Former General Director of Social Insurance lent thousands of billions of dong against regulations

On November 9, the Ministry of Public Security's Investigation Police Agency prosecuted and arrested Mr. Le Bach Hong, former General Director of Vietnam Social Security, and three other defendants for the crime of intentionally violating State regulations on economic management causing serious consequences, according to Article 165 of the 1999 Penal Code.

Mr. Le Bach Hong held the position of Deputy Minister of Labor, War Invalids and Social Affairs from 2005 to 2008. At the end of 2008, the Prime Minister decided to let him resign from the position of Deputy Minister of Labor to hold the position of Deputy Minister and General Director of Vietnam Social Security. He received the decision to retire in 2014.

According to the investigation agency (Ministry of Public Security), Mr. Hong and three other defendants were arrested as part of an expansion of the case of intentionally violating State regulations on economic management causing serious consequences, occurring at Vietnam Social Security, ALCII Company and related units according to the prosecution decision from December 2017.

Investing thousands of billions of dong in violation of regulations

According to the State Audit report, in 2011, Vietnam Social Security lent more than the guarantee limit at ALC II Financial Leasing Company (with Vu Quoc Hao as General Director), with a total outstanding debt of VND1,050 billion. While according to regulations, Vietnam Social Security is only allowed to lend capital to state-owned commercial banks.

By 2015, when checking and comparing the working minutes and debt collection of Vietnam Social Security at two financial companies under the Bank for Agriculture and Rural Development (Agribank), ALC I and ALC II, the State Audit found that debt collection (both principal and interest) had not progressed much compared to the conclusion pointing out violations announced a year earlier.

Specifically, by the end of December 2015, Vietnam Social Security had not yet recovered all of ALC II's principal and interest, the amount of VND 769 billion in overdue capital and VND 735 billion in interest. The reason was that ALC II was unable to repay the debt.

On December 15, 2016, the Ho Chi Minh City People's Court issued Decision No. 1016 to open bankruptcy proceedings against ALC II. Currently, the principal amount ALC II owes to Vietnam Social Security is VND 769.3 billion (excluding accrued interest).

Since 2012, Mr. Le Bach Hong has been reprimanded by the Party.

Also related to the violations when Mr. Le Bach Hong, in his role as head of Vietnam Social Security, Secretary of the Party Committee of this agency, on December 25-28, 2012, the Central Inspection Committee of the 11th tenure clearly stated that Mr. Hong did not direct or propose to report to the Party Committee to supplement and amend the Working Regulations of the Party Committee to suit the functions and tasks; did not properly comply with the Working Regulations of the Party Committee.

Mr. Hong announced that the balance of the Health Insurance Fund in 2010 was not in accordance with financial management regulations; and that there was not serious direction in reviewing the responsibilities of groups and individuals who had shortcomings in lending money improperly.

The Party Executive Committee of Vietnam Social Security is accused of not amending and supplementing the working regulations of the Party Executive Committee to suit the functions and tasks during the term of the Party Congress from the 9th to the 11th term; not properly and fully implementing the working regulations of the Party Executive Committee, allowing the General Director of Vietnam Social Security to commit many violations in the management and use of the social insurance fund.

For these violations, Mr. Hong was reprimanded by the Central Inspection Committee for the Party and recommended that competent authorities take disciplinary action against the government.

The arrest of Mr. Le Bach Hong is under the direction of the Central Steering Committee on anti-corruption related to the second phase of the Vu Quoc Hao case.

Vu Quoc Hao was the former General Director of Financial Leasing Company II (abbreviated ALC II). A state-owned enterprise with independent accounting, ALC II is directly under the Vietnam Bank for Agriculture and Rural Development. From January 2006 to October 2009, Vu Quoc Hao held the position of member of the Board of Directors, General Director, and Chairman of the Leasing Council. During the course of running the company, Vu Quoc Hao committed a series of violations.

On December 10, 2015, the Ho Chi Minh City People's Court sentenced Vu Quoc Hao (former General Director of ALC II Financial Leasing Company) to 18 years in prison for intentionally violating state regulations on economic management, causing serious consequences. Four of the defendant's subordinates also received sentences ranging from 6 to 16 years in prison for the same crime.

In addition to this case, at the end of September of the same year, Hao was sentenced to death by the Ho Chi Minh City People's Court for the crimes of Embezzlement and Intentionally violating state regulations, causing a loss of more than 450 billion VND.