Multiple counts of mismanagement uncovered at SCIC

The Inspectorate uncovered evidence of numerous counts of false accounting, including management fees payable to SCIC at some of the companies where SCIC personnel joined the management. The incorrect accounting practices pushed up expenditures by VND183 billion ($8.1 million).

SCIC swapped the dividend payable by Hanoi Transport Construction JSC had to pay to it for equity, without informing the government. It gave Vinaconex VND1.6 trillion ($70.7 million) to help it pay part of its VND2 trillion ($88.3 million) debt, also in exchange for a stake, without preparing a report on how this would be a profitable investment. SCIC reported investing VND43.3 trillion ($1.9 billion) in Phuong Nam Pulp Mill, which has yet to be confirmed by Vietnam Paper Corporation.

SCIC prepared wrong calculations on the VND257 billion ($11.5 million) risk provision for its investment in 29 companies. It provisioned VND645.7 billion ($28.5 million) for the investment in Bao Viet Holdings, without proper and adequate reasoning.

SCIC’s reported expenditure was VND252 million ($11,000) higher than its actual expenditure. Other violations amounted to a total of VND130 million ($5,740).

Apart from the misuse of sizeable amounts of money, SCIC assumed the role of representing the state’s stake in Vietnam Trading Engineering Construction JSC (Vietracimex), without actual authorisation from the Prime Minister. Vietracimex is not the type of company SCIC would represent the state’s stake in, according to current regulations. SCIC also received the right to represent state’s capital in Bao Viet from now-defunct Vinashin, which was also against the law. It reported to the Prime Minister and authorised government agencies about taking on Viet Ninh Service, Investment and Development JSC (VINICO) from Ninh Thuan province, then gave it back to the province in 2009—but, in fact, it never actually received the company.

It should have filed the nearest quarter financial statement upon receiving the company, but these documents are missing.

In some instances, SCIC assigned representatives without written authorisation and at another instance, with authorisation dated a year after receiving the company and making the appointment. Sometimes a representative for two consecutive years failed in his/her assigned tasks, but SCIC did not make the adequate replacement.

SCIC’s representatives often failed to make regular reports on the investee companies’ operations, as stipulated by regulations. Sometimes they allowed the company to make investments before securing the shareholders’ permission or making proper analysis. In addition, these representatives ignored protocol to request SCIC’s permission before allowing the companies to make important decisions.

SCIC represents the state’s stake in a number of wholly or partially state-owned companies. The list of investees includes big names, such as Vinamilk and FPT.

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