Acting on behalf of the government in disbursing capital for the nation’s important projects, the Vietnam Development Bank (VDB) has been found committing serious violations.
VDB was established in 2006 as a not-for-profit bank which receives subsidy from the state for interest rate differences, and management and payment-guarantee fees.
It operates as a single-member limited company in which the state holds 100 percent of charter capital, serving the government’s investment and development policies.
Under Decision No 1515 released in 2015, the government authorised the Ministry of Finance (MOF) to manage and exercise owner’s rights and duties. VDB has huge charter capital of VND30 trillion.
The bank provides loans in accordance with the state’s investment credit policies. It re-lends the capital the government borrows from foreign sources (ODA) and has the right to issue bonds.
A report fromMOF showed that the outstanding loans the bank provides is VND100 trillion each year. It also issues tens of trillions of dong worth of bonds.
At a recent workshop, Nguyen Chi Trang, deputy general director of VDB, said VDB was holding and disbursing 60 percent of ODA capital. As of August 31, 2018, VDB’s foreign outstanding loans had reached VND152.9 trillion.
The government’s inspectors have found that VDB did not observe the current regulations when disbursing VND757 billion for contractors in the project on expanding Thai Nguyen Iron and Steel JSC (TISCO). To date, VDB still has not implemented the restructuring of principal and interest for TISCO. The steel manufacturer’s credit is still listed in fifth group credit (the loans with worst quality).
By May 31, 2018, TISCO had owned VND1.573 trillion to TISCO, including VND415 billion worth of overdue debt.
Meanwhile, Thanh Nien newspaper quoted its sources as reporting that the investigation agency is probing violations committed by VDB in case of Thai Hoa JSC. The company has been found counterfeiting documents and using loans for wrong purposes and cannot pay the principal and interest worth hundreds of billion of dong.
A similar case occurred with Phuc Hung Construction Co Ltd in Hanoi.
VDB has also been found committing violations in making investment and using public assets.
Under the government’s Decree No 81, state-owned enterprise have to publicise information and finance report periodically to ensure transparent operation. However, there is no information on the website of the bank, and the health of the bank is always in doubt, even to National Assembly Deputies.
