The government pledges to wholly restructure the debt-laden state-owned shipbuilder
Photographers flock around a police car believed to carry Pham Thanh Binh, former chairman of shipbuilder Vinashin, to a search of his house and office
On Wednesday (August 4), police from the Ministry of Public Security arrested the former chairman of the state-owned shipbuilder Vinashin. The central government’s regular press briefing that same day focused solely on the company’s wrongdoing and plans to restructure it.
Pham Thanh Binh, 57, is being investigated for “intentionally violating regulations on economic management that has resulted in serious consequences,” according to a statement posted on the government website.
Police seized documents during raids of his house in Hoan Kiem District, his apartment in Trung Hoa-Nhan Chinh Urban Area and his office.
Binh, a shipbuilding engineer from the northern port Hai Phong City, became Vinashin’s General Director in 1996 and chairman in 1998. He has been chief of the group’s Party Unit since 2003.
Last month, the government reported that the shipbuilder’s debts exceeded VND80 trillion (US$4.2 billion).
On July 5, the Party’s Inspection Commission found several key party members (including Binh) in violation of regulations. Inspectors said Binh had been irresponsible in his use of state funds and pushed the company towards bankruptcy. Binh had also appointed his family members to key company positions in violation of state regulations, they said.
On July 14, Prime Minister Nguyen Tan Dung suspended Binh citing the massive debts piled up by the group under his stewardship. The move came two days after the Communist Party’s Inspection Commission decided to transfer the case to the police for criminal investigation.
Misreport
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According to this week’s government press briefing, Vinashin failed to file proper reports regarding its capital holdings, investments, and development projects. These shortcomings were attributed to a failure of leadership.
In their statement, the government decried the company’s shoddy state: “Serious weaknesses and shortcomings, especially in investment and the use of capital by [Binh], have caused heavy losses, failures to obtain loans, and sapped the Vinashin of its operation capital.” The government statement added that many of the group’s projects and units have been placed on hiatus.
Deputy Prime Minister Nguyen Sinh Hung said at the press briefing Wednesday that the central government has recognized that Vinashin’s problems were mainly caused by “subjective factors” rather than the impact of the economic downturn.
During the briefing, the central government admitted its shortcomings and ineffectiveness in managing state-owned groups, specifically Vinashin.
Restructuring
“The situation is under control,” said Deputy Prime Minister Hung. “We can solve these problems.”
Hung said it would be necessary to reaffirm the group’s strategic development by focusing on shipbuilding operations, and narrowing its ancillary projects.
He predicts that the state-controlled company will post losses through 2012 before turning profit.
Hung confirmed that Vinashin had taken out overseas loans totaling $600 million, in addition to $700 million from bond sales with government guarantee. He said an inspection taskforce is working to identify the various loans that Vinashin took out.
