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Ex-chairman of Vietnam’s largest bank arrested over $27.8mn loss

A former board chairman of Vietnam’s largest bank by assets has been captured for investigation into his alleged breach of state regulations on economic management from 2007 to 2009, leading to a total loss of more than VND590 billion (US$27.8 million).

A former board chairman of Vietnam’s largest bank by assets has been captured for investigation into his alleged breach of state regulations on economic management from 2007 to 2009, leading to a total loss of more than VND590 billion (US$27.8 million).
A former board chairman of Vietnam’s largest bank by assets has been captured for investigation into his alleged breach of state regulations on economic management from 2007 to 2009, leading to a total loss of more than VND590 billion (US$27.8 million).

Investigative police from the Ministry of Public Security have nabbed Do Tat Ngoc, 65, for breaching “state regulations on economic management, causing serious consequences.”

Ngoc is the ex-chairman of the Board of Directors of the state-owned Vietnam Bank for Agriculture and Rural Development (Agribank), which is the Southeast Asian country’s largest lender with assets totaling roughly VND672 trillion ($31.7 billion).

He is now accused of being involved in wrongdoing at Agribank Printing, Trade and Service Company and negligence in economic management in another case at Agribank Leasing Company No. 2 (ALC II).

Ngoc’s arrest, approved by the Supreme People’s Procuracy of Vietnam, followed police’s expansion of their probe into allegations of breaching “state regulations on economic management, causing serious consequences” at Agribank Printing, Trade and Service Company and International Investment and Education Development JSC (INED).

Land law violations

Before charges were filed against the misconduct at Agribank Printing, Trade and Service Company and INED, the State Bank of Vietnam (SBV) had cited inspection results concluding that the former was involved in four major wrongdoings in connection with land laws.

The violations include: 1. Contributing capital illegally acquired from the ownership of the rights to use a land lot and of the properties on it at 10 Chua Boc Street in Hanoi’s Dong Da District to Agribank Real Estate Joint Stock Co.; 2. Illegally investing in a land auction in Phu Thuong Ward in the capital city’s Tay Ho District; 3. Unlawfully investing in a five-star hotel project in Nha Trang City in the central region; 4. Illicitly transferring a rented land lot at Quang Minh Industrial Park in Hanoi’s Me Linh District.

Criminal signs have been detected in the 4th case which caused a loss of VND93 billion ($4.39 million), investigators said.

In 2008, Agribank was required by the SBV to relocate its printing factory in Hanoi to an area outside the capital. Pham Ngoc Ngoan, who was then the director of Agribank Printing, Trade and Service Company, was assigned to carry out this mission.

Ngoan later worked with representatives of INED headquartered in Ba Dinh District on the transfer of facilities and a leased land lot covering an area of 20,400m² at Quang Minh Industrial Park for the construction of a new printing factory.

However, under Vietnam’s 2003 land law, the land lot was not allowed to be sublet or transferred to another party because it was being rented by INED at that time.

In spite of knowing this regulation, Ngoan still submitted relevant proposals worth VND158 billion ($7.45 million) to build the new printing factory on this land lot to Do Tat Ngoc, the then chairman of Agribank’s Board of Directors, and secured Ngoc’s approval.

Then under the direction of Ngoan, Agribank Printing, Trade and Service Company paid VND93 billion ($4.39 million) to INED for leasing the plot in 49 years.

Investigators said Agribank is now unable to take back that VND93 billion. They added the relocation project has yet to be implemented because Agribank Printing, Trade and Service Company has not obtained the license to use the said land plot.

Corruption scandal at ALC II

According to investigators, former Agribank chairman Ngoc has been found to be involved in a separate corruption case at ALC II which caused a loss of VND500 billion ($23.6 million) to the state budget.

In 2007, the SBV issued a decision amending regulations on prudential ratios in the operations of credit institutions. According to this decision, the total amount of loans made and guarantees provided by a credit institution to any one enterprise which such a credit institution controls shall not exceed ten percent of the equity of the credit institution.

Under this decision, ALC II was not allowed to take out more lending from Agribank at the time because its debt at the state-owned bank had already topped VND2.2 trillion (roughly $104 million) in late 2006.

However, in 2007 when the total debt that ALC II owed to Agribank rose to VND2.555 trillion ($120 million) which surpassed the allowed limit by VND1.325 trillion ($62.5 million), Agribank’s Board of Directors still made a decision signed by Do Tat Ngoc to lend another VND3.77 trillion ($178 million) to ALC II.

Investigators said Ngoc is currently accused of lack of responsibility in economic management, failing to check and supervise operations at ALC II in 2007, 2008, and the first six months of 2009, and failing to discover and timely handle violations at ALC II, leading to a massive loss of VND500 billion ($23.6 million) in state asset value.

Regarding the corruption scandal at ALC II, the Ho Chi Minh City People’s Court last November gave the death penalty to two former company executives and sentenced nine other defendants to three to 14 years in prison.

One of the two men sentenced to death was Vu Quoc Hao, 58, former ALC II general director. Hao was indicted on three charges: embezzlement; abusing his position and power while on duty; and intentionally violating state regulations on economic management and causing serious consequences.

The other was Dang Van Hai, 56, ex-chairman of the Board of Members of Quang Vinh Co Ltd, who was prosecuted for three offenses: swindling to appropriate assets; abusing his position and power while on duty; and intentionally violating state regulations on economic management and causing serious consequences.

However, the People’s Supreme Court in Ho Chi Minh City quashed the two death penalties and ordered a probe into the case again this July.