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Losing money for many years

Vietnam Industrial Construction Joint Stock Corporation (Vinaincon, VVN code – UPCoM transaction) was established in 1998, with charter capital of 550 billion VND, and 82.75% of state capital represented by the Ministry of Industry and Trade. The company specializes in construction and installation, basic construction.

The audited financial statements of the parent company 2020 have just been announced by VVN, showing that the total assets of the company is 987 billion VND. Revenue from goods sold and service provision in 2020 will reach 313 billion VND but COGS is 314 billion VND, so gross profit is negative 724 million VND.

Revenue from financial activities is 48.4 billion VND. The cost of business management is 30 billion. Net profit reached 9.3 billion. Thereby, after-tax profit reached 13.2 billion.

According to the note, the revenue from financial activities mainly comes from deposit interest, interest of 18.4 billion dong, and dividend of 29.9 billion dong.

It is known that VVN invests in many subsidiaries and associates. These companies are mostly profitable, the highest profit is from Thu Duc Centrifugal Concrete JSC (13 billion VND) and An Giang Centrifugal Joint Stock Company (6.1 billion VND).

Up to this point, VVN has not yet released its 2020 consolidated financial statements. In early April 2021, VVN also submitted a request to extend the time to hold the 2021 Annual General Meeting of Shareholders for the reason that results were summarized. The Corporation’s production and business have not been completed yet because the work-in-progress valuation and debt comparison with the investors are difficult and prolonged.

According to the annual report of 2019, although the total revenue and other income in 2019 increased by 126.7% compared to 2018, reaching more than 4,443 billion VND, but the cost of goods sold was high. In addition, the investment from Quang Son Cement Company Limited lost a loss (minus 126 billion VND), making the company’s profit in 2018 and 2019 all negative numbers.

In 2020, the company has a decision to dismiss Mr. Hoang Chi Cuong – General Director, instead appointing Mr. Do Chi Nguyen.

Please clarify the role of Vinaincon

From April 12, Hanoi City People’s Court brought to trial with 19 defendants who are leaders of Vietnam Steel Corporation – VNS, Thai Nguyen Iron and Steel Joint Stock Company – TISCO on wrongdoing in this project with behavior like Adjusting the investment structure, signing the contract appendix, separating part c from the EPC contract, signing subcontracting contract with Vinaincon according to unit price, leading to breaking the EPC contract principles …

Vinaincon is a subcontractor involved in Thai Nguyen Iron and Steel Phase 2 project. In 2009, the EPC contract between Thai Nguyen Iron and Steel Joint Stock Company – TISCO and Chinese contractor MCC had problems due to consecutive MCC. contract breaking.

On April 29, 2009, Vinaincon sent a document to the Ministry of Industry and Trade, Vietnam Steel Corporation – VNS (granting investment decision) and TISCO to register as a subcontractor.

On May 14, 2009, on the basis of the request of Vinaincon, the Ministry of Industry and Trade sent a document 4320 to VNS, TISCO with the content that the Ministry of Industry and Trade commented, “Vinaincon is a capable and experienced unit in the field. construction and installation of industrial construction works. Request VNS, TISCO to consider and approve Vinaincon to be the subcontractor to perform Part C ”.

On June 26, 2009, Mr. Mai Van Tinh – former Chairman of the Board of Directors of VNS signed a written agreement to allow Vinaincon to be a subcontractor. After that, TISCO, Vinaincon and MCC signed the contract.

However, in 2010, Vinaincon returned his job to TISCO due to insufficient capacity. TISCO had to subcontract with 13 other companies, but the project was still incomplete, capitalized and caused a loss of more than VND 830 billion to the state.

Some defendants admitted that they accepted Vinaincon because of the above document from the Ministry of Industry and Trade.

Defending defendant Tran Trong Mung (former General Director of TISCO), lawyer Truong Anh Tu said that in the conclusion of the project, the Government Inspector has determined that the Ministry of Industry and Trade has introduced and proposed VNS, TISCO to accept It is not the right authority for Vinaincon to be a subcontractor.

Lawyer Nguyen Thi Minh Yen, defending defendant Dong Quang Duong (former deputy director of TISCO), stated that: TISCO’s approval of Vinainco as a subcontractor for MCC must first mention the responsibility of the Ministry of Industry and Trade in the issue of introducing Vinainco and confirming Vinainco’s capacity to lead to a tripartite contract between TISCO – MCC and Vinaincon. Next, the fact that Vinainco voluntarily stopped implementing part c was due to the subjectivity of Vinaincon.

Therefore, the lawyer proposed to return the file to investigate and review the responsibility of the Ministry of Industry and Trade; Collect documents and evidence of Vinaincon’s performance of the contract, clarify how Vinaincon appoints 13 subcontractors? …

After 3 days of questioning, on April 14, the representative of VKSND Hanoi announced the impeachment of 19 defendants related to wrongdoing at the second phase of production expansion project of Thai Nguyen Iron and Steel Company (TISCO).

Break contract rules

Accordingly, the VKSND proposed the Panel to sanction the defendant Tran Trong Mung, former General Director of TISCO, from 10-11 years in prison; Mai Van Tinh, former Chairman of the Board of Vietnam Steel Corporation (VNS), from 6-7 years in prison; Tran Van Kham, former Chairman of the Board of Directors, General Director of TISCO from 9-10 years in prison; Dau Van Hung, former General Director of VNS from 3-4 years in prison and 11 other defendants were recommended from 2-7 years in prison with the same crime “Violation of regulations on management and use of state property causes losses. , waste”. In addition, 4 other defendants were recommended 1-3 years in prison for the same crime of “Lack of responsibility, causing serious consequences”.

Defendant Mai Van Tinh at the trial

According to VKSND, TISCO is the investor of the second-phase production expansion project of TISCO. The VNS Board of Directors is the level of investment decision, with the function of directing project implementation. The winning bidder is China Metallurgical Science, Technology and Trade Corporation (MCC).

During the implementation of EPC Contract No. 01, more than 11 months from the effective date of the contract, MCC has not selected and signed the contract with the subcontractor; the detailed design of the items has not been completed, the machinery and equipment are not ordered to manufacture, the contract items have not been executed, but all people have been sent home; repeatedly proposed to extend the contract performance period; Unwarranted contract price increases …

With the assigned functions, duties and powers, defendant Mung is the General Director of TISCO and defendant Tinh, the Chairman of the Board of Directors of VNS, did not consider, direct the suspension, termination of the contract, withdrawal of advance payment, and use the contract penalty clause, report to the competent person for consideration to cancel the bid and re-organize the bidding according to regulations. On the contrary, the defendants directed the violations of the investment laws and the EPC Contract No. 01 to continue the contract performance, together with their subordinates in directing relevant individuals to the organization making adjustment of cost estimate part C. Along with that, participating in subcontracting to perform Part C of EPC Contract No. 01 in the form of unit price contract, TISCO directly takes over, takes over and makes payment. for the subcontractor to implement Part C, bear all risks, break the principle of implementing the contract in the form of a package, creating conditions for MCC to have a reason to deny the responsibility of implementing EPC Contract No. 01.

Competent contractor approval

In addition, the defendants also agreed that the Vietnam Industrial Construction Corporation (VINAINCON) was not qualified as a subcontractor to implement Part C of the EPC Contract No. 01, resulting in the project being delayed. raising interest rates, increasing investment costs, causing a particularly serious loss of state assets of more than VND 830 billion. The defendant’s behavior also adversely affects the interests of workers, indirectly adversely affects the economic development process and is currently a burden on the economy, affecting social security.

In this case, defendant Mung has the main role, is the person who directs and organizes the implementation of the offense. Specifically, when MCC breached the contract, the defendant directed to negotiate with MCC to separate Part C from EPC Contract No. 01, TISCO organized the implementation and took the risk; sign documents to report VNS and the Ministry of Industry and Trade request to report to the Government for approval of price adjustment for part C of the contract; Introduce and approve VINAINCON is not qualified as a subcontractor to perform Part C according to unit price …

Defendant Tinh is a co-offender of active crime. When TISCO reported the breach of the contract by TISCO, the defendant directed to negotiate with MCC to resolve the arising of EPC Contract No. 01; directly sign documents to request the Ministry of Industry and Trade to report to the Government for cost adjustment part C of EPC Contract No. 01; signed a document requesting the Government to agree on the policy of approving that VINAINCON is not qualified as a subcontractor to perform Part C; sign the written approval and assign the capital representative of VNS at TISCO to approve the adjustment of the total project investment structure, including the provision for part C of EPC Contract No. 01 increased by 15.57 million USD has no legal basis, is not in accordance with the provisions of EPC Contract No. 01.