The general director of a state-run drainage firm in Hanoi has been arrested for the alleged monopolistic purchase of a lake cleaning substance – a deal which investigators say caused heavy losses to state coffers.

The Ministry of Public Security confirmed on Thursday that it had apprehended and initiated legal procedures against Vo Tien Hung, general director of the Hanoi Sewerage and Drainage Company (HSDC), for “violating regulations on the management and use of state assets, resulting in losses and wastefulness.”

HSDC is a state-run company under the Hanoi People’s Committee.

According to a source who wished to remain anonymous, Hung’s alleged misconduct is related to the exclusive purchase of Redoxy-3C inoculant, a substance used to treat polluted lakes in the capital city.

Chairman of the municipal administration Nguyen Duc Chung was suspended last week for his role in both this case and two other cases.

A Tuoi Tre (Youth) newspaper probe revealed that chairman Chung had approved the use of Redoxy-3C in the treatment of polluted lakes in the capital.

On August 10, 2016, HSDC signed a contract with Hanoi-based Arktic Co. Ltd. to buy 3.24 metric tons of Redoxy-3C at VND326,000 (US$14) per kilogram.

From 2016 to 2019, the Hanoi administration agreed to let the HSDC buy more than 400 metric tons of Redoxy-3C at a cost of approximately VND137 billion ($5.9 million) to treat contamination at 91 lakes in the inner city and 50 lakes in the suburbs.

The drainage firm also used the chemicals to treat water in the city’s West Lake when mass fish deaths occurred, to treat wastewater at Nam Son landfill, and to deal with pollution in the To Lich River.

To create favorable conditions for Arktic to be the exclusive supplier of Redoxy-3C for water pollution treatment in Hanoi, the municipal administration sent a delegation of officials led by its vice-chairman to a trade fair on wastewater management in Munich, Germany in May 2016.

Nguyen Duc Hanh — one of Arktic’s two co-founders — is believed to be a relative of a high-ranking official in the Hanoi People’s Committee.

On June 2016, Hanh and Dao Xuan Tan, Arktic’s legal representative, transferred all of their contributed capital at the company to other individuals.

The Ministry of Public Security is expanding its investigation into the case and is taking legal measures to recover the lost state property.

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