Unveiling the Truth: Unraveling the Violations in the Equitization of Tin Nghia Corporation in Dong Nai

The inspection agency clarified that in determining the value of the construction work asset, the consulting unit, Grant Thornton LLC, incorrectly identified investment rates, material unit prices, and other factors, leading to a deviation in the assessed value of the asset of over VND 15 billion compared to the regulations.

The Steering Committee for the equitization of the Tin Nghia Corporation did not request the People’s Committee of Dong Nai province to provide feedback on land price determination for the untransferred area in Tan Bien 1 and 2 new residential areas, Tan Bien market neighborhood, and the expected location of the Tan Bien apartment building. This could potentially lead to an incomplete determination of land-use rights value, causing financial losses for the Dong Nai Party Committee.

During the period of 2005-2013, the Tin Nghia Corporation independently agreed to receive land-use right transfers for the purpose of expanding investment projects, which was not in accordance with legal regulations.

As of the inspection in May 2023, the area of ​​over 491,000 square meters of this land has not yet had an investment policy and a decision on changing the land-use purpose by the People’s Committee of the province, and the procedure for transferring it to the name of the corporation has not been implemented.

According to the inspection conclusion, the Standing Committee of the Provincial Party Committee decided to approve the enterprise value based on the asset value determination result. However, the Steering Committee for equitization and the Standing Committee of the Provincial Party Committee did not consider, evaluate, and compare this with the enterprise valuation results using the free cash flow discount method.

The Tin Nghia Corporation carried out the transfer of shares at Tin Khai Joint Stock Company, Phu Tin Construction and Housing Business Joint Stock Company, Proconco Joint Venture Company, and Dong Sai Gon Concrete Component Joint Stock Company in the form of agreed sale. The agreed transfer price was not determined by a unit with the function of valuing compliance with regulations.

The inspection agency discovered that the Tin Nghia Corporation sold an additional 7.7 million shares (according to the equitization plan approved by the Provincial Party Committee Standing Committee) to employees, which was not in accordance with regulations. As a result, the additional shares were not put up for auction, and the difference in value must be recovered to the budget of the Dong Nai Party Committee, amounting to more than VND 8.7 billion.

The conclusion of the Government Inspectorate clearly states the responsibility for deciding on the enterprise value according to the net asset value method without considering, evaluating, and comparing with the results of enterprise valuation according to other methods. The use of the book value of four assets to calculate the enterprise value during equitization belongs to the Standing Committee of the Dong Nai Party Committee for the 2015-2020 term, the Steering Committee for equitization, and related organizations and individuals.

The responsibility for violations in the sale of additional shares to employees and the sale of shares to strategic investors belongs to the Standing Committee of the Provincial Party Committee for the 2015-2020 term, the Standing Committee of the Dong Nai Party Committee for the 2015-2016 term, the Steering Committee for equitization, and related organizations and individuals.

Based on the results of this inspection, the Inspector General of the Government Inspectorate recommended that the Standing Committee of the Dong Nai Party Committee direct and organize a review of the responsibilities of related organizations and individuals regarding the above violations. They also directed the collection of the determined amount due to violations in determining the value of some assets that are works on land (VND 15 billion) and the sale of additional shares to employees (VND 8.7 billion) to the Party budget of the Dong Nai Party Committee.

At the same time, the People’s Committee of Dong Nai province should inspect and review to have measures to manage and guide the Tin Nghia Joint Stock Company to manage and use the land area received from the transfer of households and individuals in accordance with the law.

The Inspector General of the Government Inspectorate recommended that the Ministry of Finance consider and take measures to rectify the consulting valuation activities of Grant Thornton LLC in accordance with the law. If there are signs of criminal offenses, the case should be transferred to the investigative police agency for handling.

According to the inspection agency, on September 12, 2023, the Investigative Police Agency of Dong Nai Provincial Police decided to initiate a criminal case for “Violation of regulations on the management and use of State assets, causing waste and loss” at the Tin Nghia Corporation during the equitization process from 2014 to 2016.

The Government Inspectorate has exchanged information on some detected violations during the inspection with the Investigative Police Agency of Dong Nai Provincial Police. The inspection conclusion was also sent to the Investigative Police Agency of Dong Nai Provincial Police. Therefore, the above limitations and violations are considered by the Investigative Police Agency of Dong Nai Provincial Police according to regulations.