A cunning strategy to lower land prices in Dong Anh by Chairman Vimedimex

On January 17th, Ms. Loan, Chairman of the Board of Directors of Vimedimex Pharmaceutical Company, was prosecuted by the Hanoi People’s Procuracy for violating regulations on auctioning assets under Article 218 of the Criminal Procedure Code.

Along with the same charge, the Procuracy also indicted 8 defendants: Nguyen Quang Hung (Deputy General Director of Vimedimex), Ta Thi Van (Director of Bac Tu Liem Real Estate Company), Nguyen Xuan Duc (Deputy General Director of My Dinh Real Estate Company), Nguyen Thi Dieu Linh (Director of Hanoi Investment Appraisal and Valuation Company), Nguyen Ngoc Thang (Deputy General Director of Hanoi Investment Appraisal and Valuation Company), Nguyen Duc Phuong (Appraiser at Hanoi Investment Appraisal and Valuation Company), Tran Cong Tuyen (Director of Infrastructure Management and Land Clearance Department under Dong Anh Project Management Board) and Vuong Thi Thu Thuy (Officer of District Project Management Board in Dong Anh District).

Bui Thanh Huyen, former deputy director of the land management division under Hanoi Department of Natural Resources and Environment, and Nguyen Thi Cam Le, an official of Hanoi Department of Natural Resources and Environment, were also indicted for the crime of serious dereliction of duty. Compared to a report issued a year ago, the Procuracy added these two defendants.

According to the indictment, at the beginning of 2020, the Dong Anh District People’s Committee approved a plan to auction land use rights in the area. This plan included a residential construction project for auction in the Southeast, Co Duong hamlet, Tuong Duong commune. The district’s construction investment project management board was assigned to implement the plan.

In August 2020, Hanoi People’s Committee decided to allocate 49,100 square meters of land in Co Duong hamlet, Tien Duong commune to Dong Anh District for the project. Among which, 16,100 square meters of land were earmarked for auctioning the land use rights for residential purposes.

Although this unit did not have the function of determining the starting price of the land, Tuyen, the Director of Infrastructure Management and Land Clearance Department, submitted a report to the leadership, requesting an appraisal company to determine the starting price as a basis for organizing the auction. Through the introduction, Tuyen contacted Hanoi Investment Appraisal and Valuation Joint Stock Company (Vvai) to discuss the land price plan and determine the specific unit price.

After conducting an on-site survey, Vvai prepared tables of revenue, expenses, profit of investors, and land price. Finally, the company determined the land plot to be worth 504 billion VND, about 30-31 million VND/m2.

Upon receiving the appraisal report, Tuyen requested adjustments to lower the land price to around 300 billion VND. The appraisal company agreed and directly modified the land unit price on the calculation sheet, reducing the development revenue to bring down the land plot to 334 billion VND.

Ms. Nguyen Thi Loan. Photo: Vietpharm

With the coordination of Tuyen and the assistance of the land management division under Hanoi Department of Natural Resources and Environment, Vvai was chosen to sign the appraisal contract with the department. Since there was an agreement with Tuyen to “lower the land price”, Vvai, when issuing appraisal certificates, falsified 12 survey forms as a basis for appraisal. In the end, Vvai issued appraisal certificates determining the land plot to be worth 284 million VND, about 17.6 million VND/m2.

Cam Le, who was an official of the land management division at the time, was responsible for checking the appraisal certificates and drafting the land pricing proposal. However, Le did not thoroughly review the documents, did not compare assets for comparison, so she accepted the price provided by Vvai.

Huyen, the deputy director of the land management division, also did not check, leading to the auction starting price being only 17.6 million VND/m2, much lower than the actual value, as determined in the indictment.

In October 2020, the land valuation council organized a meeting to determine the starting price. The meeting was attended by leaders of the departments of Finance, Construction, Natural Resources and Environment, the City Tax Department, the Dong Anh District People’s Committee, and Vvai. They adjusted and agreed on the starting price of 18.2 million VND/m2.

With the aim of ensuring a higher chance of winning the land auction, Loan instructed her subordinates to bid according to a pre-arranged plan. In the first round, all 3 companies bid the same amount, equal to the starting price of 18.2 million VND/m2. In the next two rounds, the 3 companies all bid the same amount and added an incremental bid.

In the fourth round, all three companies did not bid and wrote the same statement: “Do not continue bidding”. The purpose of this action was for the auctioning company to conduct a draw to select the winning bidder. As a result, Bac Tu Liem Housing Development Joint Stock Company won the land auction with a price of 326 billion VND, equivalent to 20.1 million VND/m2. With the approval of the auction results, Loan instructed to borrow 350 billion VND from the bank to pay the full amount of land use fees.

After receiving the land, from January 2021 to August 2021, Loan approved Belleville Hanoi Real Estate Company to sell 21 out of 96 villas and adjacent houses, earning 311 billion VND. Although the winning bid was only 20.1 million VND/m2, Loan sold the properties at a price of 86.3 million VND/m2, according to the indictment.

The Procuracy determined that Loan’s collusion in lowering the land price and the actions of the co-defendants caused damage to the state budget of over 135 billion VND. During the investigation process, Loan has fully remedied the consequences caused by her wrongdoing.

In addition to the indicted defendants, the Procuracy also identified the responsibility of members of the Land Valuation Council under Hanoi People’s Committee, but their level of criminal liability has not reached the point of prosecution.

Pham Du