Delays in addressing violations

(Baonghean)The Dong Vinh Ward People's Credit Fund was established with the aim of utilizing local capital, creating conditions for people in the area to deposit and borrow money promptly, making an important contribution to the socio-economic development of the locality... However, from 2009 to the present, this Fund has been abused by its Board of Directors, violating principles for personal gain…

According to the charter of the Dong Vinh Ward People's Credit Fund, each member of the Board of Directors could borrow a maximum of 200 million VND. However, taking advantage of their authority, members of the Board of Directors and some other members of the Fund created loan applications under other people's names to legitimize loans amounting to billions of VND each (Mr. Ho Xuan Hai - Chairman of the Board of Directors, Ms. Nguyen Thi Hoa - Director, Ms. Nguyen Thi My Dung - Deputy Director… were among those who borrowed large sums, some exceeding 2 billion VND). With such easily obtained loans, these members lent the money to others to profit from the difference, deposited it elsewhere for interest, and speculated in real estate to make a profit… all while successfully evading authorities. It was only when Ms. Nguyen Thi Hoa, the Director of the Fund, became insolvent and fled that the matter came to light. One might have thought that, after this incident, the individuals responsible at this credit fund would face disciplinary action to rectify the fund's operations, but the matter was instead "overlooked"...

In a report submitted to the Party Committee, the People's Committee of Dong Vinh Ward, and the Dong Vinh Credit Fund on February 24, 2012, Ms. Nguyen Thi Hoa, the Fund Director, admitted: “Recently, I have made many mistakes related to the operation of the Credit Fund… In 2009, I, along with Mr. Ho Xuan Hai and Ms. Nguyen Thi My Dung, borrowed 1,929,000,000 VND from the Fund for the purpose of buying land in My Thanh block and the Danato project land south of Cua Tien bridge, but to date, we have repaid 1,200,000,000 VND. Ms. Dung and I also borrowed money from outside sources to lend to Ms. Nguyen Thai Hoc on Nguyen Thai Hoc street, amounting to 1,823,000,000 VND.”

"The contract I asked my brothers to borrow from the fund for the purpose of building houses, buying land, paying off customer debts… includes me and three others: Nga, Hai, and Dung, who are responsible…".

Previously, on February 12, 2013, Ms. Hoa submitted a self-criticism report to the Fund's collective outlining her wrongdoings and those of the members of the Board of Directors.

When we mentioned that the Chairman of the Board, the Director, the Deputy Director, and several members of the Credit Fund used other people's names to create loan applications totaling billions of dong, Mr. Ho Xuan Hai, Chairman of the Board of Directors of the Dong Vinh Ward People's Credit Fund, defended himself: "We facilitate things for family members; it's always been that way, as long as they repay the principal and interest in full. For example, I borrowed to buy land, but I later sold the land to repay the loan, and now I only have 100 million dong left. According to regulations, it's wrong, but we've already rectified the situation!"

Mr. Hai also admitted that this "facilitation" led to subsequent negative consequences and the loss of staff due to misconduct. Ms. Hoa left behind 958 million VND, of which 318 million VND remains outstanding after restitution...

Regarding the reasons why the Credit Fund's annual general meeting on April 25, 2013 could not be held, Mr. Hai said: "There are many reasons, and they are very complicated because the local authorities did not create favorable conditions for us (?). In early 2012, Ms. Hoa - the Director of the Fund - committed violations in borrowing and was unable to repay, so she left the area. In light of this situation, the Board of Directors submitted a report to the State Bank of Vietnam and the People's Committee and Party Committee of the ward requesting the addition of a new member to the Board of Directors to replace Ms. Hoa, but the Party Committee and People's Committee of the ward were too preoccupied with our personnel matters."



Official letter from the Party Committee of Dong Vinh Ward to the State Bank of Vietnam - Nghe An Branch.

However, in an interview with reporters, Mr. Phan Thanh Hai, Secretary of the Party Committee of Dong Vinh Ward, stated that, with the desire to rectify the operations of the Credit Fund, the ward had repeatedly sent official letters to the State Bank of Vietnam's Nghe An branch to report on the situation but had not received any response from the Bank. Specifically, on March 26, 2013, the Ward Party Committee issued Official Letter No. 10-CV/DU "Regarding the restructuring of personnel of the People's Credit Fund of Dong Vinh Ward" to the Board of Directors of the State Bank of Vietnam's Nghe An branch, which stated: "The State Bank of Vietnam's Nghe An branch should create all conditions (arrange a time as soon as possible) and provide assistance to the People's Credit Fund of Dong Vinh Ward to ensure personnel restructuring and quality."

Meanwhile, Mr. Le Truong Thanh, Chairman of Dong Vinh Ward, said: “Compared to other funds in the area, the Dong Vinh People's Credit Fund has performed poorly and ineffectively in recent years, resulting in violations. We have petitioned the State Bank of Vietnam to replace the Board of Directors because they lack credibility and responsibility, and we are requesting the Bank to conduct a comprehensive inspection; those responsible will be punished. The recent annual general meeting could not be held because the Fund did not have at least two-thirds of its members present.”

Speaking to a reporter from Nghe An Newspaper about the irregularities at the Dong Vinh People's Credit Fund, Mr. Doan Manh Ha, Deputy Director of the State Bank of Vietnam's Nghe An branch, said: "The case of Ms. Hoa absconding mainly involved borrowing from outside sources. We conducted an inspection once and have since resolved the issue. Other cases involved not creating fraudulent documents but rather using family members' names to borrow, which is incorrect. We are coordinating to address this gradually. Recently, we only reviewed Ms. Hoa's loans to see how much she borrowed and how much she owed the Fund. We haven't investigated how much Mr. Hai or others borrowed from the Fund. There have been reports about how much Mr. Hai borrowed and Ms. Dung borrowed, and I requested a report, but they said it had already been resolved. We haven't conducted a specific inspection yet. If nothing happens, we will only conduct inspections once every 2-3 years." Then, Mr. Ha added: "Currently, there are many problems at this Fund (Dong Vinh People's Credit Fund - ed.). Around July or August, we will conduct an inspection to address them. We will conclude at the end of the year, so that at the 2014 term-end congress, anyone found to have committed violations will be replaced!"

However, the reporter obtained the Inspection Report of the Dong Vinh Ward People's Credit Fund dated June 8, 2012, from the State Bank of Vietnam, Nghe An Branch. The report states: “The Fund has a total of 10 staff members, including 2 part-time supervisors. However, at the time of the inspection (March 31, 2012), the number of staff remaining in the Fund was 9, as the Board of Directors had decided to suspend Ms. Nguyen Thi Hoa, Director of the Dong Vinh Ward People's Credit Fund, from February 24, 2012, due to certain violations in the Fund's operations.”

The Fund's operations still have many shortcomings and violations in various aspects of its operations… Based on the inspection results of the Dong Vinh Ward People's Credit Fund, the State Bank of Vietnam, Nghe An Province Branch, found that the aforementioned shortcomings and violations are quite significant, including a rather serious violation: the Fund disbursed money to deposit at other credit institutions but the accountant did not create a disbursement voucher through the advance account; instead, the depositor received the money in cash from the cashier without creating a document or recording it in the fund's ledger; and a customer borrowed money on behalf of Ms. Hoa…”.

Thus, the violations at the Dong Vinh Ward People's Credit Fund are systematic and serious, and have been investigated and concluded by the State Bank of Vietnam, Nghe An Branch. However, it is unclear why the handling of these violations has been delayed. This has eroded public trust, resulting in the inability to hold the annual general meeting on April 25, 2013, due to insufficient attendance (less than two-thirds of the members).

It is time for the relevant authorities and government levels to take timely measures to address and rectify the violations at the Dong Vinh Ward People's Credit Fund so that the Fund can operate effectively and for its intended purpose.

Reporters Team