The Government Inspectorate found that Song Da Group has committed business misconducts worth over VND10.676 trillion (USD511.79 million).
Song Da Group has been found committing several business misconducts
Song Da Group was established through a merger of six state-owned investment and construction corporations. However, the Ministry of Construction failed to properly appraise state capital and corporate equity before the merger, resulting in inadequate accounting the group's chartered capital.
The group invested heavily in non-core business activities through its various subsidiaries, in violation of the Ministry of Finance’s regulation on registered capital. These misappropriations amounted to over VND2.335 trillion (USD111.93 million).
Lax management over the use of state capital and assets led to a considerable loss in tax revenues and risked further investment from the state, the inspectorate said.
The group and its subsidiaries contributed VND195 billion (USD9.34 million) in the Vietnam Investment Fund and Vietcombank Fund member No.3, which is now facing staggering losses.
It was also found that Song Da has made other unwise investment decisions. They did not fulfill their investment role in the new My Dinh-Me Tri urban area project, instead handing it over to Song Da Urban and Industrial Zone Development and Investment Joint Stock Company (Sudico) along with Bitexco Group without authorisation from municipal authorities. They made a similar move with the Nam An Khanh new urban area project.
The inspectorate proposed that the Prime Minister take measures to deal with the VND10.676 trillion that has not been accounted for. According to the inspectorate, around VND9.976 trillion (USD478.23 million) of this was used improperly.
According to Sai Gon Tiep Thi Newspaper, Song Da Group is facing difficulties in repaying foreign debts because of funds owed by its affiliate Ha Long Cement Joint Stock Company.
The Prime Minister has assigned the Ministry of Finance the task of providing a loan guarantee to Ha Long Cement Co. for foreign loans. However, the ministry instead guaranteed a loan for Song Da Corp., which has been merged with Song Da Group. Afterwards Song Da Corp. gave a loan of VND3.335 trillion (USD159.87 million) to Ha Long Cement Co. at the same interest rate of foreign banks.
Even though Song Da Corp has the capacity to repay these loans, the burden for them falls entirely on Ha Long Cement Co.
Meanwhile, the cement company has been delaying for more the last year, while their losses are mounting. They owed VND78 billion (USD3.73 million) in 2009, and at VND500 billion (USD3.96 million) in 2010. Many believe it unlikely that these debts will be paid on time.
