A Co.opmart supermarket in HCM City. The HCM City Inspectorate has discovered violations in financial management at Saigon Co.op. — VNS Photo
HCM City authorities have suspended Diep Dung, 52, Saigon Co.op’s chairman, from all roles in Saigon Co.op’ s Party Committee, including Party Committee Secretary, for his serious violations that called for disciplinary measures.
Dung was appointed by the city Party Committee to join the Standing Committee of the Party Committee and hold the post of Party Committee Secretary at Saigon Co.op in the 2015-20 term and the post of chairman of its board of directors in August, 2015.
The HCM City Party Committee's Commission for Inspection determined that Dung had directed the raising of capital and organised annual meetings illegally, violated the Party's rules in cadre work, and was dishonest with the organisation when he was asked to make a report.
In the inspection conclusion announced on Monday, the HCM City Inspectorate said that there were signs of illegally capital mobilisation and a takeover at Saigon Co.op and suggested the city People's Committee transfer the documents to the police for investigation.
Specifically, when inspecting the increase in charter capital in 2020 at Saigon Co.op, the city Inspectorate found that there was capital contribution from outside, and not all came from its cooperatives members. The capital contributions were made before member cooperatives carried out procedures involved in capital contributions. Such action is not in compliance with regulations.
During the inspection, member cooperatives did not provide documents about capital contributions and mobilisation.
Other abnormalities in capital contributions showed that in 2018 and 2019 some cooperatives with after-tax profit of VND 5-6 billion (US$216,124-259,349) did not contribute capital, while most cooperatives with after-tax profits from VND24 million ($1,036) to less than VND500 million ($21,598) made capital contributions of hundreds of billions of dong.
Co-operatives with little profit that made large capital contributions said they had mobilised capital from non-member individuals and organisations. This showed that individuals and organisations, via Saigon Co.op’s member co-operatives, had invested in the retailer.
The return on equity of 26 – 39 per cent has attracted individuals and organisations to make capital contribution in Saigon Co.op.
“But if we do not make clear the sources of the increased capital, Saigon Co.op will be dominated by outside individuals and organisations and it will be difficult to maintain its organisation and operational principles."
On July 24, the Inspectorate sent a written request to Saigon Co.op’s chairman ordering that it temporarily suspend its general meeting of members until an official conclusion and directions from authorities are issued.
However, Saigon Co.op did not comply, and continued to conduct its congress and voted on related issues. This action violated inspection law, affecting the content of inspection conclusions on personnel work, capital raising plans, increase in charter capital, and capital withdrawal of member cooperatives.
The inspection conclusion also pointed out other violations in financial management such as capital management, the use, preservation and development of undivided assets, and profit distribution.
According to the inspectorate, the board of directors, its members, management board, and relevant departments and individuals serving different terms should be held responsible for these violations.
Based on the inspection results, the City Inspectorate proposed that the city People's Committee direct Saigon Co.op to strictly abide by the inspection regulations and map out a specific capital raising plan and implementation method, with consultancies from relevant agencies and departments, and summit them to city authorities.
In addition, Saigon Co.op was asked to clarify the capital contribution sources of its member cooperatives and propose a plan to deal with the charter capital increase from capital and undistributed assets.
Established in 1989, the Saigon Union of Trading Co-operatives, or Saigon Co.op, has more than 20 member co-operatives and over 800 stores nationwide, including Co.opmart, Co.opXtra, Co.op Food, and Co.opSmiles. — VNS