State groups look over their shoulders

While Vinashin has enjoyed some business success, it has not all been plain sailing

The Central Examination Committee last week proposed the government take disciplinary measures against Vinashin chairman Pham Thanh Binh after an investigation found serious violation of the mobilisiation, management and use of state funds.

The request came after the government announced a restructuring plan for Vinashin which had fallen into severe financial difficulties. According to the National Steering Committee for Enterprises Renewal and Development, Vinashin’s total debts are more than $4 billion and it does not have the ability to repay.

Binh was also accused of intentionally violating legal regulations. The Central Examination Committee reported Binh assigned his son and young brother to important positions at the group that went against the state’s regulations.

It is not the first time the Central Examination Committee has proposed to take disciplinary measures against a highest leader of a state-owned group, considered “iron fists” of the economy.

Last year, the committee investigated Vietnam National Coal-Minerals Industries Group chairman Doan Van Kien for losses of state capital and failing to control coal exploitation and exports. Due to the mistakes, Kien resigned from his position at the end of last year.

The police last year also arrested Luong Hoai Nam, former general director of Jetstar Pacific Airlines, while investigating mistakes in causing huge losses to the country’s second largest airline, in which the state holds a 70 per cent stake.

The accusations against Nam, Binh and Kien demonstrate that there is no tolerance for leaders of state-owned groups, who are said to receive more incentives and powers. Last week, the government also asked the ministries of Finance and Planning and Investment to strengthen supervision and management to state-owned companies, especially state’s wholly-owned companies.

As state-owned groups and corporations contributing 40 per cent of gross domestic product, they also receive huge state funds used for investment and the control and stabilisation of the economy.

Though the groups and corporations substantially contribute to the economy, economists and lawmakers have raised concern about the effectiveness of state-owned groups and corporations as saying that they are expanding investments without applying proper risk management measures.