Hoang Anh Gia Lai is in the hunt for answers

Hoang Anh Gia Lai JSC has accused Lam Dong People’s Committee of losing it hundreds of thousands of dollars and wants it punished.

It might be the first case of a private company suing a state administrative agency under the Law on State Compensation Liability, which came into force on January 1, 2010. The law provides for the state’s liability to pay compensation to individuals and organisations suffering damage caused by administrative management.

Le Hanh Kinh, a lawyer from Le Nguyen Lawyer and Associates - representing the company (HAGL), said: “The letter signed by Huynh Van Hoa, chairman of Lam Dong People’s Committee, to recover 11 of 20 villas in HAGL’s resort in Dalat is irrational, causing damage to the company and Hoa has to be punished.”

Seven years ago, 20 old French villas, covering 4.6 hectares on Nguyen Du and Pho Duc Chinh streets in Dalat’s District 9, were leased by HAGL with 50-year terms and their rents would be readjusted every five years.

The company separated construction into three phases based on the progress of ground clearance fulfilled by Dalat’s People’s Committee.

After handing over 15 villas in 2008, HAGL upgraded and operated eight of them. Seven were delayed as the developer wanted to start construction with five final villas, among the total of 20 old villas, at the same time.

However, since 2008, the five villas have faced ground clearance trouble and were not handed over to developer.

On September 7, 2009, in the meeting with developer, Lam Dong People’s Committee, vice chairman Truong Van Thu requested relevant authorities quickly clear ground for five final villas and hand them over to  the developer. Thu also warned  HAGL that the province would recover seven handed-over units if the company did not start construction before October 10, 2009.

However, on September 22, 2009, the committee issued a document authorising its finance department to recover 11 old villas as seven of handed-over villas had been delayed for a long time and developers had slowly cooperated with local authorities regarding the ground for five others.

On October 9, 2009, Thu signed an agreement with Trung Thuy Company to lease the 11 villas to this firm, right before the deadline October 10, 2009 set out in the above-mentioned meeting on September 7, 2009.

HAGL’s deputy general director Tra Van Han said: “We fulfilled every financial duty that the province requested such as making a deposit of $100,000 to Lam Dong finance department and advancing $51,000 to Dalat People’s Committee to clear the ground.”

“We also explained to the province that we did not start upgrading seven handed-over villas in 2008 as we would like to combine their construction with five final villas among the total of 20 leased villas. All of the work shown our commitments.

“Meanwhile, according to the agreement signed in 2003, the province has to hand over all the villas in 2006. However, by that time, ground clearance was still not completed,”  Han said.

Lawyer Kinh said that the document on recovering HAGL’s villas had three faults. Firstly, such a document should have come from the Lam Dong Department of Natural Resources and Environment, not Finance Department given the Housing Law rules. Secondly, the authority failed to inform HAGL 20 days before promulgating the document. Thirdly, the document did not mention the consequences it would cause and especially compensation for HAGL.

On the other hand, Kinh said, the province signed the agreement to lease the 11 villas to another company before the deadline set in its meeting with HAGL on September 7, 2009.  

“Accusing the committee was not a move to get compensation or recover our property. We only would like to lesson irresponsible official-duty performers and it could be a mirror for other developers impacted upon by the official-duty workers,” Han said. “Any compensation from the legal move would be given to a charity for poor pupils in Lam Dong province.”

Kinh said HAGL could regain its $151,000 paid to the committee.