The Ministry of Commerce recently discovered more than 500 local and foreign companies in Phnom Penh’s Prampi Makara district that did not have the same addresses as the ones listed on their registration forms.
Sok Siphana, secretary of state at the Ministry of Commerce, said Wednesday that the discovery has prompted concerns that the inaccurate records could allow companies to be involved in illegal activities without being detected.
For example, a real estate company could arrange deals that end up cheating the customer, Sok Siphana said. If the client filed a complaint, the government would not be able to track down the company because it did not have the company’s proper address.
“When those problems happen, how can we enforce the law if we don’t know where they are?” Sok Siphana asked.
A Western business legal adviser said it’s normal for companies to give addresses that aren’t the location of their office. For example, a company will list the address of its accountant or lawyer to deal with legal notices and other topics.
“Many companies come and don’t know where the company is going to be set up, they don’t have a location,” said David Doran, of the firm Dirksen, Flipse, Doran and Le. “The problem here is because there aren’t good investigation services, the ministry may have trouble finding the company if there is a problem.”
Last year, the ministry called on companies to register or renew their registration for better control, and to find out how many companies remain in Cambodia and how many have ceased operations.
In a recent check of companies registered at the ministry, it was found that the address listed on registration forms for hundreds of companies did not match with the physical address.
The companies have until March 15 to renew their registrations before they are removed from the ministry’s records, Sok Siphana said.
Sorn Sokna, the vice chairman for the Phnom Penh Chamber of Commerce and a top official with the prominent Sokimex Import Export company, said the ministry’s checking of addresses is a good first step to help the government better regulate businesses.
“If we don’t demand them to register again, we fear they may do something that is contrary to law,” Sorn Sokna said.
However, a Western investment adviser said if someone was going to do something illegal, such as money laundering, they likely would not incorporate and register with the ministry because it would make you more visible.
“Forming a corporation doesn’t mean anything, it doesn’t mean a whole lot in terms of benefit,” said David Carrad of the firm Tilleke and Gibbons and Associates.
Seng Tong, a deputy governor of Phnom Penh, acknowledged that there were many companies who listed locations that were not the address of their offices, but said he didn’t think there was any illegal activity taking place at those businesses.
Some companies list addresses of buildings they are about to rent, but find out that the rent price is too high and decide to go to another location, Seng Tong said.
However, the companies don’t always inform the ministry, he said.
Sok Siphana said some of the businesses may have also shut down because of the Asian economic crisis of 1997, and did not inform the ministry that they ceased operations.
“So far, we have not assessed whether companies with wrong addresses are doing illegal activities,” Sok Siphana said. “We are still investigating to protect the welfare of the public against unscrupulous people who use a company to cheat people.”