One of the largest companies in Hai Phong City was sold at a symbolic price of USD1, leaving businessmen arrested and the company unable to pay their debt of VND1.3 trillion (USD62 million).
The Thai Son Industry and Trading Company, one of the 500 biggest private enterprises in Vietnam, was bought by Truong Sa Consulting and Investment Company in HCMC for just USD1.
The chairman of Thai Son Company, Pham Van Thu, was arrested for fraud and misappropriating assets in August. His son, Pham Hai Thanh, former General Director of the company, along with Duong Hoang Son, former Director of its subsidiary,Thanh Son Steel Company were also arrested.
Thu made a substantial sum by dismantling old ships and selling off the parts. In 2008, he incurred a debt of VND250 billion as the market saw a slump.
Despite a very high inventory, Pham Hai Thanh managed to borrow VND270 billion from DongA Commercial Bank and allegedly tricked other banks into giving loans.
In the three following years, the business did not show any signs of growth, and interest on the loans mounted up. As of February, 2012, Thu owed 12 banks and one finance company VND725 billion. He also owes another seven enterprises a total of VND180 billion. The creditors said the debt is overdue and Thai Son Company has become insolvent.
The case was exposed when Thu transferred the company to new owners, Truong Sa Consulting and Investment Company, in April.
When the company asked for their business permit, the Department of Planning and Investment in Hai Phong asked the State Bank of Vietnam to carry out an inspection because of irregularities.
Dan Duc Hiep, Deputy Chairman of Hai Phong People's Committee said, "The laws do not ban the transfer of a company. However, Truong Sa was only established in 2011, with a registered capital of only VND4.9 billion. Management of the company has proved to be incompetent, and it raised red flags when they wanted to buy Thai Son, which has and still is incurring a huge debt."
Truong Sa Company also refused to answer questions about how they plan to pay off their debts.
"They bought the company for almost nothing and hoped that the Government would extend debt relief in near future. We'll investigate the business operations of other businesses who have irregularities in transfers of ownership in the future. Any individuals found to have been in violation of the Laws on Enterprises or perform irresponsibly will be punished," Hiep said.