Black credit worth tens of billions of dong collapsed in Nghe An

On April 13, Lieutenant Colonel Pham Ngoc Canh - Head of Yen Thanh District Police (Nghe An) said that the unit had received many complaints from people accusing Mr. Tran Van Phuc of appropriating their money. "The case is still under investigation," Lieutenant Colonel Canh said, refusing to disclose further information.

Mr. Phuc (50 years old, residing in Hamlet 10A, Bao Thanh Commune, Yen Thanh) is the director of Phuc Nhien Gold and Silver Private Enterprise. This enterprise has specialized in trading gold and silver, buying and selling foreign currencies at the store in front of Bong Market (Bao Thanh Commune) for many years.

The victims of the incident shared with Nghe An Newspaper reporters. Photo: Phuong Thao

However, for the past 5 years, this enterprise has also produced its own "savings books" and mobilized capital from hundreds of households in the area. "Many people here go to work abroad, so they often go to this enterprise to trade foreign currency and gold," said Mr. Le Anh Dao (62 years old, resident of Son Thanh commune).

According to Mr. Dao, that is why Mr. Phuc and his wife know which families in the area have idle money. “The couple often encourage people with idle money to deposit it there, and withdraw it when needed. Pay in full like a bank,” Mr. Dao said.

The interest rate that this company pays to depositors is usually not much higher than the bank interest rate. If the bank interest rate is 6.5%/year, then depositing money at this company is 7.5%/year.

The appearance of the book that this business produces itself is very similar to the savings book issued by the bank. Photo: Tien Hung

“Because of the convenience, not having to do a lot of procedures, then waiting and wasting time like going to the bank, plus the fact that Mr. Phuc often shows off his company's seal and license, many people flock here to deposit money. If the interest rate here is high, we can say we are greedy, but that's not really the case. Besides the convenience, it's also because we trust acquaintances and relatives that we ended up in this situation,” said the man who accused this company of having appropriated nearly 150 million VND. This amount includes 2,000 euros in foreign currency and 80 million VND.

After each time they raise money from people, this company issues them a “savings book”. This book looks very similar to a savings book issued by a bank. The book also has the seal of Phuc Nhien Private Gold and Silver Enterprise. Inside the book, there is only the name, address of the depositor, the amount of money deposited and the annual interest rate.

Not only mobilizing capital, according to the people, this enterprise also lends money to people at high interest rates. "If anyone needs to go there to borrow, bring the "red book" of land as collateral. Normally, if you borrow 1 million VND, the interest rate is 1,000 VND/day," said Mr. Nguyen Tri Tan (57 years old, Son Thanh commune). Mr. Tan currently has more than 9,000 pounds deposited at this enterprise.

Inside the "savings book". Photo: Tien Hung

According to the people, in previous years, this company paid them interest regularly. Many families trusted it, and while they did not need the money, they continued to use the interest to deposit more. However, by the end of 2016, Mr. Phuc and his wife began to spread the news of "bankruptcy".

“When we first heard the news and went to his house, Mr. Phuc and his wife kept asking for more time. However, since the beginning of 2017, the couple has turned their backs on us and challenged us,” said Mr. Le Van Thanh (61 years old), who is depositing 5,000 euros at this business. He said: “Many times when we came, they cursed at us, saying, ‘If we don’t pay, what can we do?’ It was really frustrating.”

In the complaint sent to Nghe An Newspaper, 84 households in Son Thanh, Vien Thanh, Bao Thanh communes (Yen Thanh district) and Nghi Van commune (Nghi Loc district) said that the behavior of Mr. Phuc and his wife was "fraudulent appropriation of property". The total amount of money that these 84 households are depositing at Phuc Nhien Gold and Silver Private Enterprise is up to more than 30 billion VND. This includes 9,100 pounds, more than 142,000 euros, more than 262,000 US dollars and 14 billion VND.

However, according to the people, these are only households that know each other and signed the collective petition. The number of individual complaints to Yen Thanh District Police is up to 200 people. "As far as I know, there are about 200 households with a sum of about 70 billion VND," said Mr. Le Van Thanh.

Speaking to Nghe An Newspaper reporters after carefully reviewing the complaint and related documents, Mr. Doan Manh Ha - Deputy Director of the State Bank of Vietnam, Nghe An branch, affirmed that this is an illegal business activity. Accordingly, the Law on Credit Institutions "strictly prohibits individuals and organizations that are not credit institutions from conducting banking activities, except for margin transactions, securities purchase and resale transactions of securities companies".

“This enterprise is not licensed. It can be confirmed that Phuc Nhien Gold and Silver Private Enterprise receives deposits in the form of issuing savings books, which is a banking activity. Violating the provisions of Clause 2, Article 8,” said Mr. Ha.

According to the Nghe An Department of Planning and Investment, Phuc Nhien Private Gold and Silver Enterprise registered its business in early 2011. In its business license, this enterprise is only allowed to operate in the following industries: pawn services; foreign currency payment services according to the license; buying and selling gold, silver, precious stones; processing and manufacturing gold, silver, precious stones, jewelry, fine arts; and producing gold, silver, fine arts jewelry.

“The fact that this enterprise issues savings books on its own is completely illegal. Also known as 'black credit',” the representative of the Department of Planning and Investment affirmed./.