Prime Minister Nguyen Xuan Phuc asked the Ministry of Public Security (MPS) to handle suspected financial violations by the Vietnam Rubber Group (VRG) prior to the company’s intended initial public offering.
The Government Inspectorate (GI) conducted an inspection in 2014, but the Prime Minister’s directive indicates this inspection was inadequate. Accordingly, the MPS is required to investigate the accuracy of VRG’s financial reports and liabilities disclosure, as well as the GI’s investigation results, before January 1, 2018.
The GI will also have to revise and amend their 2014 inspection results on the VRG’s collective liability, titled 2341/KL-TTCP, and submit a new report to the Government by February 1, 2018.
The VRG will have to report to the Government on alleged misconduct by July 2018, including violations relating to capital, property and land use by the VRG and its affiliates from 2012 to 2017.
According to the GI’s 2014 inspection report on the VRG and its member units, doubts arose on the company’s sudden increase in charter capital in 2010 and 2011; long-term financial investment inside and outside its main business fields; and construction investment and land management projects undertaken without the correct procedures.
From 2010 to 2011, VRG increased charter capital at four of its member companies by VND1 trillion (US$44.5 million) and increased chartered capital at companies outside its primary field of operation, supporting hydropower, cement and steel companies over the allowed limit by VND2.59 trillion ($115.2 million).
It also made long-term financial investments of VND133.1 billion ($5.9 million) outside its main field of business and bank loans repayments of VND120.6 billion ($5.3 billion).
The GI pointed out a series of shortcomings at the VRG during the period from 2006 to 2011. Specifically, the VRG Council decided to increase charter capital in 2010 and 2011 for VRG and member units before receiving approval from the Prime Minister.
Last month, Tran Ngoc Thuan, VRG’s director, confirmed that the company will auction off 475 million shares, equivalent to 11.88 per cent of its total charter capital of VND40 trillion ($1.76 billion) to the public, no later than the first quarter of 2018.
Another 475 million shares will be offered to strategic investors while the remainder of offloaded shares will be sold to the group’s employees and trade union.
The State will retain three billion shares or 75 per cent of VRG’s charter capital after equitisation.
Thuan said the company has proposed to the PM a selling price of VND13,000 ($0.57) per share on the HCM Stock Exchange.
Ha Cong Tuan, deputy minister of Agriculture and Rural Development, said at a press conference in November that the delay in VRG’s shares offering was due to unresolved issues regarding land use.
Since its establishment in 2007, VRG has been regarded as ineffective, plagued by continuous losses, misappropriated loans and over VND253 billion ($112.5 million) in accumulated debts. — VNS