Officials ignored red flags to approve Trinh Van Quyet’s company listing: prosecutors

The People’s Court of Hanoi on Wednesday heard the testimonies of seven officials in three government agencies who are charged with intentionally publishing false information and/or concealing information in securities activities, or abusing position and authority while performing official duties.

Prosecutors said that these officials provided assistance to FLC Group chairman Quyet and his accomplices in inflating the capital of subsidiary Faros Construction from VND1.5 billion to VND4.3 trillion ($59,000 to $170 million).

To list Faros shares on an exchange, first Quyet needed to register the company as a public firm to the State Securities Commission (SSC).

Le Cong Dien, head of the SSC’s department of public company supervision, told the court that he noticed unusual factors in the capital increase of Faros, as it went up quickly in a short period of time.

He therefore ordered the company to provide further documents to prove legitimacy, including an affirmation from an auditor.

CPA Hanoi, which partnered with Quyet to “clean” the reports of Faros, twice informed Dien that the company’s capital mobilization process was legitimate.

Faros even filed two complaints saying that the SSC was creating difficulties for the company by requesting unnecessary documents, Dien said.

Dien therefore approved the registration of Faros due to “fear that the company might sue SSC to court.”

He, however, did note the issues with Faros’s capital in his approval document.

He requested the court to consider his effort to thoroughly review Faros’s application in deciding the final sentence.

Another official, Tran Dac Sinh, chairman of Ho Chi Minh City Stock Exchange (HoSE), ordered subordinates to approve Faros’s request to list on the exchange because of his personal relationship with Quyet, according to prosecutors.

Sinh told the court that he knew Quyet six months before receiving the listing request from Faros.

Sinh said that Faros chairman Doan Van Phuong, who is now hiding, came to his office and asked for the approval process to be sped up.

Sinh said many other company representatives also made the same request to him.

Because of his personal relationship with Phuong and Quyet, Sinh approved the listing of Faros.

But he said that there is a “systemic error” in the auditing of Faros and in subsequent assessment.

Le Hai Tra, former HoSE deputy CEO, said that he used to play tennis with Quyet.

Former deputy CEO of Ho Chi Minh City Stock Exchange, Le Hai Tra, seen at the People’s Court of Hanoi on July 24, 2024. Photo by VnExpress/Giang Huy

He said he only approved Faros’s listing registration because the company submitted all required reports.

His office did not have the function of an auditor and therefore could not verify whether Faros’s auditor submitted a correct report or not, he added.

After nine months of being reviewed by officials, Faros’s 430 million shares were approved to list on HoSE on Sept. 1, 2016.

Prosecutors said that HoSE became “a tool” for Quyet and his accomplices to sell shares to 30,000 investors and appropriated VND3.62 trillion from them.

At the ongoing trial, Quyet is being tried for fraudulent appropriation of assets by ballooning the capital of Faros, and for stock manipulation by buying back and forth the shares of FLC and several other affiliated companies to push up their prices.

49 other individuals are also tried for assisting him.