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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? …

Opening the argument, lawyer Dinh Anh Tuan, defending defendant Tran Trong Mung (former General Director of TISCO) said that in this case, the procedural agency should consider the responsibility of the Ministry of Industry and Trade. Vietnam Industrial Construction Corporation (VINAINCON) to defendants who are leaders of TISCO and leaders of Vietnam Steel Corporation (VNS) so that they choose VINAINCON as a subcontractor.

The defendants at the trial.

According to the defense lawyer, one of the reasons why the leaders of TISCO and leaders of VNS accepted VINAINCON because there is a document signed by the Ministry of Industry and Trade signed by a leader of the ministry. Documents of the Ministry of Industry and Trade show that VINAINCON is an enterprise of the ministry with good capacity. According to lawyer Tuan, in this incident, the main responsibility belongs to the Ministry of Industry and Trade. TISCO and VNS only have to bear joint responsibility.

During the impeachment process, the representative of the Procuracy determined that the defendant Tran Trong Mung was responsible for the case when he did not terminate the contract with China Metallurgical Science, Technology and Trade Corporation (MCC), although the This industry has violated. Specifically, in 2007, TISCO and MCC signed a package EPC contract, costing 160 million USD to build a metallurgical line. MCC then violated the contract, did not build and demanded a price increase.

The Procuracy said that, at that time, defendant Mung must terminate the contract with MCC, withdraw the advance, report to the authorized person to cancel the bid and re-bid in accordance with the law. . However, the defendant Mung instructed to negotiate at the request of MCC, and at the same time signed a written request to increase the price of part C (construction and installation) in the EPC Contract.

In addition, the defendant Mung also introduced and accepted VINAINCON as a subcontractor. Because VINAINCON is not capable enough, in 2011 the project had to stop construction, so far the project has not been completed.

The defense lawyers at the trial.

Debating about TISCO not stopping the contract with MCC, lawyer Tuan cited many legal documents, the defendant Mung signed many documents urging MCC to implement the project. Defendant Mung also signed a document to the Ministry of Industry and Trade and VNS with the content “Request the Ministry of Industry and Trade to report to the Government for permission to terminate the EPC contract with the MCC contractor. Require MCC to return the deposit and reimburse damages ”. But this is not accepted by the authorities.

Under the EPC Contract, if there is a dispute, TISCO and MCC will settle in an arbitration court in Singapore. Therefore, TISCO signed a contract with Kenvil Chia law firm of this island nation to advise and received a reply with the content “The termination of the contract cannot be taken lightly and should only consider the termination if there are no more options. choose another one ”.

Since then, the defendant Mung chose to continue the contract, change the price of construction and installation and change the price of the EPC contract according to the provisions of Circular 09/2008 of the Ministry of Construction.

Also according to lawyer Tuan, the change in the form of part C contract from package to unit price contract was not given by defendant Mung. Even the defendant Mung once opposed this because the change in unit price is that the next quarter’s price is higher than the previous quarter, causing the project to raise the price, the contractor is not actively working.

Lawyer Tuan said that his client, the defendant Mung has only part of the responsibility in introducing VINAINCON as a subcontractor, so he asked the Panel to transfer the charge to the defendant Mung from the crime of “Violation of regulations on management. and the use of State property causes loss and waste “to the crime of” Lack of responsibility, causing serious consequences “.

Lawyer Tran Van Tao, defending defendant Tran Van Kham (former Chairman of the Board of Directors cum General Director of TISCO) who is the successor to the defendant Tran Trong Mung said that the impeachment view of the representative of the Procuracy towards the body. His boss is too heavy. Lawyer Tao acknowledged that all the acts of defendant Kham were just for the purpose of expecting the project to be completed soon.

According to Tao, defendant Khâm received the project when the project had been implemented for 24 months with MCC general contractor not under construction. The project was also asked for permission by the defendant and the Ministry of Industry and Trade, the Government allowed to separate part C assigned to VINAINCON for construction and increase the investment for part C. Therefore, the Procuracy said, the defendant Khâm’s actions to prolong the performance of the contract, increase the contract price, separate Part C from the contract, agree that VINAINCON is incapable of performing the contract is incorrect.

The representative of the Procuracy exercises prosecution rights at the trial.

During the impeachment process, the representative of the Procuracy determined that defendant Khâm has the role of organizing the offense. With his powers as Chairman of the Board of Directors cum General Director of TISCO, as the successor to the defendant Mung directing the project implementation, defendant Kham knows that the EPC contract is a package contract, without grounds for price adjustment, but still directs to advise, propose and sign the decision to adjust the total project investment structure, including the provision for part C of the Contract to increase by 15.57 million USD.

Defendant Kham also signed the fourth adjustment annex with MCC agreed to separate Part C from the contract, at the same time signed a three-party subcontract, agreed to assign incompetent VINAINCON and other real subcontractors. Part C is in the form of an adjustable unit price contract, TISCO organizes the implementation and assumes all risks without a legal basis, not in accordance with the provisions of the contract.

Ministry of Industry and Trade is responsible?

In court, the defendants have the right to argue before the prosecution’s allegations that they are responsible for the VND 830 billion loss case at the Thai Nguyen Iron and Steel Phase 2 Production Expansion Project (TISCO).

Defendant Tran Trong Mung, former General Director of TISCO, was the first to have the right to argue, but asked lawyer Dinh Anh Tuan to defend himself. Previously, defendant Mung was offered a penalty of 10-11 years in prison by the Procuracy because he was accused of having the main responsibility in the case when he did not terminate his contract with China Metallurgical Science, Technology and Trade Group (MCC) even though this business has violated.

Project of production expansion phase 2 of Thai Nguyen Iron and Steel Company stopped construction for many years. Photo: GENERAL WRITE

The proceeding agency said that the defendant should Mung must terminate the contract with MCC, withdraw the advance; report to the authorized person to cancel the bid or to re-bid. However, he directed to negotiate at the request of MCC; sign a written request for price increase of part C (construction and installation) in the EPC contract of the project.

The Procuracy also accused Mung of introducing and accepting the Vietnam Industrial Construction Corporation (VINAINCON) as a subcontractor. Since then, VINAINCON is not qualified, so in 2011, construction has stopped, making the project unfinished so far.

Defending defendant Tran Trong Mung, lawyer Dinh Anh Tuan said that it is necessary to consider the responsibility of the Ministry of Industry and Trade when introducing VINAINCON to the defendants in the case so that they can choose to be subcontractors.

According to lawyer Dinh Anh Tuan, the main responsibility in introducing VINAINCON must belong to the Ministry of Industry and Trade; TISCO and Vietnam Steel Corporation – VNS are only liable for joint responsibility.

Lawyer Dinh Anh Tuan also said that his client only has a part of responsibility in introducing VINAINCON as a subcontractor, so he asked the court to transfer the crime from “Violation of regulations on the management and use of property. water causes loss and waste “to” Lack of responsibility, causing serious consequences “.

Regarding the alleged loss of VND 830 billion, VINAINCON was approved as a subcontractor, the defendants are former leaders at TISCO and VNS declared, they accepted because there was a document signed by the Ministry of Industry and Trade signed by a Deputy Minister. In the document, the Ministry of Industry and Trade said that VINAINCON is an enterprise of the Ministry with good capacity.

“Choose VINAINCON because according to experience”

Before that, in the questioning section, judge Truong Viet Toan asked VINAINCON’s representative, Mr. Hoang Chi Cuong (at the time of project implementation, VINAINCON’s General Director) to clarify the capacity of this business when being introduced to a subcontractor in the EPC contract.

Judge Truong Viet Toan asked Mr. Hoang Chi Cuong to confirm that at the time the bid received the requested documents from MCC and TISCO?

Mr. Hoang Chi Cuong affirmed that he has not received any documents yet.

Seeing “unreasonable”, because there is no request dossier in the bid, but VINAINCON is a subcontractor, judge Truong Viet Toan asked: “Without the request, on what basis for VINAINCON to respond. Asked to bid? ”

Mr. Hoang Chi Cuong said that this is just the selection of subcontractors of MCC, this is not the bidding document!

2 representatives of VINAINCON presented in court. Photo: DO TRUNG

Explaining to the representative of VINAINCON, judge Truong Viet Toan said that the selection of a contractor is also a form of bidding in the Bidding Law, in which the Bidding Law governs; the only difference is that public bidding or appointment of contractor, appointment of contractor is also a form of bidding.

“In the EPC contract, the general contractor MCC has the right to select the contractor according to the method of bidding or contractor appointment. Also in the same contract, the provisions of the contractor’s responsibility depend on the MCC; MCC selects subcontractors on the basis of bidding or contractor appointment. Bidding or appointment of contractors is ultimately regulated in the Bidding Law. Bid preparation will include requirements documents, in which the project owner will require to do what works, how economic and technical efficiency, progress on time, construction design, evaluation of works. What is the project’s environmental impact? Perhaps you do not understand what the required documents are, “said judge Truong Viet Toan.

According to Judge Truong Viet Toan, the selection of contractors, appointment contractors or tenders are all governed by the Bidding Law; In the initial steps, there are bids, in the bidding documents there are requirements.

“I asked to see how the pressure is. Because all the defendants at TISCO declared the selection of VINAINCON, this is an incompetent and inexperienced unit. And based on that dossier of request, how VINAINCON responded according to the required dossier, to see if it is true or not, ”said judge Truong Viet Toan.

Meanwhile, Mr. Hoang Chi Cuong continues to affirm that his business is a subcontractor and has never received the required documents from TISCO and MCC.

Judge Truong Viet Toan continued to prosecute: “So on what basis to sign a three-party contract?”

“Signing a 3-party contract on the basis of the capacity and experience of VINAINCON for the previous works done”, said representative of VINAINCON.

Judge Truong Viet Toan interrupted: “But, in reality, there are things that cannot be empiricist. How do you see the specific capabilities of VINAINCON in this project? “

Please be presented more, Mr. Hoang Chi Cuong said that VINAINCON has done many great projects since the 1960s, such as Apatite Lao Cai, participated in the construction of Thai Nguyen Iron and Steel Area from the beginning, Supe Lam Thao, steel, hydropower …

“Those are achievements, this is not a meeting to raise achievements and reward for emulation”, judge Truong Viet Toan asked Mr. Cuong to focus on the question …

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.