Two bank leaders withdrew 3,900 billion to lend to a 'backyard' company

The former chairman of the Board of Directors and deputy head of GPBank approved loans to two 'backyard' companies, causing a loss of 3,900 billion VND.

On December 19, the Hanoi People's Court opened the first instance trial of the case that occurred at Global Petroleum Joint Stock Commercial Bank - GPBank, causing a loss of nearly VND 4,800 billion (both principal and interest).

The defendants who must appear in court for intentionally violating the State's regulations on economic management, causing serious consequences, are Ta Ba Long (62 years old, former chairman of the Board of Directors of GPBank), Doan Van An (59 years old, former vice chairman of the Board of Directors of GPBank), and his subordinates Pham Quyet Thang (44 years old, former general director of GPBank), Nghiem Tien Sy (44 years old, former deputy general director of GPBank), Nguyen Anh Dung (39 years old, former chief accountant of GPBank) and Nguyen Ngoc Nam (41 years old, director of Sao Bac company).

According to the prosecution, in 2009 and 2010, to have money to increase charter capital at GPBank and use it for other purposes, Mr. Long and Mr. An used three back-office companies including Thanh Trung, Dai Lai, and Chi Linh to issue nearly 4,000 bonds to sell to the Electricity Finance Joint Stock Company (EVNFinance) for nearly VND3,400 billion.

The two men then used more than 2,600 billion VND of the above amount for their group of shareholders to buy shares to increase the charter capital of this bank. More than 510 billion VND was used to pay bond interest and bond issuance consultancy fees. The remaining nearly 260 billion VND was invested by the defendants in the three above-mentioned enterprises.

At the same time, GBBank was approved by the State Bank to increase its charter capital to more than VND3,000 billion (the initial charter capital was more than VND2,000 billion). Because there was no money to pay the principal and interest to EVNFinance, Mr. Long and An discussed ways to withdraw money from their own bank.

The two men proposed to buy the Capital Tower Building (contributed by Thanh Trung Company with Thu Do Construction Company) and invest in the An Khanh Commercial Office Housing Center project (invested by Sao Bac Company) to withdraw 3,900 billion VND from GPBank itself. After that, Thanh Trung and Sao Bac companies were disbursed 2,200 billion and 1,700 billion VND respectively.

In fact, the two companies were owned by Mr. Long and Mr. An, so after having the money, they withdrew it to pay off EVNFinance's debt. This action, with the help of Thang, Sy, Dung and Nam, caused the bank to lose nearly 4,800 billion VND in principal and interest.

Defendants Long, An, Thang (from right to left) and accomplices in court.

Turn trillions to take care of the "big picture"

Regarding the violations in purchasing Capital Tower, the chairman said that although Thanh Trung Company contributed more than 58% of shares, Thu Do Company had not yet decided to hand over the building to Thanh Trung, so Thanh Trung was not the owner.

Mr. Long explained that the purchase of the above building was decided by the GPBank Board of Directors at a meeting and decision was made. The purpose of the purchase was to serve as the headquarters and a place to place the bank's data system. After the investment resolution was approved by the Board of Directors and shareholders, Mr. Long assigned General Director Thang to disburse 2,200 billion VND to Thanh Trung.

“The defendant is the chairman of the Board of Directors, so does he have the right to buy the Capital Tower building for 2,200 billion VND?” the presiding judge questioned. “In reality, we have only made a deposit. Only when the purchase is completed can it be called an investment,” Mr. Long replied, but admitted that he had transferred the entire 2,200 billion VND to Thanh Trung.

The chairman said that according to the Law on Credit Institutions, banks are not allowed to invest in purchasing assets exceeding 50% of their charter capital (GPBank's charter capital at this time was over VND 3,000 billion). The amount of VND 2,200 billion after being transferred to Thanh Trung was immediately withdrawn to Chi Linh (defendant An's backyard company) to pay off the debt to EVNFinance.

In addition to the above violations, Mr. Long was also accused of investing 1,700 billion VND in the Sao Bac project (Mr. An's backyard company). The presiding judge said that the An Khanh Commercial, Office and Housing Center project had not yet been approved for construction. The money Sao Bac Company received was immediately transferred to Chi Linh in the form of a loan to repay EVNFinance. The defendant and his accomplices' actions caused GPBank to lose 3,900 billion VND.

Mr. Long explained that the above investment was a “long-term” process to help GPBank increase its charter capital to 9,000 billion VND. If the investment in the two projects was effective, it would attract capital contributions from partners in the future. However, in 2012, the State Bank Inspectorate stepped in, leaving the “work unfinished”.

Admitting that GPBank suffered losses, the defendant said he had asked partners to mortgage assets and collect shares from related groups to remedy the consequences. “The defendant is responsible for encouraging companies to repay GPBank,” Mr. Long stated.

During his interrogation, Mr. An also admitted that the investment policy for the two companies was wrong. "The pressure to increase charter capital was very intense for GPBank at that time." The defendant himself knew that the investment was wrong, but hoped that in the future, other businesses and individuals would invest in GPBank. "The defendant apologized to his subordinates for the wrong decision of the Board of Directors that caused them to get into trouble with the law," Mr. An said in a low voice.

The trial continues tomorrow with cross-examination.

According to VNE