Kien and his house which has been seized by the police. Photo cand.com.vn

HA NOI (Biz Hub) — Following a one-year police investigation into the activities of banking tycoon Nguyen Duc Kien, the People's Police newspaper has outlined how Kien took advantage of loopholes and was powerful enough to direct both the chairman and general director of the Asia Commercial Bank, despite not being on the bank's management board.

Kien contributed a huge amount of capital to ACB and became a major shareholder in 1993. He then took the position of Deputy Chairman of the bank's Management Board from 1994 to 2008. Possessing good knowledge of finance and banking operations as well as legal loopholes, he was fully aware of Vietnamese regulations that would limit the amount he could loan ACB, as well as the ramifications if he retained cross ownership in other commercial banks and private businesses while remaining a board member.

Kien withdrew from ACB's management board and then established five companies including Asia Financial Group Joint-Stock Company (AFG), ACB Investment JSC (ACBI), Aci-Hanoi Co., Ltd (ACI-HN) and B&B Joint Stock Company (B&B). Within the firms, he played the role of management board chairman on four companies - B&B, AFG, ACBI and ACI – as well as Chairman of ACI-HN's Members Council.

To retain his influence and keep power so that he could direct ACB operations, Kien asked the management board to establish the bank's founder council and approve its working regulation before he withdrew.

In fact, this council was not under the organisational structure of a bank and was not recognised by law. It was merely a way for Kien to take advantage of legal loopholes.

The investigation agency showed that although these companies were not granted licences to conduct financial business, Kien directed them to use more than VND9.7 trillion (US$462 million) mobilised and collected from their sales of bonds.

To raise ACB's share value, Kien and members of ACB's management board poured funds into ACB Securities Company (ACBS), which ACB bank owned 100 percent of equity, to buy ACB's shares.

The ACB provided VND1.5 trillion ($71.4 million) in funds for ACBS. ACBS then transferred this money, along with its owner equity to ACI and ACI-HN with total amounts of nearly VND1.56 trillion to buy more than 52.5 million ACB shares, causing ACB a loss of more than VND1.4 trillion.

According to the investigation agency, Kien also directed 19 ACB staff members to send nearly VND719 billion ($34.2 million) to VietinBank, which had then been usurped by former deputy manager of Risk Management Department of VietinBank branch in HCM City Huynh Thi Huyen Nhu and her accomplices.

The investigation has now concluded and Kien plus his seven accomplices were referred to the Supreme People's Procuracy of Viet Nam. Their imminent court date has to be announced. — VNS