Tiếng Việt
普通话
The Government Inspectorate on March 14 announced a conclusion of an 18-month inspection of a highly controversial contract in which mobile carrier MobiFone bought a 95% stake in pay TV firm AVG for a staggering VND8,889.8 billion (around US$390 million).
The announcement comes just a day after news reports said MobiFone and key shareholders of An Vien Group (AVG) met at the MIC office in Hanoi and agreed to terminate the contract.
It took the two sides nearly six hours to hold talks on March 12 and reach agreement to cancel the transfer of 344.66 million shares from AVG to MobiFone. MobiFone, which is a business unit under the MIC, will return all the AVG shares and assets bought while AVG will make full refunds, including interest.
Prosecution sought
Despite the termination of the deal, the Government Inspectorate still forged ahead with a prosecution proposal and affirmed it would forward results of the inspection to the Party Central Committee’s Inspection Commission. This is a clear indication that the case is extremely severe and that officials under the management of the Politburo and the Secretariat of the Party Central Committee could be sanctioned if they are found to be implicated in the case.
The Government Inspectorate conclusion said the MIC was uncertain over the deal and consulted some other ministries over the matter. Even though the ministry failed to make things clear, it still asked the Prime Minister to allow MobiFone to buy into AVG, according to the conclusion.
The conclusion said the MIC lacked a sense of responsibility for the assessment of the deal, approved the acquisition not on solid legal grounds, and thus caused huge losses for the State.
The transfer of shares from AVG to MobiFone is not treated as a State secret under the prevailing rules, but when the MIC wrote to the Ministry of Public Security asking for comment on the deal, it listed the document as classified information, said the inspectorate.
Moreover, multiple contents contained in the document were not in the province of the Ministry of Public Security. Therefore, the inspectorate said, the MIC should not have relied on what the Ministry of Public Security said as a basis to argue that it had heeded guidance from relevant agencies.
The conclusion said the inspectorate had asked the MIC to consider declassifying the document or continuing keeping it secret but the MIC had not acted.
The inspectorate pointed out Pham Dinh Trong, head of the business management department under the MIC and chief of the MobiFone-AVG deal assessment committee, had committed multiple violations. Trong and his assessment committee used the information which AVG provided for the MIC to compare share prices without verification. AVG told the MIC that the price of the 95% stake which a foreign partner was planning to pay was US$700 million.
Overevualation of AVG
The Government Inspectorate conclusion said the business performance of AVG from its inception to the day of asset evaluation was poor. When the pay TV firm was evaluated on March 31, 2015, its total assets were put at more than VND3,260 billion (US$143.13 million) while its debts amounted to more than VND1,266 billion.
The company spent nearly VND2,660 billion, or 73.3% of its chartered capital, investing in operations unrelated to TV business. It used more than VND2,473 billion to acquire stakes in Mai Linh Silk Worm Seed JSC and An Vien B.P JSC.
The investments in the two companies put AVG at risk, said the conclusion, adding the Government Inspectorate wanted to clarify these investments.
In its investment plan sent to the MIC, MobiFone made false statements about AVG, showing its good future outlook.
MobiFone acquired the 95% stake in AVG for VND8,889.8 billion but the value of AVG was just VND1,983 billion as of March 31, 2015, leading to a possible loss of about VND7,006 billion for MobiFone.
According to the Government Inspectorate, the MIC failed to verify the documents which MobiFone used to make a decision on the AVG stake purchase.
Other ministries implicated
The Ministry of Planning and Investment (MPI) wrote to the Prime Minister proposing approving the deal. However, after the contract had been signed and MobiFone had completed payments for 95% of the contract’s value, the MPI on January 22, 2016 said in a document that the acquisition was risky, hence its self-contradiction.
The Government Inspectorate said the Ministry of Finance did not promptly assess the impact of the stake acquisition on MobiFone’s equitization plan. The ministry realized the deal would negatively affect MobiFone’s business performance and asked the MIC to conduct a review but finally approved of the deal.
The inspectorate in its conclusion proposed the Prime Minister order the MPI and the Ministry of Finance to identify those responsible.
The inspectorate also proposed the Prime Minister order the Ministry of Public Security to find those responsible for giving advice on the issuance of three documents relating to the deal.
The inspectorate asked the MIC to discipline MobiFone’s chairman and board members, general director, deputy general directors, chief accountant and other individuals involved.
The MIC and MobiFone should take back the money MobiFone had used to pay for the deal.
The inspectorate even proposed the Prime Minister order the Government Office to determine those responsible for the case.