While the international manhunt for its ex-chairman continues, a subsidiary of state-run oil and gas giant PetroVietnam is undergoing a state inspection due to massive losses the company incurred a few years ago.
The state inspectors will look into investment projects conducted by PetroVietnam Construction JSC (PVC) between January 2008 and December 2013 in a 70-day probe that began Thursday, the Government Inspectorate of Vietnam announced the same day.
The primary focus of the inspection will be pointed at the VND3.3 trillion (US$147.32 million) loss PVC incurred between 2011 and 2013 while under the leadership of Chairman Trinh Xuan Thanh and general director Vu Duc Thuan.
Thuan and three other former top PVC officials were taken into custody on charges of “intentionally violating state regulations on economic management that caused severe consequences” in September, while Thanh fled just before police announced his charges and now has an international wanted notice for his arrest.
The unplanned inspection was launched at the request of Prime Minister Nguyen Xuan Phuc in August after PetroVietnam, PVC’s parent company, unearthed the intentional mishandlings of the ex-PVC leaders.
Throwing money in the trash
PVC was established in 2007 and subsequently assigned as the main contractor or major sub-contractor for numerous large-scale and heavily invested projects throughout the country, due-in-part to its status as a PetroVietnam subsidiary.
The subsidiary’s involvement included the Dung Quat oil refinery, Phu Tho ethanol factory, Dinh Vu yarn mill and Thai Binh 2 thermal power plant, all multimillion-dollar projects.
However, several of these projects, whose contracts PVC won under the leadership of Thanh and Thuan, either failed to begin commission or incurred massive losses shortly after beginning operations.
The $325 million Dinh Vu yarn plant in the northern city of Hai Phong, for example, has temporarily closed three times since its operations started in May 2014, while construction of the $75.89 million Phu Tho ethanol mill remains unfinished seven years after groundbreaking.
In 2011, PVN assigned PVC as the contractor of the Thai Binh 2 thermal power plant and gave the company an initial capital of $64.64 million which PVC allocated for other purposes, leading to a massive loss for the plant.
Under Thanh and Thuan’s leadership, PVC took an aggressive descent from a successful contractor to a loss-making enterprise, particularly after it began investing in the real-estate and financial investment sectors in 2011.
Between 2001 and 2013, PVC heavily invested several trillions of dong into nearly 40 realty and financial investment companies. (VND1 trillion = $44.64 million), many of which incurred losses totaling VND3.3 trillion, or three quarters of PVC’s total registered capital.