A former bank director in Hanoi was sentenced to seven years in prison on Thursday for wrongfully allowing VND360 billion ($15.27 million) in loans to an incompetent Taiwanese firm.
Do Quoc Hung, former director of the BIDV Thanh Do Branch, along with four other former BIDV employees, were charged with “violations of the operational regulations of credit institutions and branches of foreign banks,” according to the Hanoi People’s Court.
Two other former BIDV employees received suspended sentences.
Prosecutors stated that the former directors and employees did not accurately assess the risks and capabilities of businesses that requested loans when they allowed the fly-by-night Taiwanese company Kenmark to borrow $67 million, including $39 million from BIDV and the rest from SHB and Habubank.
Kenmark did not have an office in Vietnam and was rated “high risk” by the Credit Information Center, which assesses the credit worthiness of all individuals and organizations in Vietnam, prosecutors added.
Kenmark, a subsidiary of Kenmark Industrial, wanted to build an industrial park in the northern province of Hai Duong in 2008. But in 2010, the company announced it was suspending operations and its representative left Vietnam. By then it had only finished the technical infrastructure for 13 out of 27 factories it had proposed to build in the industrial park.
The company then could not pay back over VND360 billion, of which VND180 billion is owed to BIDV.
At the trial, the former bank employees said they were “partially at fault” as it was their first time performing financial assessments and allowing a foreign company to borrow money, meaning they could not foresee all the risks.
But prosecutors said that while Kenmark was the most at fault and should be held responsible for the consequences of its actions, it was the fault of former BIDV employees that caused the loss of money.
Besides the prison sentences, both the Kenmark company and the former BIDV employees were ordered to pay a total of VND180 billion in compensation.
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