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Four arrested, one at large, as Vietnam probes massive losses at state-run firm

Tuesday, June 20, 2017, 16:32 GMT+7

Vietnamese police have initiated criminal proceedings against five people responsible for sending a well-invested state-run enterprise into steep losses, officers announced on Tuesday.

Four of the accused have been arrested on charges of “intentionally acting against state economic management regulations and causing serious consequences,” while one remains at large after fleeing the country in November 2016.

The fugitive is Vu Dinh Duy, former general director of PVTex, the operator of the US$325 million Dinh Vu yarn making plant in the northern city of Hai Phong.

Duy left Vietnam on October 22, 2016, under the apparent guise of overseas medical treatment, and has since remained nowhere to be seen.

The PVTex was developed by the state-owned PetroVietnam, the country’s oil and gas giant.

The other four arrestees are former PVTex chairman Tran Trung Chi Hieu, the company’s ex-chief accountant Vu Phuong Nam, Dao Ngo Hoang, former head of its trade department, and Do Van Hong, chairman and general director of the Kinh Bac Petroleum Construction and Investment JSC, another PetroVietnam subsidiary.

Police confirmed on Tuesday that they have yet to detect the whereabouts of Duy.

The Dinh Vu plant has been forced to temporarily close three times since beginning operations in May 2014. By the end of the same year, the facility had incurred VND1.08 trillion ($48.21 million) in losses.

Deficits had risen to VND1.73 trillion ($77.23 million) by March 31, 2015, when the plant had only managed to sell 23,000 out of the 32,000 metric tons of yarn it had produced.

According to a report the Ministry of Industry and Trade submitted to the government, the PVTex plant had been developed based on a feasibility study that contained a number of misestimates.

For instance, the feasibility study stated that the power cost for the facility was only around $4.69 million a year, whereas the real figure was $12 million. Similarly, the plant had to spend $11 million buying chemicals needed for production, against an estimate of only $500,000.

While the feasibility study suggested that the developer should be able to recoup investment eight years after the facility began commission, the latest calculation shows that it will take as long as 22 years and ten months to reach that mark.

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