Role of former CEO Doan Van Phuong of FLC
The Investigation Agency (C01) of the Ministry of Public Security has recently issued additional investigation conclusions and proposed prosecuting Mr. Trinh Van Quyet (Chairman of FLC Group) for the crimes of “Market manipulation” and “Misappropriation of assets”.
The investigating agency has identified that the defendant Doan Van Phuong has been on the run since 2022.
In contrast to the previous investigation conclusions, this supplementary investigation conducted by C01 prosecutes 51 defendants, including 7 leaders and officials of the Ho Chi Minh City Stock Exchange (HOSE), the State Securities Commission, and the Vietnam Securities Depository Center.
At FLC Group, Faros Construction Joint Stock Company, and its related companies, C01 has clarified the criminal acts of each defendant, except for Doan Van Phuong (born in 1977, CEO of FLC Group) who fled abroad in March 2022.
According to the investigating agency, in this case, Doan Van Phuong also held the position of Chairman of the Board of Directors of Faros Construction Joint Stock Company from 2012 to 2016, and then a Member of the Board of Directors from November 2016 to June 2019.
As the Chairman of Faros Construction Joint Stock Company, from May 28, 2015, to November 9, 2016, Phuong directed members of the Board of Directors, the General Director, and employees of Faros to issue resolutions on increasing charter capital, preparing fake capital contribution documents, registering the company as a public company, registering the deposit, and registering the listing of 430 million shares equivalent to VND 4,300 billion charter capital of Faros.
This action by Phuong aimed to help Trinh Van Quyet and his accomplices sell shares formed from fake capital contributions and misappropriate over VND 3,620 billion from investors in the stock market.
Regarding Phuong’s actions, the investigating agency concluded that the defendant directed and directly signed minutes, reports, and resolutions of the Board of Directors to establish the policy of fake capital increase in each capital increase round (the 3rd, 4th, 5th) and the listing of Faros shares on the stock exchange.
Under the title of Chairman of Faros Board of Directors, Phuong directly participated in signing fake documents to legitimize the accounting for fake capital contributions. In which, he signed 18 cash withdrawal slips for defendant Trinh Thi Minh Hue (sister of Trinh Van Quyet) to withdraw VND 900 billion in contributed capital from Faros’s account; signed 12 payment authorizations for Hue to transfer VND 296.5 billion from the account of FLC Investment and Development Joint Stock Company to the accounts of different individuals to create cash flow, forming fake debt for legitimate accounting in the bookkeeping and financial reporting.
Mr. Trinh Van Quyet.
Benefiting from 500,000 shares
In addition, the defendant also signed documents to prepare a dossier submitted to the Supervision Department of the Joint Stock Company for the registration of a public company; requested the Depository Center to register and deposit securities; requested HOSE to approve listing the company’s shares at an incorrect contributed capital value.
In his personal capacity, Doan Van Phuong signed a contract on May 19, 2015, stating: “Receive the transfer of 675,000 shares of Nguyen Van Manh in Faros Construction Joint Stock Company but without payment to become a shareholder contributing capital”.
After becoming a capital-contributing shareholder, from May 27, 2015, to November 12, 2015, Phuong falsely signed 4 deposit money contribution papers and 2 fake payment authorizations for Trinh Thi Minh Hue to use for depositing money, transferring money, legitimately increasing the fake contributed capital amount under Doan Van Phuong’s name at Faros from VND 675 million (equivalent to 675,000 shares) to over VND 77.6 billion (equivalent to 7,762,500 shares). Before listing, Phuong returned 7,762,500 shares to Trinh Van Quyet through a transfer contract without making any payment.
The investigating agency determined that the defendant Doan Van Phuong benefited from 500,000 shares with an issued value of VND 5 billion. On August 29, 2016, the defendant registered these shares in a securities account under his personal name. In the years 2017 – 2018, the defendant received an additional 160,000 shares in dividends, increasing the total number of shares owned by Phuong to 660,000 shares.
In mid-May 2020, Phuong sold all 660,000 shares using his securities account, earning over VND 2.3 billion.
“Doan Van Phuong, together with Trinh Van Quyet and his accomplices, increased the registered capital value at Faros Construction Joint Stock Company, registered and sold shares formed from fake capital contributions, and misappropriated over VND 3,620 billion from investors in the stock market,” concludes C03, stating that Phuong’s violations are sufficient to constitute the crime of “Misappropriation of assets”, with an active aiding role for Trinh Van Quyet.
Until now, despite investigating various places, Doan Van Phuong has not been found. The Investigation Agency of the Ministry of Public Security has separated the documents related to the crime of “Misappropriation of assets” committed by Phuong for further processing.
