Errors in equitisation of Vietnam Medical Equipment Corporation

June 25, 2019 | 14:20
The Government Inspectorate of Vietnam has just announced the conclusions of its inspection of the equitisation process at Vietnam Medical Equipment Corp. (Vinamed); the state divestment at Mediplast Medical Plastic JSC (Mediplast) and Danameco Health JSC (Danameco); and the merger of Mediplast into Vinamed.

The Government Inspectorate concluded that in 2007-2010, the Ministry of Health (MoH) did not request advice from the prime minister about the difficulties to complete the equitisation of Vinamed, which after the transition was not transformed into a joint stock company.

errors in equitisation of vietnam medical equipment corporation
The Government Inspectorate uncovered several errors in the equitisation of Vinamed

After being transformed into Vinamed, the enterprise did not research the production of medical equipment and neither did it increase the value of the state's interest in the company.

For the equitisation process of Vinamed in the 2014-2016 period, Decision No.4208/QD-BYT dated October 15, 2014 of the Minister of Health was not consistent with the provisions of Decree No.59/2011/ND-CP dated July 18, 2011 of the government. The MoH did not issue a plan or a roadmap to implement the equitisation in accordance with regulations.

Vinamed and Dong A Securities Co., Ltd. did not notify the authorities in time about completing the business valuation.

The Ministry of Health (MoH) issued Decision No.3854/QD-BYT on the value of equitised enterprises slower than prescribed; the implementation of the approved land use plan was slow and the land use was not in accordance with the plan.

The corporation until July 12, 2016 also had overdue bad debts.

The Government Inspectorate also pointed out that after the sale of the shares the company delayed returning the state's capital.

In addition, the equitisation steering committee did not report to the MoH the added value of Mediplast shares from VND25,200 ($1.1) to VND 29,484 ($1.3) per share and did not recalculate the value of state capital at the time it officially transformed into a joint stock company.

Along with that, the merger of Mediplast into Vinamed did not comply with the PM's directions. After one year of officially operating under the JSC model, Vinamed should have completed the divestment before merging with Mediplast, but the company reversed this order.

Prior to the above issues, the Government Inspectorate of Vietnam proposed the PM to direct relevant units to re-calculate the value of shares, the number of shares, and the percentage of shares held by the state at Vinamed to transfer to the State Capital Investment Corporation (SCIC).

The MoH redefined the value of state capital when the firm was transferred to the JSC model.

At the same time, the MoH clarified its responsibilities and determined penalties and solutions for these shortcomings.

Vinamed must immediately pay the interest and late payment fee due to delaying payments to the state. The state will also cancel and nullify the two valuation certificates and documents (one for the divestment and one for the merger).

The Hanoi People's Committee monitors and urges the handling of existing problems in the management and use of houses and land at No.1 Lane 135, Nui Truc, Kim Ma, Ba Dinh, Hanoi and No.89 Luong Dinh Cua, Dong Da, Hanoi.

The Hanoi People's Committee will also prepare documents to deal with land and house recovery in accordance with regulations if Vinamed is found to have violated regulations on land management and use in the two above facilities.

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