Mr. Trinh Van Quyet directed the increase of virtual capital, and gave dishonest explanations.
Faros Company increased its virtual capital to thousands of billions of VND, but in the end, the Ho Chi Minh City Stock Exchange still approved the registration to list ROS shares.
According to the investigation, in 2014, Faros Construction Joint Stock Company had a charter capital of 1.5 billion VND. After 5 capital increases in 2014-2016, Faros had a charter capital of 4,300 billion VND. It is worth mentioning that shareholders only contributed more than 1,197 billion VND, the remaining 3,102 billion VND was "false capital".
In each capital contribution, money is deposited into the account but is quickly withdrawn, deposited again, and circulated many times. The withdrawal of money is legalized by investment trust contracts, business cooperation contracts, and capital lending contracts.
After inflating the charter capital, knowing that Faros Company did not meet the conditions to be listed on the Ho Chi Minh City Stock Exchange, Mr. Trinh Van Quyet still directed his subordinates to prepare documents to send to State management agencies to request registration for depository and listing of ROS shares (of Faros Company) on the Ho Chi Minh City Stock Exchange.
According to the Investigation Agency, despite knowing clearly that the contributed capital was not consistent with the financial report for 2015 and the first 6 months of 2016, on April 20, 2016, Mr. Doan Van Phuong (Chairman of the Board of Directors of Faros Company) signed a document to send to the State Securities Commission requesting consideration and approval of the registration of a public company, along with related documents.
Receiving Faros's dossier, the State Securities Commission assigned the Public Company Supervision Department to conduct the appraisal of the dossier. After studying the dossier, the Public Company Supervision Department requested Faros Company to clarify a number of contents related to the capital contribution process and capital use from 1.5 billion VND to 4,300 billion VND in 2014, 2015, 2016; Explain related contents about investment trusts and loans to Ms. Nguyen Thi Hong Dung and Le Thi Thom...
Although Ms. Dung and Thom are tailors, freelance workers, and do not do any business, Faros Company still explained that they are "two reputable investors".
The investigation results clarified that on May 31, 2016, Mr. Nguyen Ngoc Tinh (General Director of Hanoi Auditing and Accounting Company Limited) signed and issued 2 audit reports of Faros Company.
However, the report notes to readers of the financial report as follows: “In 2015, the unit entrusted investments to a number of organizations and individuals with an amount of more than 3,332 billion VND. Some transactions on investment trusts during the period arose in cash of large value…”
While the dossier still had many problems, on June 24, 2016, Faros signed a document urging the State Securities Commission to "soon issue a document approving Faros as a public company".
Faros Listing Approval
On June 30, 2016, Ms. Nguyen Thi Thuy (specialist) and Mr. Le Cong Dien (Director of the Public Company Supervision Department) signed a report with a submission on the Faros dossier to the then Chairman of the Securities Commission, Mr. Vu Bang. Afterwards, Mr. Vu Bang commented: "Agree; Continue to clarify with the company and auditors".
On July 1, 2016, the Department of Public Company Supervision issued a document approving Faros's public company registration dossier and requested Faros Company to continue to explain some contents and supplement related documents.
On July 4, 2016, the Department of Public Company Supervision sent a document to the Hanoi Stock Exchange and the Ho Chi Minh City Stock Exchange informing them of Faros' capital increase and requesting that in case Faros submits a listing and trading registration dossier, the Departments be requested to closely assess it according to their authority and regulations.
On August 24, 2016, Ho Chi Minh City Stock Exchange decided to approve the registration of listing of ROS shares, with the quantity of 430 million shares, par value of VND 10,000, total value of shares at par value of VND 4,300 billion, reference price of VND 10,500/share.
The investigation agency clarified that from September 2016 to March 2022, Mr. Trinh Van Quyet assigned his sister, the defendant Trinh Thi Minh Hue, to use accounts under the name of Trinh Van Quyet and 40 securities accounts in the name of others to buy and sell ROS shares.
Mr. Trinh Van Quyet directed Ms. Hue to sell more than 391 million ROS shares initially formed from fake capital contributions (shares with no guaranteed value) to earn 4,818 billion VND. The investigation conclusion showed that the amount of money that investors had bought the misappropriated ROS shares was 3,620 billion VND.
According to the Investigation Agency, for subjects belonging to State management agencies on securities, auditing companies and related companies showing signs of violations, the Investigation Agency of the Ministry of Public Security will continue to investigate and handle them according to the provisions of law.
The Ministry of Public Security's investigation agency also requested the State Securities Commission to consider administrative sanctions for the act of lending securities accounts leading to stock market manipulation by individuals and legal entities.
