Government Inspectorate uncovers hundred-millions in losses due to Vinacomin mismanagement

Vinacomin made a loss of over VND14.882 trillion ($656 million) during 2010-2015

According to the inspection conclusions signed by Deputy Chief Government Inspector Ngo Van Khanh, the agency has detected a series of violations of the management board of Vinacomin and its subsidiaries in financial management, investment, capital contribution, as well as land and natural resources management.

The conclusion showed that Vinacomin spent about $4.4 million (VND77.678 trillion) to invest in Southern Mining Co., Ltd. (Cambodia). Up to date, this investment is likely to be lost. The findings showed that Vinacomin’s Board of Management, particularly deputy director general Doan Van Quang, has neither complied with regulations on investment nor examined the feasibility of the project before the investment decision.

Besides, Vinacomin's investment in Crommit Co Dinh, Thanh Hoa Co., Ltd. (VTCC) was ineffective. Vinacomin decided to contribute over VND587 billion ($27 million) and conducted a disbursement of VND112 billion ($5 million), but the project has been pending since 2013.

Vinacomin also contributed VND314 billion ($14.3 million) to Ferro Crom Carbon factory, which has been idle since 2014, causing a loss of VND113 billion ($5.2 million) to Vinacomin during 2012-2015.

Regarding the management of capital and assets, the inspectorate's conclusion pointed out illegal and impractical decisions, providing guarantees for loans exceeding the bank's legal lending limit, leading to high losses in some investments.

Particularly, Vinacomin lost the ownership capital and owes Thai Nguyen Non-Ferrous Metal JSC (Vimico) over VND24.6 billion ($1.1 million). Vinacomin confirmed the guarantees for loans exceeding the bank's legal lending limit, so that Thai Nguyen Non-Ferrous Metal JSC had to pay for Eximbank Thailand $13.7 million (including initial debt and interest amount).

Vinacomin also contributed over VND870 billion ($38.3 million) without carefully reviewing and conducting the necessary procedures, leading to capital stagnation for a long time. Several investments in other countries, including Cambodia and Laos, suffered a total loss of over VND380 billion ($16.75 million). Vinacomin also lost VND180 billion ($8 million) in three undisclosed businesses that the firm previously invested in.

The Government Inspectorate also detected violations of regulations on production and business management committed by Vinacomin board members and the director general, causing a loss of VND740 billion ($32.6 million) to the company.

In several other projects, Vinacomin miscalculated or declared wrong tax amounts, leading to millions of dollars of losses. The Government Inspectorate proposed to handle the firm's wrongdoings and retrieve VND754 billion ($33.2 million).

The Government Inspectorate has also detected many violations in the supervision and appraisal of coal trading, as well as violations in the management of construction, land, natural resources, and assets, causing a loss of VND75 billion ($3.3 million).

With these outcomes, the Government Inspectorate has recommended proper penalties for the group and individuals related to such violations.

The Inspectorate requested the Ministry of Public Security (MoPS) to receive this dossier to review, investigate, and handle Vinacomin and subsidiaries’ violations. Vinacomin’s subsidiaries were named as Huu Nghi Cement JSC (Phu Tho), Ha Giang Cement JSC, and Binh Nguyen JSC (Dak Nong).

The Government Inspectorate also recommended MoPS to investigate those decisions related to investment, finance, and debt guarantees that caused losses to the group.

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