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Banking & Finance

PetroVietnam Deputy CEO detained

Released at: 10:55, 05/09/2017

PetroVietnam Deputy CEO detained

Mr. Ninh Van Quynh (standing). Source: m.seatimes.com.vn

Oil and gas giant confirms business as usual following arrest.

by Quang Huy

The second phase of a corruption investigation into Ocean Bank has seen five officials from the State-owned Vietnam Oil and Gas Group (PetroVietnam) arrested and prosecuted for deliberately violating State regulations causing serious consequences.

The latest police decision saw PetroVietnam Deputy CEO Ninh Van Quynh and former Board member Nguyen Xuan Thang detained on September 1, while two ex-Board members, Nguyen Thanh Liem and Vu Khanh Truong, were put under house arrest.

Having been detained since 2015, Nguyen Xuan Son, who was CEO of Ocean Bank from 2008-2010 before being appointed to senior positions and later Chairman at PetroVietnam, was accused of abusing his position as representative of PetroVietnam’s stake in Ocean Bank to misappropriate VND246 billion ($10.8 million).

During the 2008-2011 period, PetroVietnam contributed a total of VND800 billion ($35.2 million) to maintain its 20 per cent stake in Ocean Bank. His 20-day trial, which opened early last week, saw Son declaring in court that he had given VND30 billion ($1.32 million) to VND40 billion ($1.76 million) each year to PetroVietnam during his time as Ocean Bank’s CEO to thank the group’s leaders for asking its member companies and oil and gas contractors to use the bank’s deposits and payment services.

Quynh, then the group’s Chief Accountant, has admitted that group leaders had supported the bank at the time, following a cooperation agreement between the two sides, but rejected Son’s charge of receiving funds.

A report reveals that, as at March 31, 2014, Ocean Bank’s bad debts rose by nearly VND15 trillion ($661 million) and in May 2015 the State Bank of Vietnam (SBV) took over the bank after it reported losses of $445 million and bad debts that accounted for nearly 50 per cent of its total outstanding loans.

However, PetroVietnam did not report any problems at Ocean Bank despite sending three staff to supervise the bank’s operations during that time.

In a move to prevent any additional serious damage, PetroVietnam sent out a press release after the Police Investigation Agency arrested and prosecuted its officials on September 1. “The arrests and prosecutions were made as part of a police investigation into the group’s investment in Ocean Bank,” the press release stated. “PetroVietnam is actively cooperating with the investigation, and the incident will not affect the group’s business activities.”

“We have suspended Deputy CEO Ninh Van Quynh and rearranged personnel,” the release added, and it hopes to receive support from customers and partners to overcome the challenges.

Ocean Bank was founded in 1993 with a 20 per cent stake held by the Ocean Group conglomerate, which also invests in hospitality, securities, media, and retail. It remains active in real estate and hotels and services and was valued at about $3.5 million last year, according to its website.

Former Chairman of both Ocean Bank and Ocean Group Ha Van Tham, a US-educated banker who was Vietnam’s eighth richest man in 2013 based on stock holdings, had won several national awards for outstanding entrepreneurship before his arrest in October 2014. Police said that Tham and other executives also offered deposit rates above those set by the SBV, causing losses of nearly VND1.6 trillion ($70.4 million). Nearly 700 people benefited from the illegal rates.

Both Tham and Son have been accused of embezzling $2.2 million and abusing their power in misappropriating another $8.8 million. Embezzlement convictions in Vietnam carry the possibility of a death sentence.

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