'Gutting' trick at Thai Binh 2 Thermal Power Plant

The recently arrested chief accountant of PVN is directly involved in the violations of "embezzling and misusing" state money at the Thai Binh 2 Thermal Power Project.

» Chief Accountant of Vietnam Oil and Gas Group arrested

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On September 26, the Security Investigation Agency (Ministry of Public Security) announced that it had prosecuted and temporarily detained Mr. Le Dinh Mau - Chief Accountant of Vietnam Oil and Gas Group (PVN) for "intentionally violating State regulations on economic management, causing serious consequences" at the Thai Binh 2 Thermal Power Project, with Vietnam Oil and Gas Construction Joint Stock Corporation (PVC) as the general contractor.

In addition to Mr. Mau, three other people were also prosecuted for the same crime, including Vu Hong Chuong, former head of the Thai Binh 2 oil and gas power project management board; Tran Van Nguyen, chief accountant of the Thai Binh 2 oil and gas power project management board; and Nguyen Ngoc Quy, former Vice Chairman of the Board of Directors of PVC.

According to the authorities, Mr. Mau and the defendants showed signs of violations in making advance payments before signing the EPC Contract of the Thai Binh 2 Thermal Power Plant project.

Thai Binh 2 Thermal Power Plant with a total investment of about 1.7 billion USD is one of the famous projects with many violations of PVC assigned by the Vietnam Oil and Gas Group (PVN). This is also a typical project for the indiscriminate spending and "burning money" of PVC's leadership under the time of Mr. Trinh Xuan Thanh, who was still Chairman of the Board of Directors, including the fact that PVC used the investment capital in this project for the wrong purpose.

Embezzlement of investment funds at the Thai Binh 2 Thermal Power Plant project has caused the project to be 3 years behind schedule. Photo: NLM

According to the audit report onRegarding the financial and activities related to the management and use of State assets in 2014 at the Vietnam Oil and Gas Group announced by the State Audit in March this year, the project investor - PVN - was "stuck" when itSigned a capital arrangement consultancy contract worth nearly 68.9 billion VND and disbursed nearly 61.3 billion VND. However, this expense has not yet been regulated by the State on the norms as well as accounting and settlement of construction investment projects.

In addition, the Vietnam Oil and Gas Power Corporation (PV Power, a member of PVN) also signed a contract with the PVC contractor at the provisional price approved in the bidding plan without completing the design survey and estimate, and without organizing the contractor selection (the road construction package and the site leveling construction of the Thai Binh Power Center).

After that, PVC signed an EPC contract with the Thai Binh 2 Oil and Gas Power Project Management Board with a value of about 918 million USD and 5,874 billion VND.

Violations followed violations when the advance payment for this project that PVN gave to PVC in 2011, about 1,300 billion VND and 6.6 million USD (approximately 150 billion VND), was misused. The leader of PVC at that time, Mr. Trinh Xuan Thanh, spent 1,080 billion VND to pay 425 billion VND of principal debt from the bank and 55 billion VND to pay interest on the group's entrusted loan. PVC also spent 74 billion VND tosupport Phu Tho biofuel factory, and add 103 billion VND to support Vung Ang project (Ha Tinh).

The entire remaining advance payment, nearly 300 billion VND, this enterprise did not use to implement the Thai Binh 2 Thermal Power project, but instead "threw" it into 5 other units that PVC contributed capital to, includingPVC - MS company is 102 billion VND, PVC - Land company is 50 billion VND, PVC - Hoa Binh company is 55 billion VND, PVNC company is 30 billion VND and PVC Mekong company is 30 billion VND. Up to now, the 3 companies have been operating at a loss and have not recovered their capital, PVC has had to set aside provisions and record business losses.

It is worth mentioning that the entire amount of money spent for the wrong purpose has not yet been recovered by the parties.Later, to have money to develop Thai Binh 2 Thermal Power Plant, the leader of PVC in the post-Trinh Xuan Thanh era, Mr. Vu Duc Thuan, sent a document "calling for help" from the parent corporation - PVN, asking for support.The total interest payable for the loan to open the L/C by the end of 2013 is about 1.5 million USD.

“In the immediate future, the group will support PVC with the interest expense payable up to August 25, 2013, which is 600,000 USD and is expected to accumulate to December 31, 2013, which is 1.5 million USD,” the proposal stated at that time.

In addition to the "huge" amount of money spent for the wrong purpose by PVC in this project, vThe incident at Thai Binh 2 Thermal Power Plant has recently attracted attention when the bidding unit was accused of being non-transparent in the "Insulation and Heat-insulating Materials" bidding package.

Specifically, in August, the Oil and Gas Construction Maintenance and Repair Corporation - PVMR (formerly known as PVEIC), representing the PVEIC - TBDST - TEMEX Joint Venture, submitted a written petition regarding the removal of this joint venture from the "Insulation and Heat-insulating Materials" package by PVC. According to PVMR, in March 2016PVC organized the bidding for the package “Insulation and heat insulation materials” - Thai Binh 2 Thermal Power Plant project and publicly sold the bidding documents to interested bidders. PVC closed this bidding package in May 2016 and proceeded to open the bid and evaluate the technical proposals.

Five months later, PVC's Working Group on this bid package reported on the technical proposal evaluation with three contractors passing the technical test, including the PVEIC - TBDST - TEMEX joint venture.The problem arose when the Working Group submitted, the PVC Board of Directors removed the contractor status of the PVEIC - TBDST - TEMEX Joint Venture and directed a review of the results of the technical proposal evaluation.Regarding this incident, PVC Deputy General Director Nguyen Duyen Hai signed the Board of Directors' explanatory report to the Board of Directors and proposed to maintain the results presented by the Working Group, but it was not accepted.

After receiving information about being eliminated from the bidding package, PVEIC sent a dispatch requesting clarification on a number of issues related to the bidding qualifications of this consortium, but did not receive a response from PVC and continued to send a petition to PVN reflecting the incident as a request for clarification.

Faced with the bidding controversy involving PVC as the EPC general contractor for this project, a month ago, Minister of Industry and Trade Tran Tuan Anh requested the General Department of Energy to coordinate with relevant units to urgently review issues related to the project's thermal insulation materials package.

According to VNE