Chairman of the heavy industry and property developer Vina Megastar Group. — File Photo

HA NOI (Biz Hub) — Local press have reported that Nguyen Hoang Long, chairman of the heavy industry and property developer Vina Megastar Group, has been arrested for fraudulently appropriating assets belonging to SeaBank.

Investigators initially accused Long of usurping nearly VND30 billion ($1.43 million) from the bank, which he claimed was to be invested in the company's real estate projects.

The company is said to have a stake in around 10 developments. Long's arrest has sparked panic among fellow investors and property buyers who are now faced with the risk of losing billions of dong.

Vina Megastar is best-known as the investor in Hesco Van Quan and Vinh Hung Dominium, two major office and housing complexes which the company began funding, along with other firms, in 2009-10.

The model of Nhan Chinh Park, a project of Vina Megastar. — File Photo

According to investigators, in order to raise capital for major projects, Long mortgaged properties and mobilised hundreds of billions of dong from customers. Despite this, the projects have not progressed.

At Vinh Hung Dominium, many buyers called for their money back after finding out that developers hadn't fulfilled their contracted work on the project. But they didn't receive a satisfactory explanation for the delays or any word of what had happened to their investment.

Investigators said they were enquiring further into the case and exploring every avenue to find out what had happened to the money Long borrowed and what it was used for.

Dat Lanh Real Estate Co deputy director Nguyen Van Duc told the Giao duc Viet Nam newspaper online that he was worried about a possible collapse of many property projects after this incident.

The model of the Vinh Hung Dominium. — Photo dddn

"While this is just an initial shock, it may be followed by other shocks with a domino effect that could lead to massive enterprise collapse," he said. "If this happens, the property market will be in a very bad situation. If thousands of people lose money, assuming that they each lose VND500-700 million ($23,800-33,300), it will be hugely damaging for them and for the economy."

Tran Minh Hai, a lawyer from the Basico Law Firm said the likelihood of people reclaiming their rights and interests in the company's projects would depend on the real financial situation facing Vina Megastar. If the property developer had no money left, asset buyers would have to accept losses.

Vina Megastar was established in 2007 with an equity of VND700 billion ($33.3 million), according to its website. It then set up the Megastar Land Co to invest in real estate and held a 35-per-cent stake in this company.

According to cafef.vn, some other Vina Megastar projects include the VND871 billion Ha Long hotel and trade centre complex, the VND40 trillion Huu Hoa urban area, the VND150 billion Hung Phu housing project and the $70 million Megastar Business Park.

The company has also invested in a VND36.5 billion service apartment complex, a VND2.6 trillion park, a VND1.8 trillion road project and a 25-floor tenement in Ha Noi. — VNS