Probe Nabs More Shipping Officials

Vietnamese authorities arrest five more officials from a mismanaged state agency.
2012-07-26
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The logo of Vietnam's state-owned shipbuilder Vinashin at its headquarters in Hanoi, July 19, 2010.
AFP

Vietnamese authorities arrested five more officials they accused of “deliberate wrongdoings” that led to staggering losses for a state-owned shipping firm, state media said Thursday, bringing to 11 the number of people in police custody in connection with the widening scandal.

The five, which included former lead accountant for the Vietnam National Shipping Lines (Vinalines) Nguyen Thi Bich Loan, were responsible for losses of some U.S. $5 million after purchasing a floating dock, the official Lao Dong newspaper reported, citing investigators. They were arrested on Wednesday.

Also held were three customs officials and another official, the newspaper said.

The government said in June that Vinalines, Vietnam’s largest shipper, had defaulted on loans worth more than U.S. $2 billion.

Only two of the 13 people under investigation for links to the shipping scandal remain at large, Lao Dong said.

Vinalines’ former director and his deputy were arrested in May and the company’s former chairman, Duong Chi Dung, is currently being sought on an international warrant after police failed to arrest him that month.

Government inspectors say Vinalines lost some U.S. $1 billion in purchasing more than 70 ships which required major repair work and maintenance.

The Vinalines scandal is yet another example of criminal mismanagement at one of Vietnam’s major state-owned enterprises (SOEs), which together are responsible for some two-thirds of the country’s economic capital and assets.

In 2011, nine officials at state-run shipbuilder Vinashin were given long-term prison sentences for knowingly violating state regulations in a well-publicized court case.

In December 2010, Vinashin nearly went bankrupt after defaulting on the first U.S. $60 million installment of a U.S. $600 million loan by Credit Suisse, which was provided in 2007.

At the time, the government said that Prime Minister Nguyen Tan Dung and several cabinet members made "shortcomings and mistakes" in managing Vinashin, but that these were not serious enough to warrant disciplinary action.

The troubles at Vinashin sparked investor concerns over the management of the country’s other government-run firms and the company’s default posed difficulties for other SOEs wanting to borrow money.

Following the scandal, Standard & Poor's slashed Vietnam’s debt rating by one rung to BB-, three levels below investment-grade.

The global credit-rating agency followed a similar move by rival firm Moody’s.  Another agency, Fitch, downgraded Vietnam's long-term foreign and local currency ratings in July 2010.

Vinalines had taken on many of Vinashin’s projects, but also mismanaged them.

Vietnam announced plans this month to restructure its beleaguered SOE sector by 2015, but doubts remain over how effective the proposed reforms will be.

Reported by Joshua Lipes.