Trillion-dollar loss projects during Trinh Xuan Thanh's time

From profitable business, under the management of Mr. Trinh Xuan Thanh, PVC fell into a vortex of cash flow imbalance, losing 3,300 billion VND.

» Trinh Xuan Thanh: From a blue-plate Lexus to a red-wanted criminal

» More than 300 days of searching for suspect Trinh Xuan Thanh

» Minister of Public Security speaks about Trinh Xuan Thanh's return to the country

» Arrest and extradite Trinh Xuan Thanh to serve investigation

After nearly a year of fleeing abroad, the Ministry of Public Security announced that Mr. Trinh Xuan Thanh had surrendered to the security investigation agency. Previously, Mr. Thanh was prosecuted by the Investigation Police Agency (Ministry of Public Security) for embezzlement and intentionally violating economic management regulations, causing serious consequences due to his responsibility for a series of violations that occurred at the Vietnam Oil and Gas Construction Corporation (PVC).

Under the "molding" hands of Mr. Trinh Xuan Thanh, PVC went from a profitable enterprise to a trillion-dollar debtor.

From a profitable business, PVC under the management of Mr. Trinh Xuan Thanh became a "huge debtor" to banks. This enterprise started to decline in business since 2012, when Mr. Trinh Xuan Thanh was still the Chairman of the Board of Directors. In this year, PVC's revenue decreased seriously due to the lack of new jobs for workers.

Along with that, a number of key projects were stopped, delayed, and especially a series of subsidiaries and affiliated companies that PVC invested in all suffered losses this year, causing PVC to lose nearly 1,850 billion VND in 2012 and double a year later. PVC's total loss was nearly 3,300 billion VND.

Due to huge losses, PVC's return on equity (ROE) in 2013 was negative 150.09%. PVC continues to fall into a spiral of cash flow imbalance.

Not only did PVC collapse, under the "hands of molding" of Mr. Thanh and his subordinates, PVC used more than 86% of its charter capital to invest in subsidiaries and associated companies. However, these units revealed weaknesses in production and business activities leading to losses and scandals, typicallyPetroleum Mechanical Construction and Installation Joint Stock Company (PVC – ME).

The factory inside Phu Tho Ethanol factory is deserted.

PVC - ME was established by PVC in 2009 with 102 billion VND invested from the parent company - PVC. One year later, PVC continued to invest 200 billion VND in this enterprise. Due to the weak capacity of the company's Board of Directors, PVC-ME only accepted the project, then hired subcontractors to do the construction, while it stood in the middle and took a percentage, which led to a series of scandals.

According to the conclusion of the Government Inspectorate, after 3 years of establishment, PVC - ME lost all its equity and incurred a debt of over 576 billion VND. This enterprise also set up a "hundred billion black fund" to use for entertaining guests, giving gifts or going on foreign affairs. For example, on July 7, 2011, the office department withdrew 350 million VND to buy... a golf set for the "boss". On August 15, 2011, 4 amounts of money worth 750 million VND were withdrawn 4 times from the fund. This amount was later explained as being used for nearly 550 million VND to pay for "boss Thanh's father's birthday at the head office".

Also according to the conclusion of the Government Inspectorate at the Phu Tho Ethanol Plant project, the authorities have clarified violations related to the contractor, the Petroleum Construction Corporation (PVC) - at the time when Mr. Trinh Xuan Thanh was Chairman.

The total investment of Phu Tho project when approved was 1,317.5 billion VND, the value of the EPC package was more than 59 million USD, but during the implementation process, the investor PVB and contractor PVC adjusted the value of the EPC contract to increase by more than 14.3 million USD. Among the 5 loss-making projects of the oil and gas industry, Phu Tho Ethanol is the only project that started construction the earliest but has not been completed yet. The project stopped construction of items since the end of 2011, and has remained "inactive" since then. As of December 31, 2016, Phu Tho Ethanol's total debt was 826 billion VND.

The situation of this project is so bad that the Government Inspectorate had to make an assessment: "By September 2016, the investor PVB, contractor PVC and PVN still have no solution, the project is getting deeper and deeper into a deadlock, with the potential risk of difficulty in continuing implementation."

The agency managing the trillion-dollar loss projects - the Ministry of Industry and Trade - proposed 4 options to handle this shelved biofuel project, including: Continuing to implement the project with contractor PVC; liquidating the PVC contractor to find another contractor; bankrupting the company, or transferring or divesting capital.

Another project of the oil and gas industry that has the "shadow" of Mr. Trinh Xuan Thanh and is still among the sluggish projects that have not been completed after 5 years of investment is the Thai Binh 2 Thermal Power Plant.

In 2012, Vietnam Oil and Gas Group - PetroVietnam and PVC were assigned as contractors and joint ventures with several other contractors in the project. This is a project with a designed capacity of 1,200 MW with a total investment of more than 34,295 billion VND (equivalent to 1.7 billion USD). 5 years later, the project has only completed 79.4% of the plan. Most contractors do not have the initiative to use resources to construct or construct at a slow pace, such as contractors PVC - PT, PVC - MS... The procurement of materials and equipment by the general contractor PVC is slow, does not meet the construction and installation progress or has signed a contract but due to unpaid invoices, the supplier refuses to deliver.

The prosecution and investigation of some key officials at PVC has somewhat affected the selection of contractors for the procurement package of materials and equipment... After a period of struggling with the Thai Binh 2 thermal power plant, PVC itself proposed that its parent company - PetroVietnam, set up a working group to support the handling of difficulties and backlogs.

VNE