Preventing the situation of 'blue army, red army' in asset auctions

The situation of “blue team, red team”, collusion, and price lowering in property auction activities is still common. To prevent this negative situation that causes loss of property, the draft Law on Property Auction devotes a whole chapter to regulations on handling violations, canceling auction results, and compensation for damages.

Still negative

The public is abuzz with the auction of 135 motorbikes seized by the Can Loc District Police (Ha Tinh) in early June. Specifically, the Auction Council of the Can Loc District Police authorized the Phu Quy Auction Joint Stock Company branch in Ha Tinh to conduct the auction.

However, many people who wanted to buy a car went to the address announced by Phu Quy Company but could not find the office. In addition, during the time of registering to participate in the auction, many individuals tried to contact the leaders of Phu Quy Company directly, but the final answer they received was "the car lot has been sold!". In response to this scandal, the Ministry of Justice sent a document requesting the Ha Tinh Department of Justice to report.

This is just one of the recent incidents that has caused public opinion to question the transparency of property auctions. At a recent workshop to provide comments on the draft Law on Property Auctions in Ho Chi Minh City, Mr. Dinh Dang Dung, Director of the Phuong Nam Property Auction and Partnership Branch, shared that there are negative aspects to auctions. The first is the negative aspect between the property owner and the auction organizer. The second negative aspect is between the auctioneer and the property buyer.

There are many things to consider in the auction. Illustration

According to Mr. Dung, if an auction does not have clear information in the press, it is easy for collusion to occur, because there are many people who want to buy the property but do not know how the property is sold. There are also cases where after posting the auction, people come to ask for information but are told that the person in charge is away and does not let them see the documents. "They use that method to push customers away, leaving the auction to the "blue team, red team". Therefore, the goal of auctioning at the highest price has not been achieved," said Mr. Dung.

Agreeing with this view, Dr. Tran Du Lich, former Deputy Head of the National Assembly Delegation of Ho Chi Minh City, affirmed that the phenomenon of “blue army, red army, wooden legs” leading to negativity in auctions is real. Mr. Tran Du Lich cited the case of someone wanting to buy a good piece of land or house but there were forces coming to prevent the auction and no one dared to do anything. From there, Mr. Tran Du Lich suggested that the draft Law on Property Auction must have a mechanism to overcome this negative phenomenon.

Strictly handle organizations and individuals who violate

Currently, the draft Law on Property Auction is being received and revised. Accordingly, the draft consists of 8 chapters and 79 articles, including a number of additional points and provisions on the auction of bad debts and collateral of bad debts, reviewing and supplementing types of auctioned assets such as: state assets, land, execution of judgments, etc.; supplementing prohibited acts, regulations related to property auction service centers, property auction enterprises, auctioneers and socio-professional organizations of auctioneers.

To prevent the situation of formal auctions, "blue team, red team", and negative activities in auctions that cause loss of assets, the draft also devotes a chapter to regulations on handling violations, canceling auction results, and compensation for damages. Thereby, clearly defining the responsibilities of agencies, organizations, and individuals related to the legality of assets put up for auction, handling responsibilities of cases of auction participants with violations, and auction winners not receiving assets. The draft also lists a series of prohibited acts for auctioneers; asset auction organizations; organizations and individuals participating in auctions.

Assessing these contents, many opinions believe that the regulations on property auctions are quite strict, but if there are no strict sanctions for organizations and individuals who violate, negative practices in auctions will still exist. Therefore, the drafting committee needs to consider increasing the penalty for violations of regulations on property auctions when considering amending the 2015 Penal Code. Accordingly, Article 218 of the 2015 Penal Code stipulates a fine of VND 20 million to VND 200 million, non-custodial reform for up to 2 years or imprisonment from 3 months to 2 years for the following acts: creating a fake list of people registering to buy property for auction; creating fake records, fake records to participate in property auctions or colluding to lower or raise prices in property auctions. This penalty level is considered too low compared to the profits that organizations and individuals gain when trying to "collude" or collude to appropriate state assets in auction activities.

Thu Phuong/baotintuc