Projects under investigation related to Mr. Dinh La Thang

The OceanBank scandal and the huge losses at the Thai Binh 2 Thermal Power Project are two serious economic cases involving Mr. Dinh La Thang when he was still the leader of PVN.

On December 8, the Investigation Agency of the Ministry of Public Security decided to prosecute and temporarily detain Mr. Dinh La Thang, Deputy Head of the Central Economic Commission, for serious violations during his time working at the Vietnam Oil and Gas Group (PVN).

Mr. Dinh La Thang committed many violations during his time as leader of PVN. Photo source: Zing

Lost 800 billion invested in OceanBank

Mr. Dinh La Thang and leaders of the Oil and Gas Group during the period 2009 - 2015 contributed capital exceeding the prescribed level to OceanBank, contrary to the provisions of the Law on Credit Institutions, causing very serious damage to the Vietnam Oil and Gas Group.

Accordingly, from 2008 to 2011, PVN approved three times to contribute capital to Oceanbank with a total amount of up to 800 billion VND. However, in May 2015, OceanBank was compulsorily acquired by the State Bank at a price of “0 VND”. This means that PVN’s 800 billion VND shares here were lost.

Ha Van Tham - Chairman of the Board of Directors of OceanBank was sentenced to life in prison.

Specifically, in 2008, when Oceanbank increased its charter capital to VND2,000 billion, PVN contributed VND400 billion (equivalent to 20% of shares) by transferring from its deposit account to Oceanbank's account. Immediately after that, in 2009, Oceanbank increased its capital to VND3,500 billion and then to VND4,000 billion in 2011, PVN contributed an additional VND400 billion to maintain the 20% share ratio.

According to published documents, as of March 31, 2014, OceanBank had bad debt of nearly 15,000 billion VND, a net loss of more than 10,000 billion VND and negative equity of 249% of owner's equity.

During the investment period in Oceanbank, PVN even sent 3 officials to take on key roles at this bank to manage and supervise the investment. However, before the time Oceanbank had accumulated negative capital losses of tens of thousands of billions of VND, PVN still did not see any dangerous signs of this investment.

Losses at Thai Binh 2 Thermal Power Plant

The Thai Binh 2 Thermal Power Project was assigned to the Vietnam Oil and Gas Construction Joint Stock Corporation (PVC) - a subsidiary of PVN. The losses in this project originated in 2011, when PVN assigned PVC as the main contractor for the project with a total capital of up to VND34,295 billion, approximately USD1.7 billion.

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

During the investigation, the authorities discovered signs of violations in the advance payment before signing the EPC contract of the Thai Binh 2 Thermal Power Plant Project.

Thai Binh 2 Thermal Power Plant. Photo source: Tien Phong

Although there was only a policy to assign the Vietnam Oil and Gas Construction Joint Stock Corporation to carry out the EPC package, and the EPC contract had not been signed, before that, the Vietnam Oil and Gas Group had completed procedures to transfer more than 8.2 million USD and more than 1,317 billion VND to the Thai Binh 2 Oil and Gas Power Project Management Board to advance 6.6 million USD and 1,312 billion VND to PVC in 2011.

After that, PVC used 1,080 billion VND of the advance payment to pay off the principal of the bank loan of 425 billion VND, pay the interest on the entrusted loan of PVN, support capital for Phu Tho Biofuel Factory with 74 billion VND; support capital for Vung Ang project with 103 billion VND; support capital for other projects with 156 billion VND...

As of 2012, PVC's financial report only showed an investment of 133 billion VND in the Thai Binh 2 Thermal Power Project, and by 2013 it was only 802 billion VND. Before that, in 2011, PVC's financial report did not show this investment.

In addition, PVC also contributed capital to 5 subsidiaries, 3 of which suffered losses and could not recover capital, forcing PVC to set aside provisions and record business losses.

Meanwhile, PVN had to prepare funds to restart this thermal power project. In August 2013, PVN borrowed a total of 226 million USD from the Japan Bank for International Cooperation (JBIC) and several other credit institutions. In December 2013, PVN had to borrow another 795.25 million USD... to speed up the project's construction progress.

According to PVC's consolidated financial report, by June 2016, the total estimated contract value that the corporation had signed with subcontractors for this project had exceeded the value of the signed EPC contract.

Dinh Vu fiber project "shelved"

The Dinh Vu – Hai Phong fiber project is the clearest evidence of Mr. Dinh La Thang's mistakes in managing, directing, and approving investment projects when he was still the leader of the Oil and Gas Group.

This is one of the top 5 loss-making projects of the Ministry of Industry and Trade. The project has an investment capital of nearly 7,000 billion VND, with the Vietnam Oil and Gas Group holding over 75% of the shares, and plans to use raw materials from the Dung Quat Oil Refinery to process into fibers, with the aim of helping Vietnam become partly self-sufficient in textile materials.

However, after just over a year of operation, this factory had to be continuously "covered", losing more than 1,700 billion VND and facing the risk of bankruptcy.

In addition, a series of other projects of PVN such as 3 biofuel plants including Dung Quat ethanol, Phu Tho ethanol and Binh Phuoc ethanol are also in difficult situations. These plants have been operating at huge losses and are almost not operating commercially. As of November 2014, the total investment capital in these projects has reached 5,401 billion VND.

Previously, the 5th Central Conference on May 7 announced the decision to discipline and remove Mr. Dinh La Thang (Secretary of the Ho Chi Minh City Party Committee) from the position of Politburo member with a warning.

According to the report submitted to the Politburo and the Central Executive Committee by the Central Inspection Commission, the Standing Committee of the Party Committee of the Vietnam Oil and Gas Group (PVN) in the period of 2009-2015 lacked responsibility in leadership and direction, and was lax in inspection, supervision, and management of party organizations and party members, leading to many of the Group's investments being lost and difficult to recover, with a very large total amount of money.

As Party Secretary and Chairman of the Board of Members of PVN from 2009 to 2011, Mr. Dinh La Thang must take responsibility as the leader for PVN's violations during this period.

Mr. Dinh La Thang was then transferred to be Deputy Head of the Central Economic Committee and transferred from the Ho Chi Minh City National Assembly Delegation to Thanh Hoa.

According to Kienthuc.net.vn