On February 23, 2023, the Inspector General of Vietnam issued Decision No. 49/QD-TTCP to inspect the compliance with laws on equitization and state capital divestment at DIC Corp., a leading construction and development company.
From February 28 to May 4, 2023, the inspection team carried out the inspection at the Ministry of Construction and DIC Corp.
The inspection conclusion states that the Ministry of Construction’s decision to equitize the Investment and Development Company and divest state capital from it was in line with the government’s policies and the Prime Minister’s directives.
The equitization process was effectively implemented by the Ministry of Construction, attracting investments from various economic sectors to enhance the company’s financial capacity and operational efficiency.
As a result, DIC Corp.’s chartered capital increased from VND 370 billion to over VND 2,381 billion, and its total assets grew from VND 2,381 billion at the time of equitization to VND 6,133 billion as of September 30, 2017, before complete state capital divestment.
The company distributed over VND 400 billion in dividends to the state capital, and the value of state capital increased from VND 240 billion to VND 1,182 billion during the equitization and divestment process. After the divestment, VND 2,274 billion was contributed to the Enterprise Arrangement and Development Support Fund, with a capital surplus of VND 1,092 billion.
The equitization and divestment processes were completed within the timeframe set by the government and the Prime Minister’s directives.
However, there were also some limitations, shortcomings, and violations identified in the inspection, relating to legal basis, procedures, asset valuation, and financial handling during equitization and divestment.
Based on the inspection conclusion, the Inspector General recommended that the Prime Minister direct the Ministry of Construction to organize a review and take disciplinary action against organizations and individuals involved in the identified violations.
It was also recommended to urge related organizations and individuals to rectify the financial violations identified in the inspection, determine the causes of losses at three DIC subsidiaries, and take appropriate measures. Additionally, the Ministry should clarify the directives on private placement share prices in 2009 and the failure to re-evaluate the land-use rights of three land plots during the share price appraisal for state capital divestment from DIC Corp.
Furthermore, the Ministry of Construction should coordinate with the People’s Committee of Dong Nai province to review the valuation of land-use rights for the Dai Phuoc Eco-Tourism Urban Area project. If the re-evaluated land-use rights value is lower than the accumulated investment costs and the project’s development rights value included in the enterprise value, it should remain unchanged. However, if it is higher, the difference should be paid as a supplement to the state budget.
Dai Phuoc Eco-Tourism Urban Area.
However, aside from the achievements, there were still some limitations, shortcomings, and violations in the equitization and capital divestment process of DIC. These pertained to legal basis, procedures, asset valuation, and financial handling during the equitization and divestment.
Based on the inspection conclusions, the Inspector General recommended that the Prime Minister direct the Ministry of Construction to organize a review and take disciplinary action in accordance with regulations against organizations and individuals involved in the identified violations.
It was also recommended that the Ministry of Construction urge related organizations and individuals to rectify financial violations identified during the inspection and determine the causes of losses at DIC No. 1 Joint Stock Company, DIC Construction Materials Joint Stock Company, and DIC Tourism Joint Stock Company. Appropriate measures should be taken regarding the losses that have been settled into the state capital value at the Investment and Development Construction Company in accordance with regulations.
Additionally, the Ministry should clarify the directives on private placement share prices in 2009 and the failure to reassess the land-use rights of three land plots during the share price appraisal for state capital divestment from DIC Corp. They should also coordinate with the People’s Committee of Dong Nai province to re-evaluate the land-use rights of the Dai Phuoc Eco-Tourism Urban Area project.
If the re-evaluated value of the land-use rights is lower than the accumulated investment costs and the project’s development rights value included in the enterprise value, it should remain unchanged. However, if it is higher, the difference should be paid as a supplement to the state budget.
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