PVD in nosedive after arrest of former chairman

Former chairman arrested, PVD stock plunged

One of Vietnam's most senior oil and gas executives has been arrested over alleged financial irregularities from the time he was chief executive of PetroVietnam Exploration and Production (PVEP).

On December 18, 2018, the Investigation Police Agency (C03) under the Ministry of Public Security (MPS) issued a decision on prosecuting and detaining Do Van Khanh, former general director of PetroVietnam Exploration Production Corporation (PVEP).

The investigation police agency concluded that during 2012-2014, Do Van Khanh had abused his position as PVEP director general to receive extra interest payments from OceanBank and appropriate assets, according to Vietnamplus.

Accordingly, the Investigation Police Agency issued a decision No.265/C03-P15 to prosecute accused, arrest to temporarily detain Do Van Khanh, former general director of PVEP, according to arrest warrant No.77/C03-P15, for abusing his power to appropriate property under Article 355 of the Penal Code 2015.

Khanh led PEVP between August 2010 and November 2015, then moved to PetroVietnam Drilling & Well Services Corporation (PVD).

According to PVD’s press release, on November 30, Vietnam National Oil and Gas Group (PetroVietnam) approved the resignation of Do Van Khanh and asked PVD to carry out the procedures to elect a new chairman.

The prosecution is completely unrelated to the period Khanh worked at PVD from December 2015 to the last day of November 2018 and does not affect PVD’s current business activities.

Despite a press release to clarify and correct information about the prosecution, PVD lost 4.5 per cent of its share value, ending at VND15,800 ($0.68) per share on December 19, after four consecutive sessions of decrease.

According to the financial report published on PVD’s website, PVD’s revenue in 2016 was only $98 million, down 75.4 per cent compared to the $402.6 million in 2015. After-tax profit was only $3.46 million, down 95 per cent.

In 2017, PVD’s profit dropped to only VND45 billion ($1.96 million), meanwhile, revenue fell to only VND3.7 trillion ($160.87 million).

2018 is even worse as in the first half PVD recorded a loss of VND331 billion ($14.4 million).

Beside being PVD’s customer, PVEP is also PVD’s debtor. By the end of the third quarter of 2018, PVD made a provision of VND319 billion ($13.87 million) for PVEP's VND460 billion ($20 million) debt, according to Vneconomy.