Lesson 1: Bad Debt

(Baonghean) - Since Directive No. 15-CT/TU of the Provincial Party Committee, post-inspection and inspection handling work has been paid attention to by all levels and sectors in the province and has had positive changes. The results achieved in implementing post-inspection handling decisions have contributed to improving the efficiency and effectiveness of inspection. However, the inspection work still has shortcomings that need to be resolved to improve the management and direction capacity of state agencies....

Directive 15-CT/TU of the Provincial Party Committee on "strengthening the leadership of post-inspection and audit handling" along with the participation of relevant levels and sectors has improved the efficiency and effectiveness of post-inspection handling decisions. In 2011 and 2012 alone, the province carried out 450 administrative inspections at 1,560 units (including 359 planned inspections and 91 surprise inspections).

Through inspection, 945 inspected units were found to have economic violations (mainly in the fields of basic construction, finance, budget, tax...) with a total amount of 64,664 billion VND and 4,431 hectares of land, 55 organizations and 121 individuals were found to have violations, 3 cases with 5 subjects were discovered and recommendations for handling were made. By the end of the year, 55,416 billion VND had been handled, reaching an average rate of 85.8%; 44 organizations and individuals with violations were handled administratively; one corruption case was completed, one subject was sentenced by the court to 4 years in prison.

However, currently, the inspection work still has shortcomings that need to be resolved, the most obvious of which is that urging and recovering economic violations after inspection still faces many difficulties and becomes "hard-to-recover debt".

In Quy Hop district, according to the economic conclusions after the inspection, the total amount to be recovered is more than 6.3 billion VND.

Of which, the amount recovered according to the province's conclusions is nearly 5.75 billion VND and more than 561 million VND according to the district's decision. The recovery result (including the amount exempted from collection due to force majeure) according to the province's decision is more than 2 billion VND, reaching 35%. The collection result according to the district's conclusion is higher, only 60%.

Research into the reality in some localities and some sectors shows that the post-inspection settlement is low and becomes "bad debt" due to many reasons. The main reason is that: Some agencies, organizations and individuals who are subject to inspection are not fully aware of the compliance with the conclusions and decisions on post-inspection settlement that have come into legal effect, and are still procrastinating, citing objective reasons for the slow implementation, or not fully implementing the conclusions and decisions on settlement of the inspection agency.

Some units, due to business losses and difficulties, are unable to pay their economic debts into temporary accounts, pending processing, but there are also units that use "law-circumventing" tricks such as when being inspected and having conclusions and decisions on economic recovery, they are currently a company or unit, but after a short time, they have established another company or sold it to someone else. It is not difficult to name the companies and enterprises that are in the "bad debt recovery" category mentioned above, such as: Xuan Tung Company Limited (Quynh Luu), Viet Thai Company Limited (Vinh City) are loss-making enterprises; Nghe An Agricultural Machinery Joint Stock Company, after inspection and having a decision to handle the amount of 25 million VND due to tax violations, has dissolved and established 5 companies in Nghi Loc, Dien Chau, Quynh Luu, Vinh City.

Phuc Hang Company Limited (Quy Hop) after the inspection decided to recover 20 million VND but was later dissolved. Luong Vy Company Limited (Quy Hop) when the decision to recover the money was made was still the same company, then sold to another owner... Then some units when the decision to recover the money was made were state-owned companies then equitized into new legal entities. Typically, Construction Company I "sold" to the Oil and Gas Group; Construction Company II "sold" to Hanoi Construction Company.

According to some inspectors, post-inspection handling, especially in areas related to economic recovery, is similar to the enforcement of judgments; this is mainly bad debt. Especially for non-state enterprises, because many enterprises do not have a party organization or a trade union organization, it is difficult to assign responsibility to the head, handle administrative handling, and handle economic recovery after violations. Even the issue of account freezing is not feasible because the late payer can open many different accounts, making it very difficult to handle, not to mention that the accounts of many enterprises are just empty accounts.

On the part of competent state agencies (directors, heads of departments, branches, sectors, Chairmen of People's Committees of districts...) some units have not been really determined in directing and organizing the implementation of handling, sometimes they are lax, and the urging and reminding are not regular. The consultation on post-inspection handling measures by inspection organizations at the department and district levels still has many limitations. Some conclusions of the inspection team are not clear, strict, or the basis for handling is not really accurate; not true to the nature of the incident, or the responsibility of individuals and leaders is not clearly defined. The handling and discipline of officials is not strict.

Coordination between functional agencies and organizations in post-inspection handling is not regular, continuous and effective, which is also the reason why post-inspection recovery work is still limited. More broadly, it must be said that current legal documents still lack strong enough guarantees and sanctions. "Currently, there are still no specific sanctions to handle organizations and individuals who commit violations and deliberately delay in implementing legally effective decisions and conclusions. Documents specifying the Inspection Law such as: "Regulations on urging post-inspection handling" only stipulate responsibilities for the inspection agency, but the inspection subjects and agencies coordinating the implementation of inspection decisions have not been mentioned" - Mr. Le Van Dung - Head of the Department of Public Reception and Post-inspection Handling - Provincial Inspectorate, shared.

Besides, it cannot be denied that the objective reason is that in the past time, the general economic situation was difficult, the State limited disbursement, so units had difficulty in finding money to pay the budget. However, there is a reality that in budget-receiving units such as at the district level, the recovery of economic violations in the misuse of funds such as (public benefit fund, flood prevention fund...) preschool education funds, often cannot arrange resources to pay for handling after inspection. There are conclusions of recovery issued from 2003, 2004, 2005 to date that have not been handled.

Currently, the Provincial People's Committee is assigning the Department of Finance to review the misuse of funds by units to adjust and reduce budget allocations. At the commune level, there are also many violations originating from arbitrary changes in the purpose of using capital sources, such as the source of support for road construction being converted to build schools and clinics; schools being turned into communal People's Committee offices... For example, in Quy Hop district, there are currently 597,033,800 VND that have not been recovered, of which 110,735,579 VND were used for the wrong purpose of the source of support for loans for cement to build rural roads that have not been recovered.

The reason is that the violations occurred between 2001 and 2003, some former officials have retired, some have moved out of the area, on the other hand, the commune budget is difficult, so although the District People's Committee has urged many times, they still cannot pay. According to the report of the Provincial Inspectorate on the results of implementing the conclusions and recommendations for handling after the inspection related to economic recovery, in 2012, the Provincial Inspectorate urged the inspection teams that had decided to recover from 2011 and earlier but have not recovered a total amount of 12,832,716,746 VND. Of which, the amount that must be handled from 2011 is 10,077,977,539 VND; the amount that must be urged to recover in 2012 is 2,729,624,175 VND. The total amount recovered is 2,100,000,000 VND, reaching a rate of 16.4%, the amount of receivable transferred in 2012 to continue to be urged is 10,732,716,746 VND.

The slow and sluggish implementation of post-inspection recommendations by many subjects and units... in many localities that are difficult to recover in recent times has been and is a difficult problem for the Inspection sector.

Circular 01/2013/TT-TTCP effective from May 1, 2013 stipulates:

The head of the state inspection agency or the head of the agency assigned to perform specialized inspection functions shall decide to conduct an inspection when one of the following grounds exists: a) After the deadline for reporting the results of the supervision, the subject of supervision, inspection has not completed the implementation of the conclusions, recommendations, and decisions on handling the inspection; b) The subject of supervision, inspection, or supervision has not fulfilled its responsibility to report the results of implementing the conclusions, recommendations, and decisions on handling the inspection according to the provisions of law; c) During the process of supervision, supervision, signs of obstruction, dissipation of assets, destruction of documents, non-cooperation, or violation of the law by the subject of supervision, inspection, or supervision are discovered.

Based on the inspection results, the Head of the State Inspection Agency and the Head of the agency assigned to perform specialized inspection functions shall be responsible for reviewing and promptly handling the inspection results as follows: a) Request the Head of the direct management agency of the subject of monitoring, urging, and inspection to apply measures within their authority and as prescribed by law to force the subject of monitoring, urging, and inspection to complete the implementation of conclusions, recommendations, and decisions on handling inspection. In case the failure to complete the implementation of conclusions, recommendations, and decisions on handling inspection causes damage, the subject of monitoring, urging, and inspection shall be responsible for compensation; b) Apply according to authority or recommend competent authorities to apply disciplinary measures, administrative sanctions and other measures according to law provisions to responsible monitoring, urging and inspection subjects when they do not implement, do not fully implement or do not implement on time in the conclusions, recommendations and decisions on handling inspection; c) Transfer the case to the Investigation Agency at the same level for consideration of prosecution if the inspection process detects signs of constituting a crime by individuals responsible for or related to the implementation of conclusions, recommendations and decisions on handling inspection.

Khanh Ly - Mai Hoa