The Lao government has threatened to arrest senior executives and directors of Macau-based real estate investment firm Sanum Investments if they do not pay a disputed $23 million tax bill, according to a company statement.
The firm said it had received a “questionable audit” and “baseless tax claims” from the Laos government relating to its confiscated business Thanaleng Slot Machine Club, located near the capital Vientiane.
The Lao government could not be reached for comment.
Sanum was in the process of filing two international arbitral claims against the government after it had allowed a well-connected Lao family and their companies to seize control of the foreign-owned assets in total valued at $400 million in August.
The arbitral claims accuse the Lao government of violating investment protection treaties signed with China and the Netherlands. Sanum hopes independent tribunals will order the government to compensate its foreign investors.
Sanum owned 60 percent of Thanleng, having initially invested $20 million in the business in 2007 as the sole foreign investor; local minority partners owned the rest. Jody Jordahl, president of Sanum, said in a statement: “We were treated as VIPs when the Lao government courted us to invest in Lao PDR. As soon as we began turning profits, the relationship cooled. Now we are not only fighting to protect our investments in the country, but also the safety of our remaining staff on the ground.”
Jordahl believes that he would likely be one of the first arrested upon re-entry into the country.
“It is becoming increasingly clear that [Laos] is not a safe place for the foreign investment community to invest their time, money and expertise because [the government] is just not willing to protect foreign investors in the country,” he told PE Asia.
“We’ve had investments in Southeast Asia for almost eight years. We’re not having any issues in any of these other countries [including Cambodia and Thailand]. It is an isolated issue with Laos.”
At the end of October, representatives from the World Trade Organisation are voting on the admission of Laos to the WTO. In the statement issued by the firm, Jordahl said, “If the scrutiny that comes from WTO accession and two looming investment treaty arbitrations isn’t enough to ensure the rule of law in Lao PDR, one has to wonder whether it will ever be safe for foreign investment to return.” The WTO did not respond to requests for comment.