VNPT found guilty of capital and asset abuse

VNPT is the latest state-oned enterprise to be found guilty of breaching regulations on management of assets

According to the Government Inspectorate’s Notice 1639/TB-TTCP issued last week, Vietnam Posts and Telecommunications Group (VNPT) implemented a range of major investments which suffered from unacceptable delays  during 2006-2011. The notice confirmed that the average delay for most of VNPT’s projects reached a staggering 8.7 months.

VNPT was found to have not correctly calculated the mobile networks’ development and technology requirements, and disobeyed investment procedures, causing major losses. For instance, its copper cable project racked up inventories worth $3.35 million, while the Cityphone project suffered an aggregate loss of $8 million.

VNPT also delayed the implementation of the $142.85 million north-south optical fibre link project  which began in 2003. The project was intended to stretch 2,231 kilometres including 2,034 km via submarine cabling. The fibre optic cable was intended to provide 80 gigabytes per second - equivalent to nearly 10,322,000 simultaneous phone calls, and provide telephone, internet and data transmission services for ministries and other agencies.

However, the project’s bidding activities remain unfinished.

“The delay has badly affected the project’s effectiveness,” said Ngo Van Khanh, vice head of the Government Inspectorate.

Additionally, the group’s $187.5 million Vinasat-1 and $280 million Vinasat-2 satellite projects suffered from losses of $15.66 million in 2011.

As for financial investment, VNPT was found to have contributed $157.1 million to 86 enterprises. Specifically, VNPT’s investment worth $9.33 million in 28 enterprises churned out a low return on investment ratio of just 3.16 per cent. Its $34.47 million investment in 20 enterprises and funds produced no profits whatsoever.

During 2006-2010, VNPT’s business performance was weak, according to the notice, resulting in an equity shortfall of $130.47 million as stipulated by the prime minister.

VNPT was also reported to have disobeyed government regulations and the Ministry of Finance on withdrawing investment capital from non-core businesses. VNPT’s feeble management over its Post Finance Company also contributed to the company’s losses.

Regarding land management and usage, VNPT was reported to be using more than 7.33 million square metres of land. However, it had no reliable records of its land usage, payable taxes or other liabilities.

Deputy Prime Minister Nguyen Xuan Phuc last week agrred with the Government Inspectorate’s proposal for punishing VNPT’s subsidiaries and forcing VNPT to repay $5 million to the state coffers to make up for its outstanding tax payments.