Lessons from the "tycoon" bank fraud case

(Baonghean) -Taking advantage of loopholes in the process of document appraisal and land appraisal by credit officers, Nguyen Chu Ngoc established 2 companies, falsified many land titles and documents to embezzle money from the bank. When the “tycoon” went bankrupt and fled, the bank was shocked to realize that they had been deceived for a long time.

Set up a company, forge land use rights to defraud the bank

At the end of June 2013, the People's Court of Nghe An province tried the case of Fraudulent appropriation of property against Nguyen Chu Ngoc (born in 1977), residing in Ha Tinh City. Attending the trial, in addition to a number of residents and relatives of the defendant, there were also many officers and employees of Eximbank Vinh Branch. Two former credit officers of the branch, NVH and NQT, also stood before the bar for the crime of "Lack of responsibility causing serious consequences". After 2 days of trial, the court sentenced Nguyen Chu Ngoc to 16 years in prison, and two former credit officers, H. and T., to 36 months and 18 months in prison, respectively, with suspended sentences.

Nguyen Chu Ngoc is a famous "tycoon" in Ha Tinh, famous for his high-class restaurant named Dai Duong and nicknamed Ngoc Dai Duong. At the end of 2008, Ngoc wanted to approach and expand his business in Nghe An market. In April 2009, Ngoc, together with Mr. Nguyen Sy Quang and Ms. Doan Thi Phuong Loan, established Thai Binh Duong Company, rented a prime piece of land in the area of ​​Nghe An Labor Culture House, built a stilt house and opened a restaurant. In name, Mr. Quang was the director but was not present at the company headquarters on Ho Tung Mau Street, Vinh City. This "fake director" was only present to sign procedures and documents when Ngoc requested.

To have capital for business, Ngoc Dai Duong directed his subordinates to complete procedures to borrow capital from Eximbank Vinh Branch. From December 2009 to January 2011, Thai Binh Duong Company borrowed 15.6 billion VND from the above bank branch. Seeing that borrowing capital from the bank seemed easy, in April 2010, Ngoc established Hoang Phu An Company Limited with his wife as director, the main field of activity being automobile trading. This time, Ngoc continued to borrow nearly 12.4 billion VND from Eximbank Vinh Branch.

Ngoc used all the money he borrowed to invest in real estate. In 2011, when the real estate bubble in Vinh City and its surrounding areas burst, Ngoc also went bankrupt and fled. At the end of September 2011, Ngoc was arrested by the Economic Police Department of Nghe An Province while hiding in Hanoi. At this time, Nguyen Chu Ngoc's scam of creating fake land use certificates and then mortgaging them was exposed.

During the loan process from Eximbank Vinh Branch, Ngoc had mortgaged assets such as red books and prime land plots in Ha Tinh province. Specifically, when using Thai Binh Duong Company to borrow capital, Ngoc used 5 land use right certificates of 5 different land plots in Ky Anh district, Cam Xuyen district and Ha Tinh city as collateral for the bank.

According to the investigation agency, Ngoc forged two red books. The first red book was forged by Ngoc by bringing a real book in the name of a relative to Ho Chi Minh City and hiring someone to make a new book in Ngoc's name. The second red book was forged exactly from an original book in the name of his biological parents. Ngoc then used the "real book" to borrow 3.5 billion VND from the Investment and Development Bank, Bac Nghe An branch. The "fake book" was used to borrow 1.86 billion VND from Eximbank Vinh branch. At Hoang Phu An Company, Ngoc made 6 sets of documents including fake red books and fake registration procedures to appropriate 10.1 billion VND.

Nguyen Chu Ngoc at court.

Who helped the tycoon?

The reason Nguyen Chu Ngoc could easily use fake documents and fake land books to borrow money was because of the support of bank credit officers.

According to the investigation agency, since 2001, the Governor of the State Bank has issued the Regulations on lending by credit institutions to customers. After that, the Board of Directors and the General Director of Eximbank also issued Decision No. 19/EIB/ dated March 29, 2002 on the implementation of Decision No. 1627 on the lending regulations of the State Bank; Decision No. 155/EIB - General Director dated April 19, 2004 promulgating the credit business process; Decision No. 1308/2007 promulgating the real estate valuation process. Accordingly, after receiving the application from the customer, the credit officer will have to assess the financial potential, income source, debt repayment ability, legal capacity of the customer, assess the collateral, must go with the customer to register the secured transaction and draft various types of contracts and documents in the loan application to advise the leader to decide whether to grant the loan or not.

However, during their work at the bank branch, both credit officers did not perform their functions and duties as credit officers, did not properly follow the asset appraisal process according to the prescribed steps, and skipped the step of determining the origin of the land and the land owner at the hamlet government and the commune cadastral office where the land plots that Ngoc mortgaged were located. In particular, both credit officers did not directly go to sign the security transaction at the Land Use Rights Registration Office but left everything to Nguyen Chu Ngoc to do it himself. Due to NVH's laxity, Nguyen Chu Ngoc had the opportunity to use 7 fake documents, appropriating more than 10 billion VND from Eximbank. Meanwhile, NQT created conditions for Nguyen Chu Ngoc to use 2 fake documents, appropriating more than 2.2 billion VND, etc.

Judge Vi Van Chat, Deputy Chief Justice of the Criminal Court of Nghe An Province, presiding over the trial, affirmed: The case of Nguyen Chu Ngoc defrauding Eximbank Vinh Branch is a great lesson about the laxity in credit management of banks and financial institutions. When the case occurred, those responsible at Eximbank Vinh Branch at that time knew clearly that the two companies Thai Binh Duong and Hoang Phu An were both opened and operated by Nguyen Chu Ngoc.

Ngoc had no real financial potential, no stable source of income and ability to repay debts, but both companies still easily borrowed a lot of money from the above bank branch. In addition to the laxity in the process of appraising mortgaged assets, bank officers were also too weak in appraising documents, unable to distinguish between real and fake red books, leading to Nguyen Chu Ngoc's deception. The lesson from this case will be a timely warning to bank branches, credit institutions and all those who intend to make money and get rich through fraud and dishonesty.

Article and photos: Nguyen Khoa