2013 was a horrible year for some state owned conglomerates which were considered the “iron fists,” or the “motive force” of the national economy.
Big bosses met big disasters
While Vinashin (Vietnam Shipbuilding Industry Group) case, found as incurring big debts and losses due to the mismanagement, was considered the highlighted event of 2012, the corruption case at Vinalines (Vietnam National Shipping Lines) has been put on the top highlight of 2013.
In mid-December 2013, former Head of the Vietnam Maritime Bureau, former President of Vinalines Duong Chi Dung, and Vinalines’ General Director Mai Van Phuc was sentenced to death for the counts of making corruption and intentionally violating the laws on economic management, causing serious consequences.
The other 17 defendants in the case have been sentenced to up to 20 year imprisonment.
The case relates to a ship repair yard in the south in 2007. Vinalines’s managers bought an old, seriously damaged floating dock worth $2 million, reporting the purchase price at $19.5 million.
By 2012, Vinalines had poured more money into the floating dock, raising the total investment capital of the valueless thing to $24 million. However, it remains useless, has been left as scrap iron polluting the sea.
Each Dung and Phuc reportedly pocketed VND10 billion from the affair, while the State lost VND366 billion.
Vinalines’ case has been stirring the public for the last many months. Analysts have recalled that just two years ago, Vinalines, which was still considered as a powerful state owned corporation, together with the Vietnam Oil and Gas Group (PetroVietnam), were assigned the task of rescuing Vinashin.
Prior to that, in 2012, former Vinashin’s President Pham Thanh Binh was sentenced to a 20-year imprisonment. Binh and the other eight defendants, who bought the old and backward Hoa Sen Ship, caused the loss of VND910 billion to the State. The figure is 2.4 times higher than the loss caused by Vinalines.
In 2009, President of the Vietnam Coal and Mineral Industries Group (Vinacomin) Doan Van Kien was dismissed for the “management loosening.”
Dao Van Hung, President of the Electricity of Vietnam, was dismissed for a series of mistakes in the management. Especially, EVN incurred the loss of over VND1 trillion when it made investment in telecom, which was not its core business field.
The big state owned corporations and the big debts
State owned economic groups and general corporations have been described as the economic sector which has been going very slowly in the restructuring process and operating ineffectively. “Loss” and “debt” are the two words most popularly used when talking about them.
In late November 2013, Minister of Finance Dinh Tien Dung, reported before the National Assembly that 105 state owned groups and corporations had incurred the huge debt of VND1,350 trillion and the accumulative loss of VND29 trillion.
The ratio of accounts payable on the stockholder equity of the enterprises was 1.46. However, 48 of them were found as “going beyond the safety line” with the ratio far exceeding the allowed level.
Lilama, for example, had the ratio at 53.19, Bach Dang Construction Corporation 20.97, Cienco 8 20.02.
Dr. Pham The nh, a well-known economist, has noted that the debts are so big that the State may have to come forward and pay the debts instead of letting the enterprises go bankrupt.