked the Group Lease companies to clarify “important information” and its effect on the SET.

The share prices of three related companies – J Trust Co. Ltd., Wedge Holdings Co. Ltd. and Showa Holdings Co. Ltd. – nosedived on the Tokyo Stock Exchange, by 16.39 percent, 15.53 percent and 17.99 percent respectively before recovering later.  The three also figured in stories about Group Lease. J Trust was the subject of major stories on its takeover of Bank Mutiara in Indonesia amid concerns over financial irregularities.  A source told Asia Sentinel the Stock Exchange of Thailand is being urged to share its information with Tokyo authorities.

In an email asking for details, Anonymous Equity – whose participants remain anonymous – said that “We have no particular information about the thinking and motivations of the Thailand SEC, but we suspect that there was some additional info in the report that pushed the SEC to act quickly. They must have been looking at this already to be able to move so fast.”

Anonymous Equity’s 63-page report, titled “Is Group Lease a Fraud?” argued that the company, which is loosely tied to the Tokyo-based J Trust financial empire – whose investors include US Commerce Secretary Wilbur Ross and the behemoth California Public Employees Retirement Fund — “would not have survived” without the controversial Tokyo-based financial group’s help.

Group Lease is said to have misrepresented itself on an extensive list of crucial issues including the identity of its key officials and has manipulated its share price via questionable financial dealings.  Group Lease is said to be part of a much large group of Japanese and Southeast Asian entities known as the Group Lease/APF Group controlled by a British Virgin Islands company called APF Group Co. Ltd.

After detailing a long series of discrepancies, the report says: “It thus appears likely that Group Lease may be lying about several important issues.”  The anonymous writers said the Group Lease/APF Group entities may be “round-tripping” group money through Singapore borrowers, disguising group money as ‘interest income’ in order to create the illusion of earnings for Group Lease.”

J Trust and Group Lease were the subject of extensive reports by Asia Sentinel earlier this year after it appeared that the company was kiting its share price on the Stock Exchange of Thailand, rising by more than 1,100 percent in early 2015 to late 2016.  After the auditors EY issued a report featuring nine pages of questions over intercompany loans, the share price plummeted by 80 percent before rebounding.  EY also raised questions about the acquisition of a 30 percent-odd stake in a Sri Lankan company from a related party, which occurred at a 120-percent premium to market price.

According to Anonymous Equity, Group Lease’s earnings are at least partly built on what is alleged to be “dubious interest income” from circular loans between related parties. If that income were stripped out, the company’s actual earnings for the previous year would fall by 55 percent. More than 40 percent of its earnings in 2015 and the first half of 2017 came from interest income on “suspiciously high-interest loans” to two groups of buyers in Singapore and Cyprus which has been a hotbed of financial legerdemain and money laundering until authorities ordered the island’s financiers to clean up their act.

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