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​Vietnamese ministries, top officials face punishment in $392mn acquisition deal

Thursday, March 15, 2018, 14:51 GMT+7

Vietnam’s state inspectorate has suggested a police probe be launched into an investment scandal involving a leading mobile carrier, putting different ministries and high-ranking officials at risk of punishment for their involvement in the affair.

Mobifone, the company at the center of the high-profile case, has had a deal to acquire a 95 percent stake in local pay TV operator AVG in late 2015 probed by the state inspectorate after authorities ruled the deal was made in violation of a number of protocols.

State inspectors concluded their investigation earlier this week and suggested on Wednesday that the Ministry of Public Security launch another probe into the case to ensure relevant individuals are held accountable for their wrongdoings.

The call for an investigation made national headlines as three different ministries and several top officials under the management of the Politburo, the most powerful arm of the Vietnamese political system, and the Secretariat of the Communist Party of Vietnam, are likely to be held responsible.

Mobile carrier Mobifone and AVG reached an agreement on Monday to nullify their contract, but the apparent last-ditch effort might fail in shielding the company and relevant organizations and individuals from punishment.

An AVG billboard is seen in Hanoi. Photo: Tuoi Tre
An AVG billboard is seen in Hanoi. Photo: Tuoi Tre

Different ministries involved

Mobifone, an entity owned entirely by the state, has been under the management of the Ministry of Information and Communications since December 2014.

Shortly after taking over the mobile carrier, the ministry approved a Mobifone proposal to acquire the pay-per-view television service.

Mobifone eventually completed the deal and rebranded AVG as MobiTV. However, the telecom firm did nothing to develop the acquired company until the contract was terminated.

Upon its investigation, the state inspectorate ruled that the investment decision was green-lighted and carried out without final approval from the prime minister, a breach of the law on investment.

The information ministry also sought feedback from its public security and technology counterparts, making these two entities partially responsible for the case.

The Ministry of Science and Technology is being held accountable for failing to advise its information counterpart to appropriately evaluate AVG and assess the feasibility of the investment.

The ministry first backed the decision to have Mobifone acquire AVG, only to release a warning, after the ship had already sailed, that the investment had to be stopped, according to the state inspectors.

For its part, the Ministry of Public Security was asked to classify the acquisition deal by Mobifone as a ‘state secret,’ a legal violation considering the investment is far from government confidential information.

The public security ministry has also issued a statement to its information counterpart, confirming that the price it offered to acquire shares of AVG was much lower than those proposed by consultants.

The state inspectorate ruled that the Ministry of Public Security acted beyond its responsibility as financial evaluation is not among its designated functionalities.

A woman pushes her bicycle past one of the properties of AVG in Hanoi. Photo: Tuoi Tre
A woman pushes her bicycle past one of the properties of AVG in Hanoi. Photo: Tuoi Tre

Mobifone had agreed to pay VND8,889 billion ($392 million) to possess 95 percent of AVG.

The generous offer was made when AVG was bogged down with total debts valued at VND1,266 billion ($55.77 million) and accumulated losses of VND1,632 billion ($71.89 million) in late 2015.

Mobifone had spent a fortune on buying a company whose total assets were worth only VND206 billion ($9.07 million) after offsetting all of its debts and losses, according to the state inspectorate.

In conclusion, Mobifone’s share acquisition of AVG was done under a negligent and irresponsible decision by the Ministry of Information and Communications, which could cause total losses of VND7 trillion ($308.37 million) to the state budget.

The state inspectorate thus demanded that the prime minister task the Ministry of Public Security with handling the case and considering initiating legal proceedings against relevant people to hold them accountable for their misconduct.

The government inspectors will also submit their conclusions of the case to the Central Inspection Committee of the Communist Party of Vietnam, which is authorized to punish high-ranking officials overseen by the Politburo and the Party’s Secretariat.

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Son Luong / Tuoi Tre News

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