Selling bad debts
From March 5th to April 29th, the Ho Chi Minh City People’s Court will hear the first-instance trial of Van Thinh Phat Group and SCB bank. According to the charge sheet, when overdue loans had to be classified as bad debts group 5, while the credit growth rate was restricted according to the regulations of the State Bank, Ms. Truong My Lan – Chairman of the Board of Directors of Van Thinh Phat Group – not only did not repay the debts but also instructed accomplices to sell bad debts to the Asset Management Company (VAMC) and sell overdue debts to “ghost” companies set up by Van Thinh Phat Group to conceal part of the bad debts, not to account for interest, reduce the credit balance and continue to embezzle money from SCB bank.
Ms. Truong My Lan – Chairman of the Board of Directors of Van Thinh Phat Group – instructed lower levels to conceal incorrect information, report inaccurate and incomplete results of audits and inspections.
The investigation results determined that from January 1, 2012, to October 7, 2022, Truong My Lan and accomplices instructed SCB bank personnel to sell bad debts to VAMC, sell slow-paying credit loans, set off 269 loans/216 customers, with a disbursed capital of nearly VND 133,336 billion. As of October 17, 2022, there is still a total debt balance of over VND 200,452 billion, including nearly VND 130,810 billion of principal debt (accounting for 27% of the total principal debt of Truong My Lan’s group) and over VND 69,642 billion of interest debt.
Specifically, SCB bank sold bad debts to VAMC including 69 loans/39 customers, with a disbursed capital of over VND 51,397 billion, and the total debt balance as of October 17, 2022, was over VND 84,231 billion.
SCB bank sold overdue debts including 148 loans/132 customers, with a disbursed capital of over VND 58,803 billion, and the total debt balance as of October 17, 2022, was nearly VND 87,503 billion. Set-off debts including 52 loans/45 customers, with a disbursed capital of over VND 23,135 billion, as of October 17, 2022, the total debt balance was over VND 28,718 billion.
To cover up criminal acts when being inspected, Truong My Lan instructed key SCB bank personnel to bribe officials and leaders of the Banking Inspection and Supervision Agency, leaders of the State Bank branch in Ho Chi Minh City, Head of the Supervision Unit at SCB bank in order to cover up incorrect information, report inaccurate and incomplete results of audits and inspections.
In addition, Truong My Lan instructed key leaders of SCB bank to allocate her loans at the main branches in Saigon, Cong Quynh, Pham Ngoc Thach, Ben Thanh to other branches such as East Saigon, Cu Chi, Tan Dinh… to reduce the attention from authorities.
In 2017 – 2018, the inter-agency inspection team focused on inspecting the Pham Ngoc Thach branch as it discovered signs of irregularities. To cope with this, Truong My Lan instructed to settle her loans at this branch by creating new loans at other branches, using disbursed funds to settle loans at the Pham Ngoc Thach branch.
Notably, after falling into special control, SCB bank signed a contract to hire the Hoang Quan Valuation Company to value its assets at the time of September 30, 2022.
Ms. Lan withdrew money from SCB bank through the trick of creating false loan profiles.
As a result, the Hoang Quan Valuation Company determined the value of SCB bank’s assets at the time of September 30, 2022, was VND 295,940 billion. In particular, VND 5,946 billion is fixed assets, VND 289,994 billion is the value of collateral assets for the remaining outstanding loans including bad debts sold to VAMC, overdue debts, set-off debts, slow asset sales.
Raising collateral asset values
Related to the loans of the Truong My Lan – Van Thinh Phat Group, there are 1,166 asset codes securing 1,284 loans, the total value of secured assets recorded on the books by SCB bank is VND 1,265,504 billion.
Among them, the Hoang Quan Valuation Company valued 726 asset codes that were reassessed and allocated a value of VND 253,561 billion. The remaining 440/1,166 asset codes were not valued with the book value of VND 622,476 billion. The reason is that these assets are stocks, rights to assets, real estate without sufficient documentation, legal ownership of assets, and some assets not subject to reassessment.
Among the above-mentioned 726 assets, there are 517 asset codes with sufficient legal collateral and collateral to be counted as the asset value when establishing risk provisions, with allocated values according to procedures or mortgage contracts, totaling VND 179,196 billion.
Over 200 remaining asset codes do not meet the legal conditions (no mortgage contracts, unnotarized mortgage contracts, unregistered assets as stipulated…) so SCB bank cannot handle the assets, cannot count the asset value when establishing risk provisions.
According to the charge sheet, to withdraw money from SCB bank through the trick of creating false loan profiles, Truong My Lan instructed SCB bank officers to collude with individuals at appraisal companies to issue legitimate appraisal certificates for her loan profiles.
The investigation results determined that SCB bank hired 19 appraisal companies/46 individuals such as directors, deputy directors, appraisers, and employees to issue 378 related appraisal certificates for the remaining outstanding loans of the Truong My Lan group.
So far, there have been 5 appraisal companies (TAM NHIN MOI Company, MHD Company, THIEN PHU Company, E XIM Company, DATC Company) and 7 individuals who are directors, deputy directors, appraisers, and individual brokers issuing 23 legitimate appraisal certificates for the loans of the Truong My Lan group.
The loans of the Truong My Lan – Van Thinh Phat Group were valuated at VND 1,265,504 billion.
To legally withdraw assets, have values to sell or use for other purposes, Truong My Lan and accomplices at SCB bank used many assets without legal conditions, inflated prices to include as collateral assets for the loans.
Regarding the 1,284 loans under the responsibility of Truong My Lan, there are 1,166 asset codes with the book value recorded by SCB bank, totaling an allocated value of VND 1,265,504 billion but the Hoang Quan Valuation Company valuated only 726/1,166 asset codes. The remaining 440/1,166 asset codes were not valued because these assets are stocks, rights to assets, real estate without sufficient documentation, legal ownership of assets…
When it is necessary to withdraw legally collateral assets with values for sale or use, Truong My Lan and accomplices at SCB bank did not carry out registration of collateral transactions as prescribed or disguised as “rights to assets” to avoid registering collateral transactions.
For the 240 collateral assets under the responsibility of Truong My Lan’s remaining 1,284 loans, there are asset codes with a total value recorded on the books of VND 487,451 billion, which were exchanged for 278 collateral assets with a total book value of VND 351,948 billion. The Hoang Quan Valuation Company valued only 260/278 asset codes with a total value of over VND 108,109 billion.
